Wednesday, January 16, 2019

Unbridled capitalism. And you. And me.

Ever since I was a little kid and had a 50-house paper-route in the ramshackle neighborhood I grew up in, I’ve always been interested in newspapers. I always enjoyed reading them, whether I was reading a big story like Vietnam, or Richard Nixon’s resignation, or local news about my high school baseball team, or the Yankees or Mets, or even, in papers other than the Times and the Journal, the comics.

My first advertising job was as a copywriter at Bloomingdale’s. And we had ads in papers from wherever they had stores--all over the country. I often brought home, in addition to the Times, the Philadelphia Inquirer, the Dallas Morning-News, or the Boston Globe. I just loved to read local stories from local reporters.

It’s sad, these past few years, to see the newspaper industry dry up and die. To be honest, in my head I’ve looked at the precipitous decline of the newspaper industry and the similar throes of the advertising industry, and again in my head, I’ve drawn parallels.

I’ve also spent some time wondering about a simple question. Are the deep problems with these industries exogenous or endogenous? ie, are our issues the result of internal problems or are they caused by outside forces.

There was an article in yesterday’s Times about the newspaper industry, specifically the bid of a Hedge Fund to take-over the Gannett Group, publishers of “USA Today,” “The Detroit Free Press,” and other newspapers. The hedge fund, Alden Global Capital already owns over 200 publications in the United States, including “The Denver Post” and the “San Jose Mercury News.”

Here are the sentences in the article that really got me thinking:

Critics have described Alden as a “destroyer of newspapers” that is prone to “savage” layoffs and as “one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism.”

An op-ed by Joe Nocera in “Bloomberg Opinion” says this of the way Alden Global Capital’s chief operates:

              His layoffs aren’t just painful. They are savage.

For instance, according to figures compiled by the NewsGuild, the union that represents workers at Digital First Media properties, the staff of the Denver Post has fallen from 184 journalists to 99 between 2012 and 2017. The Pottstown Mercury in Pennsylvania went from 73 journalists in 2012 to 19 in 2017. That’s right: 19. The Norristown Times-Herald, also in Pennsylvania, shrank from 45 journalists to 12.

It’s hard to look at shrinkage like the above in the newspaper industry and not think of our own industry’s contraction. I remember when Ammirati was a big agency, Kenyon & Eckhardt was a big agency, Bozell Jacobs was a big agency, Lintas was a big agency and Lowe was a big agency. Twenty years later, after all those agencies were amalgamated together they barely comprise one small agency.

Meanwhile, as these many shops shrunk into nothingness, corporate chieftains in lavish executive suites (somehow open-plan doesn’t work for corporate chieftains) routinely took home $1.7 million, $6.3 million, even in the case of one holding company CEO $16.8 million.

I know we work for holding companies. But my question is are holding companies working for us? Are they working to build our industry or do they extract, like rapacious mining companies, wealth from it?

David Brooks, in a recent Times op-ed, wrote about a cultural shift that’s happened in our world. It's a shift that may be having an outsized impact on our industry, our business and our lives. Brooks writes,

Somehow over the past 40 years economic priorities took the top spot and obliterated everything else. As a matter of policy, we privileged economics and then eventually no longer could even see that there could be other priorities.
For example, there’s been a striking shift in how corporations see themselves. In normal times, corporations serve a lot of stakeholders — customers, employees, the towns in which they are located. But these days corporations see themselves as serving one purpose and one stakeholder — maximizing shareholder value. Activist investors demand that every company ruthlessly cut the cost of its employees and ruthlessly screw its hometown if it will raise the short-term stock price.

…We turned off the moral lens. We more or less did this as an entire society — we switched to a purely economic lens…
I’m not an economist, or a sociologist, or even a business person. I’m just a copywriter.

But all this makes me wonder. Is what’s wrong with our industry our industry?


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