I just want to clarify something for a Think! reader who wrote to me about this.
Yes, one option is to go the non-profit endowment route.
But another, and one which is part of my thinking, is that pure endowment isn't the only play here.
Let's just consider for a moment that, after the recent financial meltdown, we're going to see new flora and fauna emerging, a bit like after a forest fire.
I think this is likely not just in the case of newspaper companies and their offerings, but also capitalism in general. It's what I call the birth of Capitalism 2.0. (I don't know if anyone else is using that term, but if so I haven't read about it.)
Capitalism 2.0 is a market place for profit-minded investors (yes, capitalists still want an ROI) within which different classes of investors emerge who are willing, for reasons of contributing to the broader base of social capital, to accept reduced, capped or fixed income returns on their investments.
In my scenario of 100 rich Americans/foundations/endowments/whoever stumping up, let's say, $10 million each to achieve this for the NYT Company, they would enable the NYT Company to survive in the short term and flourish in the long term (once the NYT Co. get with the programme of what is actually going on in the media world and what the market wants and come up with some new ideas). But a fully blown not for profit endowment is not what I have in mind.
What I have in mind is an investment class of managed profit expectations where investors are willing to accept, in return for a broader (can we say greater?) good, lower returns on their capital than they can achieve elsewhere.
Capitalism 2.0 will still leave plenty of investment classes for people who are driven purely by greed and profit, but in 25 years time, might we be asking each other at dinner parties whether we're into - to shorthand the idea - social capital class B investments or pure profit motive class A investments? Emerging social trends will determine which class of investment is called A and which class is called B.
This differential between investment classes can be applied to any company or sector you care to mention. Oil companies that are Investment B class or Investment A class for example, the former being one that caps its profit margins at a certain percentage, re-invests that money in alternative non-fossil energies and pays out, yes, a lower dividend.
Given the NYT families who own the voting stock are going to have to swallow considerably lower dividends for some years to come, even if (and it's an if) they survive, might they like to go for this model and at least claim some glory for developing the concept (after me that is)?
We're constantly told what terrifically socially minded and all round great people the family is (a bit like the Bancrofts, ho hum) so let's see them put their money where their mouth is. Sorry kids, some of you are going to have to get real jobs, but you've all got the nice Manhattan brown house/loft apartment/trust fund based on NYT dividends to date, so it's not all bad is it?
As for management and editorial staff, well, sorry too.
You're going to have to take a pay cut.
I would if I were you in this scenario because given the media meltdown, both re, media market B-side and editorial staffing cuts, there's plenty of members of the liberal media elite who would be more than willing and capable of working for a Capitalism 2.0 NYT Co. on a wage platform of, off the top of my head, at least 25% less than you're currently getting paid.
With the $10 million members of the liberal media elite poneying up to get the debt down by around a billion dollars, the company going public-to-private, the resulting drop in debt servicing fees and 25% off the biggest cost base without you losing your job, this could be one hell of an offer.
And we'll all get a chance to see just how liberal you and the Ochs-Sulzbergers really are. Which would be nice wouldn't it?
If you don't like the deal on the table you can always go and set up a blog, because boy, that's the future isn't it (not).
And let's not forget, that with NYT Company stock trading at as low as $6.90 yesterday, your performance related stock options aren't worth a bag of beans anyway, so no big loss on that front.
Naturally investor/employee participation is going to be a big part of the reward of being in Class B investments as an investor or employee, so we may need a few changes of management style. But judging by the mood music I'm hearing, no one would be worrying too much about that.
BTW: if something like this does happen at the NYT Co. I still want that place on the board. And given how much I've made out of the naked short selling of NYT Company stock in the last 24 months, I'm more than happy to put the first 10 mill on the table. Can't do fairer than that ;)
Today's article in the IHT about the Smithsonian (see below) is perhaps relevant in all this, but there are more thoughts beneath it about the future of newspapers in the world of Capitalism 2.0.
At meeting, Smithsonian practices new openness
By Robin Pogrebin
Tuesday, November 18, 2008
WASHINGTON: Fielding questions about its diminished endowment fund, the possibility of charging admission fees and the fate of its fabled yet shuttered Arts and Industries Building, the Smithsonian Institution held the first public board meeting in its 162-year history on Monday as part of its new commitment to openness and accountability. Sitting on the stage of a 565-seat auditorium at the institution's National Museum of Natural History, members of the governing body, or Board of Regents — including members of Congress — took questions from the audience present and online.
