William J. Holstein

What GE’s Sale of NBC Might Suggest For The Media
Dec. 22--I posted this today on the Overseas Press Club website, http://www.opcofamerica.org.

As we contemplate the end of one decade and the beginning of another, all of us in the media are wondering what went so wrong, meaning the devastation that has hit many news organizations. That's particularly true in my sectors of interest, business and international. And we also are wondering, Can the phoenix rise from these ashes?

I think one of the most important things that went wrong during my nearly 40-year career was the takeover of so many media outlets by non-news corporations interested primarily in maximizing their profit margins. As a young reporter, I can recall working at the Louisville Courier-Journal and Times, owned by the Bingham family. They saw their media assets as a commercial enterprise, to be sure, but something much more. It was part of their commitment to a vibrant civic society and ultimately to the American democracy.

But over the years, so many media assets were purchased by Gannett, Disney, General Electric, Viacom, and others. These players were attracted by the possibility of 18 or 20 percent rate of returns. Their mantra became, "Repurpose the content. Create multimedia conglomerates. Then cash in."

It didn't work. These owners have stripped the media of much of their talent and led them down a vicious spiral. If there's nothing worth reading in a newspaper, or watching on a local television station, then people stop reading and watching. Owners with an exclusive interest in rate of return never understood the simple equation--people have to have a reason to buy a magazine or newspaper, or listen or watch.

So now General Electric is trying to unload NBC to Comcast. Comcast is not an exactly enlightened group of individuals but at least they are in the "content business." One possible interpretation is that GE has concluded it cannot get the high rate of return on media assets that it once assumed it could.

Will more profit-only owners come to that conclusion? Could we begin to see a transformation of pattern of ownership? That's what we have to watch for. Who might own the media that emerges from the destruction? It appears to be a combination of players:

--in the business space, McKinsey and Booz and INSEAD and other consulting/academic organizations are creating very fine editorial products, helping fill the vacuum left by the endless round of cutbacks at Forbes, Fortune and Business Week.

--we see also the rise of non-profits, as in the role played by the MacArthur Foundation in helping former Chicago Tribune editor Jim O'Shea create a news organization in Chicago that will be affiliated with the New York Times. Charitable giving also helped Paul Steiger create his investigative organization, Pro Publica.

--news cooperatives might spring up. The emergence of Global Post in Boston is interesting in that light. This online organization pays very little money to journalists around the world, but at least it pays them something. This could be the future model of being a foreign correspondent. Most traditional news organizations have completely given up on paying the full packages for correspondents and their families. Maybe a new model is being born.

--some online organizations like Huffington Post or the Daily Beast could emerge as profitable, sustainable models of coverage in general and that would include some international content.

These are all straws in the wind, but worth contemplating as we stare into 2010.