Updates and Corrections

Because the book's deadline was in June 2003, this page will provide updates on developments since then relating to the book. It also will note any corrections.

CHAPTER 1:
Page 5: Update Alert. The Project for Excellence in Journalism annually issues a study on the state of the U.S. media. The Denver Post said the 2004 study documented a vicious cycle at work in today's news media: "Declining audiences lead to newsroom cutbacks, which reinforce the public's suspicion that news organizations are motivated by profit rather than public service." It is available on-line at The State of the News Media 2004. In the 2005 study, journalists who were surveyed said that profit pressures are hurting news coverage worse than ever. The entire report is available on-line at The State of the News Media 2005. In the 2006 study, PEJ concluded that the war between news and the bean counters was over, and that the bean counters won. That study is on-line at The State of the News Media 2006. A detailed study of online journalism is in The State of the News Media 2007. An analysis of news coverage for the year is provided in The State of the News Media 2008. The current crisis for newspaper and TV journalism is examined in The State of the News Media 2009.

Added to the "Historical Perspective of the Media" is the national and global recession, which began in 2008, steadily intensifying into 2009. It has resulted in massive cost-cutting by media companies, especially newspapers. A number of different cost-cutting measures taken by newspapers trying to survive the recession are discussed with links to full articles here. A good site for keeping up with newspaper closures is newspaperdeathwatch.com.

Page 8: The fourth designating mark in the key of the chart was inadvertently dropped. The newspaper-TV combination that should have been marked as owning a cable TV station is the second from the last in the list—The World Company of Lawrence, Kan.

The New York Times announced in January 2007 that it had sold its television stations (by then numbering nine) so it could concentrate on its print and digital properties. The TV stations accounted for 4 percent of the company's revenue, and together they had an operating profit margin of 22 percent. The TV stations were sold for $575 million (2.6 times 2006 revenue) to a private equity firm, Oak Hill Capital Partners. The Times also sold one of its two New York City radio stations to ABC for $40 million.

By the end of 2007, Dow Jones & Co. became owned by News Corp. and Tribune Co. became privately owned by Sam Zell and an Employee Stock Ownership Plan (ESOP).  

Pages 10 and 175: Update Alert. The FCC's repeal of the cross-ownership ban and expansion of the network market limit was to go into effect in early September 2003, but a temporary injunction was issued by a federal court. Also, although silent during the months of FCC consideration, several members of Congress began speaking out about the need to keep the media rules intact after the FCC vote of June 2, 2003, to repeal them. Congress objected to the FCC's loosening of the national market penetration cap for TV networks from 35 percent to 45 percent, and in early 2004 a Congressional compromise settled at 39 percent. The compromise limit would protect Viacom Inc.'s CBS Network and News Corp.'s Fox Network, both of which already are at about that level. In June 2004 a U.S. Court of Appeals decision put the repeal of the cross-ownership ban between newspapers and TV stations on hold, and told the FCC to justify or modify its 2003 decisions to repeal the ban and to increase the number of TV stations one company can own in any one market.

Any temptation to celebrate the setback to the FCC majority's plans to help big media get bigger is tempered by this sobering assessment from FCC commissioner Michael Copps, who has led the fight against relaxing ownership restrictions: "The rules were sent back to the same (FCC Commission) that dreamed them up in the first place. So it's still conceivable that we could come out with rules every bit as bad, or worse, than the ones that were sent back."

The issue was revitalized in a 3-2 vote in December 2007 when the FCC approved allowing media companies to own a newspaper and a television or radio station in the country's top 20 markets. It also approved a new set of requirements for companies seeking to own both print and broadcast properties in smaller markets, and it gave 42 permanent waivers to media companies that already own both newspaper and television stations. (News Corp. was unsuccessful in gaining a second waiver for one of the two TV stations it owns in New York City in addition to the New York Post.) Members of Congress indicated they would lead an effort to roll back the new FCC changes in 2008, although President Bush had said he would veto any roll-back.

Page 14: Update Alert. Peter F. Drucker died Nov. 11, 2005, at the age of 95. He was the author of more than three dozen business management books. The Washington Post called him a "management visionary" whose business philosophy over 66 years influenced leaders ranging from Winston Churchill to Bill Gates.

Page 17: Update Alert. Alas, Geneva Overholser and the Poynter Institute had a falling-out over a column in September 2004 and she no longer writes the weblog mentioned in the first full paragraph. Hopefully, Poynter will continue to post an archive of her past weblog columns at the address in the book. In 2008 Overholser left the University of Missouri to become director of the Annenberg School of Communication at the University of Southern California.

Page 20: Update Alert. A major swap of properties by three newspaper chains was announced in August 2005 affecting Detroit and and four other cities. The Detroit Free Press is owned by Gannett, and it will publish a Sunday edition alone that previously was shared with the Detroit News. The Detroit News is taken over by MediaNews Group and published six days a week. In return for bailing out of the Detroit newspaper rivalry, Knight Ridder takes over three former Gannett dailies in the West—in Boise, Idaho, and in Olympia and Bellingham, Wash.—while Gannett takes over the former Knight Ridder daily in Tallahassee, Fla. The Detroit JOA will continue until 2089, but now it will be between Gannett and MediaNews Group.

Pages 22: Update Alert. The paragraph about crushing debt loads turned out to be shockingly prescient in the 2008-2009 recession. A major, and perhaps the major, reason for the devastating financial problems of the newspaper chains is being attributed to their difficulty and often inability to meet the debt obligations they ran up in previous years buying media properties at high prices.