The two-hour meeting was a window on public concerns about the Smithsonian's shaky financial state and potentially endangered programs, rather than merely a forum for combative accusations after two tumultuous years in which the institution has been battered by mismanagement scandals. Museumgoers and Smithsonian staff members had the opportunity to ask whatever they wanted about the organization's operations and direction.
Although billed as an open board meeting, the session seemed more like a chance for the regents to hear from the public than for the public to observe the regents at work. Questions ranged from broad issues like the thrust of the Smithsonian's new strategic planning initiative, intended to draft a course of action for the institution's financial future and its programs, to whether a tram might be built at the National Zoo.
There were nonetheless more challenging moments.
"Why did you not all resign?" was the first question, submitted on a card by an audience member. It referred to the Board of Regents' decision to stay on after revelations about the lavish expense-account spending of Lawrence Small, the Smithsonian's former secretary, or chief executive, who resigned in March 2007.
Roger Sant, chairman of the Smithsonian's executive committee, replied that the regents had asked themselves, "Do we resign, or do we roll up our sleeves — and we chose the latter."
The question that drew one of the most emphatic responses from the regents concerned the viability of the Smithsonian's policy of free admission at all of its components, which include 19 museums and galleries, the zoo and 9 research centers. The Smithsonian draws 70 percent of its $1 billion annual budget from the federal government.
One written comment suggested that "the luxury of free admission must be a thing of the past." The audience booed.
Senator Christopher Dodd, Democrat of Connecticut and a Smithsonian regent, called the admission policy "one of the great hallmarks" of the institution.
Calling attention to the Smithsonian's unusual governance structure was the scheduled role of Chief Justice John Roberts Jr., who serves as the Smithsonian's chancellor and traditionally presides over board meetings. At the last minute the chief justice was unable to attend and Sant presided instead. "We've been trying to do some fixing," Sant said upon opening the meeting. "The board views this meeting as an opportunity to directly engage with all of you about the issues facing the Smithsonian."
Many questions were answered by G. Wayne Clough, the former president of the Georgia Institute of Technology, who took over in July as the Smithsonian's secretary.
He faces the task of restoring stability to an institution struggling with a $2.5 billion shortfall, crumbling buildings and a recent legacy of improprieties by leading Smithsonian executives. "We believe the Smithsonian is at a turning point," he said in his opening remarks. "The world is rapidly changing in so many ways."
Like other organizations, the Smithsonian has been seriously affected by the nation's economic downturn; the value of its endowment has dropped 21 percent since June. "Of course we can't predict the future," Clough said, "but we can prepare for it."
He said the Smithsonian had "to find ways to be more self-reliant." The institution raised $135.6 million last year, he said, an improvement on its goal of $115 million.
The developer and philanthropist Eli Broad, who serves as a regent, said the board had become more conservative about its investments.
The organization has also raised $400,000 toward the $1.3 million cost of its strategic planning effort, Clough said. But he said that fund-raising was not enough and that the institution needed to set about attracting a younger and more diverse work force and audience.
Clough said he had established a committee to ensure that executives at the institution — including regents, staff members and contractors — reflected the nation's ethnic diversity. "The Smithsonian is the treasure of America and it represents America," he said. "Therefore its Board of Regents should as well."
Several of the questions dealt with the Smithsonian's neo-Classical 1881 Arts and Industries Building, which has been closed for four years and is listed by the National Trust for Historic Preservation as one of the nation's most endangered places because of its state of disrepair.
Clough said that the cost of repairs had been estimated at about $75 million and that the Smithsonian would conclude a study on its future use in January. One member of the audience suggested setting aside part of the building as an information center for all the institutions on the National Mall.
The Board of Regents plans to hold open meetings at least once a year. The next one is expected in June. Sant said the board might adjust the format in the future.
"We don't have it exactly right," he said. "But at least we're trying to tinker with it."
If you think all of the above is a load of old bollocks then you'll be cheered by these remarks by Mr. Capitalism 1.0s recent remarks:
Murdoch upbeat about the future of newspapers
By ROHAN SULLIVAN – 2 days ago
SYDNEY, Australia (AP) — Global media magnate Rupert Murdoch says doomsayers who are predicting the Internet will kill off newspapers are "misguided cynics" who fail to grasp that the online world is potentially a huge new market of information-hungry consumers.
Newspaper companies in the United States and elsewhere are facing fundamental changes to their businesses as more people get their news from the Internet and other sources, and advertisers follow the market away from the paper-and-ink format.
