>>THE LOCAL SPIN

Quick multiple choice test: The main purpose of an American newspaper is:

(a) To watchdog government and other powerful institutions, keep readers informed so they can participate as citizens, and to cultivate civic life.

(b) To make as much money as possible.

We would all hope that for most newspapers, the answer would be (a). We know that although they function as businesses, newspapers perform a unique role in our democracy. The rights granted by the First Amendment to the Constitution come with responsibilities to serve the public interest, or so we assume.

For Knight Ridder, in recent years, the answer had become (b).

This does not mean the people running the second-largest newspaper chain in the country were callous greedheads. A slew of Pulitzers and other honors point to the fact that the company recognized a mission beyond the bottom line. But ultimately, Knight Ridder was forced to honor a deeper commitment to make money—even if that meant destroying itself.

What doomed Knight Ridder was a decision that was made in 1969 by the great newspaper man John S. Knight, who had inherited the Akron Beacon Journal from his father, and then purchased several other regional newspapers. When John S. Knight took his small chain public and sold stock on Wall Street, almost 40 years ago, it was seen as a smart business move. It gave his papers access to capital and resources to grow. Eventually, it allowed him to forge a merger with Ridder Publications, which had followed a similar trajectory.

But Knight had made a decision that would ultimately lead to his company’s undoing. The corporate structure of Knight Ridder was unlike that of most other public newspaper companies. The New York Times, Inc., the Chicago-based Tribune Company and other newspaper corporations reserve a class of stock for family members, or others involved in their newspapers’ management, protecting them from the demands of Wall Street. Knight—hungry for investors—did not do that. That was a tragic mistake.

As a publicly traded corporation, Knight Ridder’s primary responsibility was to its investors. If the company put the public interest ahead of the demands of profit, it would be in violation of the fundamental principles of corporate capitalism. If Knight Ridder could make more money by cutting staff, those cuts would be made. If it could make more money by selling off its assets than by publishing newspapers, it would have to sell.

Wall Street’s demands had been hurting Knight Ridder for a long time before the investment banker Bruce Sherman destroyed the company. Ten years ago, just before Knight Ridder bought the Monterey Herald, the company slashed its editorial budgets in an effort to satisfy investors. Tom Fiedler, the political editor at what was then its flagship paper, the Miami Herald, said that was “the first time it became unmistakably clear that Knight Ridder was a corporation interested in protecting profits first and a news organization interested in the ideals of journalism second.”

He then made a comment that rings true today: “It is as if we made a Faustian bargain when we went public. And we didn’t realize the implications of that bargain until now.”

Just recently, Knight Ridder’s debt to the devil of Wall Street came due, and the company was forced to sell off all of its newspapers. The McClatchy newspaper group, based in Sacramento, bought the chain, but immediately put 12 newspapers, including the San Jose Mercury News and the Herald, back on the auction block.  

There has been much speculation about who will come to own these newspapers. Gannett, the nation’s largest newspaper chain, is listed as a possible buyer, as is MediaNews Group Inc., a company based in Denver and run by William Dean Singleton. As reported in these pages, the Newspaper Guild, a journalists’ union backed by an imaginative financier, is also in the running.

Here at the Weekly, we have been critical of the Herald. For journalistic reasons, we can find fault in its coverage of crucial local issues. As a competitor, we bemoan what we sometimes see as predatory business practices.

But as members of the Monterey County community, we support the Herald and its efforts to survive as a daily newspaper, striving to fulfill the mission of American journalism.

If Gannet buys the Herald and its brethren, we will all likely see the paper diminished. If Singleton gets the Herald, we will likely have a lot more to complain about.

The Newspaper Guild deal may be a long shot, but for those of us who hope to see the Peninsula’s daily thrive and improve, that’s our best bet.

Friends and competitors tell us that there is a Web site, savetheherald.com, where we can register this hope.