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James Fallows: Two-Class Voting and the Great Newspaper

James Fallows writes about public trusts and public corporations:

James Fallows: The fundamental problem with today's American press is a mismatch between its economic basis and its public function.... [T]he press has cultural, social, and political effects beyond the purely commercial. But its managers are being forced to make decisions on the same focused quarterly-returns basis that guides choices at Merrill Lynch or General Motors. Sometimes those pressures for maximized return (and rising stock price) make news organizations more efficient. But in general they weaken or destroy the parts of news systems that affect people in any role other than as shareholders - that is, as readers, viewers, voters, citizens.

The point is not to rehash that argument. It is to say that the "two-class" shareholding structure that undergirds America's three best newspapers (the New York Times, the Washington Post, and the Wall Street Journal) was explicitly designed to permit decisions to be made for non-economic reasons. If you want management to concentrate strictly on raising the share price, you don't need any special ownership structure. Financial markets will insist on that anyway. The only justification for "Class B" shares giving special voting power to the Sulzberger family at the Times, the Graham family at the Post, and the Bancroft family at the Journal is the assumption that the families will weigh other factors in deciding how the news operation should be run.

Thus the future of these news organization rests on the hope that the later generations who inherit controlling shares will acknowledge the concept of "enough" money. If they want the most money possible out of their inheritance, they'll eventually view the newspaper as just another asset -- and destroy it. (See the tragedies of the Chandler family of Los Angeles, the Bingham family of Louisville, etc.) If no amount of money can be "enough" -- if, to be plain, people who are already rich are greedy to be richer still -- they debase institutions on which the rest of us depend...

One would think that the Wall Street Journal editorial page since a time before the memory of man, or the Washington Post editorial board since 2000, or the New York Times's Whitewater and Iraq coverage would give Jim a little pause. Freedom from market discipline is not enough; freedom from wingnuttery is needed as well.