Murdoch, the Australian-born chairman and chief executive of News Corp., said in a speech broadcast Sunday titled "The Future of Newspapers: Moving Beyond Dead Trees" that the Internet offered opportunities as well as challenges and that newspapers would always be around in some form or other.
"Too many journalists seem to take a perverse pleasure in ruminating on their pending demise," Murdoch said in a speech, recorded in the United States and relayed nationally by the Australian Broadcasting Corp. It was the latest in an annual ABC series of lectures by a prominent Australian.
"Unlike the doom and gloomers, I believe that newspapers will reach new heights" in the 21st century, Murdoch said.
Murdoch grew a small city newspaper he inherited in 1953 into one of the world's largest media conglomerates that now includes 20th Century Fox, Fox News Channel and Sky Broadcasting, Dow Jones & Co. and the online networking site MySpace.
He said people now were "hungrier for information that ever before" and that papers have an edge over bloggers and other newcomers because they are more trusted by readers.
"Readers want what they've always wanted: a source they can trust," Murdoch said. "That has always been the role of great newspapers in the past. And that role will make newspapers great in the future."
He said newspapers would have to evolve from the physical item to "news brands" that are delivered in a variety of ways and are flexible for readers.
"I like the look and feel of newsprint as much as anyone," he said. "But our real business isn't printing on dead trees. It's giving our readers great journalism and great judgment.
"It's true that in the coming decades, the printed versions of some newspapers will lose circulation. But if papers provide readers with news they can trust, we' ll see gains in circulation — on our Web pages, through our RSS feeds, in e-mails delivering customized news and advertising, to mobile phones," Murdoch said.
"In this coming century, the form of delivery may change, but the potential audience for our content will multiply many times over," he said.
Murdoch cited two of his most prestigious newspapers, The Times of London and The Wall Street Journal, as examples of how newspaper brands can win large online readerships.
But he stressed that even these papers must recognize that online customers will decide what news they want and how they receive it.
"To compete today, you can't offer the old one-size-fits-all approach to news," he said. "The challenge is to use a newspaper's brand while allowing readers to personalize the news for themselves and then deliver it in the ways that they want."
To capitalize on online opportunities, Murdoch said The Wall Street Journal was planning to offer three tiers of content online — free news, a subscriber-level service, and a third "premium service" of reader-customizable "high-end financial news and analysis."
Murdoch was scathing of journalists who predicted the death of newspapers as self-pitying and "misguided cynics who are too busy writing their own obituary to be excited by the opportunity."
"The newspaper, or a very close electronic cousin, will always be around," he said. "It may not be thrown on your front doorstep the way it is today. But the thud it makes as it lands will continue to echo around society and the world."
That's all great Rupert but your share price is hardly crash hot either is it?
On that cheery note, I am taking a break from Think! for at least a week, if not more. Knee operation in hospital and other more pressing matters to deal with. I may or may not be back.
Can I just conclude by telling those people who edit the simply dreadful T magazine that, as reported in their piece on Amsterdam in their recent travel edition, Amsterdam is NOT the capital of Holland; The Hague is the capital of The Netherlands. (I think we can sadly take it as a given that the headline writers weren't thinking from their desks in Manhattan about the various provinces in The Netherlands when they called that one.)
I'm running a prize competition for the Think! reader who most accurately predicts the NYT Company share price on 31 December, 2008. It's a good prize and I'll send it out in the first week of January, 2009, as well as announcing the winner (anonymous you may remain if you prefer but your entries to ihtreraders AT gmail.com please - if you want to claim the prize I will need your postal address at some point.)
And please, if you are a reader of this blog, and there seem to be lots of you, particularly in Paris, London, Hong Kong and NY according to my stats, and if you haven't yet voted on the three polls on this blog that close at the end of this year, please take a minute to do so.
By far the biggest readership, as judged by the polls, is IHT subscribers but I have data and ISP addresses which would seem to suggest otherwise.
Time to fess up and vote!
A PLACE IN THE AUVERGNE
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A PLACE IN MY COUNTRY
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A PLACE IN MY COUNTRY
For more reviews visit ianwalthew.com
Business trip to the IHT in Paris or friends and family coming to visit you? Fed up with hotels? Bring the family (sleeps 6) to superb Montmartre apartment - weekend nights free of charge if minimum of 3 work nights booked;. Cable TV; wifi, free phone calls in France (landlines); large DVD and book library; kids toys, books, travel cot and beds; two double bedrooms; all mod cons; half an hour to Neuilly and 12 mins walk from Eurostar. T&E valid invoices.
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