The Impact of Public Ownership, Profits, and Competition on Number of Newsroom Employees and Starting Salaries in Mid-Sized Daily Newspapers

Article excerpt

This study of seventy-seven dailies between 25,000 and 100,000 circulation found publicly held daily newspapers produced higher profit margins than did privately held dailies. Public ownership and higher profits were associated with smaller newsroom staffs. Public ownership was positively related with starting salaries. Also, the presence of competition was positively correlated with newsroom size and starting salary. The impact of profitability on newsroom size was progressively greater for newspapers with higher-than-average profit margins.

The unexpected resignation in early 2001 of Jay Harris as publisher of the San Jose Mercury News drew attention to a newspaper industry trend that began more than forty years earlier. Harris resigned over budget cuts by parent company Knight Ridder. Part of the motive behind the cuts was the need to maintain profit levels expected of publicly held corporations by stock analysts and institutional investors.1

Although Harris' resignation surprised many, researchers have been investigating the impact of ownership on newspapers for several decades.2 More recently, research has investigated the impact of public ownership on newspaper performance.3

The trend toward increased control of newspaper companies by outside interests was one of two that reshaped the industry during the last half of the twentieth century. The other trend is the decline of competition among dailies. By 2001, fewer than a dozen markets had separately owned and operated dailies within a city, and another thirteen had joint operating agreements, antitrust law exemptions allowing two newspapers to combine all functions except the newsrooms.4 Although intracity daily newspaper competition has declined significantly, competition among dailies within counties and across county lines continues,5 as does competition among dailies and weeklies.6 However, companies' acquisition of dailies and weeklies in the same extended geographic area, called clustering, continues to eliminate newspaper competition.7 As a result of these moves, scholars disagree on the current extent of newspaper competition.8

Though there exists research about public ownership and competition, only one study has examined their relationship to newspaper performance. Lacy, Shaver, and St. Cyr found that public ownership correlated with lower newsroom budgets but that competition was a countervailing force.9 As the percentage of group newspapers facing competition from other dailies increased, the percentage of revenue devoted to the newsroom budget at publicly held newspapers increased.

The purpose of this study is to examine the impact of public ownership and competition on profit levels and then to examine how these variables relate to number of newsroom employees and starting salaries for reporters.

Literature Review

Ownership. The impact of ownership has received a great deal of scholarly attention during the last forty years, but early research was often atheoretical, concentrating on the decline of family-owned newspapers and the growth of newspaper groups.10 Recent studies have found limited differences in performance between independent and group newspapers.11 Compaine and Gomery concluded that corporateowned newspapers were as good or better than independently owned newspapers.12 However, their review did not include more recent research about the impact of public ownership on newspapers' financial performance.

During the 1990s, Deniers integrated organizational and ownership variables in examining the "corporate newspaper." He said the claim that corporate newspapers negatively affect journalism is overstated. He emphasized corporate structure but did not consider variations that might be connected to public versus private ownership.13 In a follow-up, he found that the structural complexity of a daily newspaper had a moderate correlation with use of content perceived as critical by city officials. …