Chris Mackin, of Ownership Associates in Cambridge, asked that I post to the MGP Forum his contribution to the thread about ownership and sustaining of news organzations of the future. Note the last paragraph, which is all the more relevent given news today that Tribune Company may be entertaining bids for sale of individual newspapers.

Date: Tue, 31 Oct 2006 15:35:52 -0500
From: Chris Mackin
To: 'Bill Densmore'
Subject: RE: [MGP-Forum Announce] Sustaining,
organizing news organizations of the future

You invited me to speak to your UMASS-Amherst conference this summer about ownership issues knowing that I had an angle here. As you know, I am partial to broad based employee ownership as an ownership structure - and have been professionally engaged in the field for over 25 years. My colleagues at Duff & Phelps and I have spent a fair amount of time since last winter exploring these ideas on behalf of The Newspaper Guild-CWA. hat union hired us to explore these ideas around the break up of the Knight Ridder chain. We came close to a deal in Philadelphia and there are others that may still come to pass.

Of the preferred structures you list below, you mention Co-op ownership which is, of course, a form of employee ownership. It is the oldest form of employee ownership in the United States, literally reaching back to two 19th Century labor organizations, the Knights of Labor and the National Labor Union, that advocated for cooperatives as an alternative to then emerging industrial capitalism. In the last quarter of the 20th century, the initiative in this field was largely taken over by the work of Senator Russell Long of Louisiana and his followers who created ESOPs or Employee Stock Ownership Plans, a more legally complex form of employee ownership which today involves over 11,000 companies and 10 million workers – see HYPERLINK "http://www.nceo.org/"www.nceo.org. ESOPs are not perfect – they are not as immediately and clearly democratic as cooperatives for one but they are familiar and they are particularly effective as “transitional” mechanism that enable business owners to sell over time to employees. Cooperatives, by contrast, are typically used in start-up situations, not with established companies.

There is a lot more that could be written about this and I have some ideas of where people could dig further should they so desire but to speak to one of the more philosophical points your discussion has raised … one of the reasons I am partial to employee ownership is that one generally finds in a group of employees – managers and rank and file alike, the kind of natural distribution of value perspectives on the news and on ideological questions one would hope to have at a newspaper. One could argue I suppose that the population of a typical newspaper will contain more liberal leaning types than elsewhere but still if the measure we are using is not the values of one or two people at the top but the employees as a group the shades of difference that any large group contain will be relevant, useful and in some rough way representative of the kinds of values that can endure the occasional “hot spots” and controversies that can roil a community.

By featuring this notion of employee groups as roughly “representative” of public opinion I also do not mean to suggest that editors at such papers would be polling employee shareholders regularly before making editorial decisions – though occasional polling would probably be a good idea. One canard that the employee ownership field has fortunately overcome through over 25 years of hard work is this notion that if a company is employee owned then it is destined to be inefficient. The research at HYPERLINK "http://www.nceo.org/"www.nceo.org and elsewhere is readily available to demonstrate that is not the case. Employee owned companies are in fact more efficient (and profitable and productive) than conventionally owned companies. It is possible in other words to imagine a publisher with freedom to do his or her job and editors able to do the same. The fact
that
they are in some real sense working for the people in the building, the people who report to them, can be a very good thing for business and for democracy.

The only paper of any size (roughly 2,300 people) that presently functions as an employee owned newspaper is the Omaha World Herald. Their editors have been quoted in some recent stories saying some interesting things about how they enjoy the independence that comes through employee ownership. The Bureau of National Affairs, which is organized by the Newspaper Guild, is also an employee owned media company that employs about 1,800 people. The Newspaper Guild-CWA remains a leader in pushing these ideas into the future of media conversation. I would suggest that you reach out to Linda Foley, their President and Bernie Lunzer, their Secretary-Treasurer to talk to them about these ideas. They came very close to assisting with a combined “worker friendly” private equity/employee ownership structure for the Philadelphia Inquirer and Daily News this past summer. And there are a lot more papers that are about to change hands …

Regards,
Chris

Christopher Mackin
Ownership Associates, Inc.
122 Mt. Auburn Street
Cambridge, MA 02138
http://www.ownershipassociates.com