Pages 22–23: Update Alert. On Oct. 15, 2003, directors of family-owned Freedom Communications Inc. decided not to sell to Gannett and MediaNews Group, which had extended a joint $1.83 billion buyout offer. Instead, the directors picked two private equity firms to buy the shares of disgruntled family members, which would leave the descendents of founder R.C. Hoiles in control of Freedom. Family shareholders accepted the arrangement in 2004. The arrangement with the equity firms values Freedom at $1.72 billion. Then, in September 2009, Freedom filed for Chapter 11 bankruptcy in a reorganization intended to cuts its $770 million debt to $325 mlllion. Freedomown 33 dailies, 70 weeklies and other publications, and eight television stations.

Page 22: Update Alert. The divestiture of Vivendi Universal SA mentioned on this page really took off after the book went to press. General Electric Co. agreed to purchase an 80 percent stake in Vivendi's entertainment subsidiary, to be merged with GE's NBC subsidiary. The purchase price is $14 billion, including $3.8 billion in cash. The new NBC-Universal entity will include the NBC television network and its cable channels (CNBC, MSNBC and Bravo) as well as Telemundo, to be combined with Vivendi Univeral's movie and TV studios, several theme parks and its cable channels (USA, Sci-Fi and Trio). The new media giant will start out with about $12 billion in annual sales. The final hurdle—approval of the merger by the Federal Trade Commission—was cleared April 20, 2004.

Clear Channel Communications, still saddled with massive debt from its rapid expansion, announced in October 2006 that it had begun a review of "strategic alternatives." On Nov. 16, 2006, executives announced that two private equity firms had made an offer to purchase the nation's largest radio broadcaster for $26.7 billion, which includes assumption of Clear Channel's $8 billion in debt. Clear Channel had recovered from the financial performance woes described on page 22, posting quarterly profits ranging from 10 percent to more than 12 percent in 2005-2006. The investor consortium announced an aggressive sell-off of Clear Channel assets to finance the purchase, including the sale of 448 of Clear Channel's current 1,150 radio stations and all of its 42 television stations, all which are in smaller markets. However, several of Clear Channel's top-10 shareholders expressed displeasure with the sale's terms in mid-January, 2007, and in late late March 2008 it appeared that the national financing credit problems were leading the lenders to back off from the sale. Stay tuned.

In 2007, Thomson Corp. bought the British news service Reuters for $17.89 billion at the December 2007 exchange rates. Thomson assumed control April 17, 2008.

Page 29: Update Alert. Edward R. Murrow's concern over the co-existence of capitalism and journalism is explored in depth in a 2004 article by one of today's great capitalists—CNN founder Ted Turner—in which Turner concludes the pendulum has swung too far in favor of huge media conglomerates.

Turner's article, "My beef with big media: How government protects big media—and shuts out upstarts like me," is in the July/August issue of Washington Monthly and on the Web at <www.washingtonmonthly.com/features/2004/0407.turner.html>. Turner's conclusion forcefully states, "At this late stage, media companies have grown so large and powerful, and their dominance has become so detrimental to the survival of small, emerging companies, that there remains only one alternative: bust up the big conglomerates."

Page 29: Update Alert. In the years since the chart was created in mid-2003, many of the largest chains have grown larger through more acquisitions. For those wanting to keep the chart up to date, as of early 2006 these are the following changes in the number of dailies owned: Gannett, 91; Knight Ridder, 32; Tribune Co., 13; Advance Publications, 31; MediaNews Group, 46; McClatchy Company, 12; Lee Enterprises, 58 (with interest in six others); Community Newspaper Holdings Inc., 91; Morris Communications, 27; Journal Register Co., 27; Ogden Newspapers, 39.

Meanwhile, it was announced March 13, 2006, that McClatchey would buy Knight Ridder's 32 daily newspapers for $4.5 billion in cash and stock, but that it would in turn sell 12 of the dailies. Even with selling off 12 papers, the deal will make McClatchy the nation's second largest newspaper chain. In April 2006 MediaNews Group committed to buying four of the 12 dailies forn $1 billion in a joint venture with Hearst, which would make McClatchy the nation's fourth largest chain in circulation.

In August 2006, Journal Register Company announced that it would sell five dailies and a group of weeklies in New England. The company at that time owned 27 dailies (up from 23 listed in the book in mid-2003) and 366 non-dailies. In November 2006, Dow Jones & Co. sold six of its dailies to Community Newspaper Holdings Inc. for 11 times EBITDA, or $282 million in cash, leaving Dow Jones with eight dailies and 15 weeklies. Also, talks continued in late 2006 on the sale of individual papers owned by Tribune Co. or the entire company, while Copley Press announced it was considering the possibility of selling all of its newspapers except the flagship San Diego Union-Tribune. In July 2008 the Union-Tribune also was put up for sale.

2005 deals included Lee Enterprises buying the 14 dailies and more than 100 non-daily publications owned by Pulitzer Inc. for $1.46 billion in cash, increasing Lee's stable of dailies to 58, and in March 2005 Gannett finalized its purchase of HomeTown Newspapers, acquiring another daily and increasing its total of non-daily publications to nearly 1,000.

By the end of 2007, Dow Jones & Co. became owned by News Corp. and Tribune Co. became privately owned by Sam Zell and an Employee Stock Ownership Plan (ESOP).  

CHAPTER 2:
Page 40: In the third paragraph of the "First, get the right job" section, there is a typo at the end of the first line of the word "that," and the second line should read "would take" instead of "would took."

Page 41: Update Alert. Salaries for new journalism graduates improved markedly in the 2004 study after years of stagnating since the 2000 figures reported in the book, then dropped in most categories in 2006. In nominal terms, the bachelor's degree recipients in 2007 received a median annual salary of $30,000, the same as in 2006. The annual survey by the Grady College at the University of Georgia reported the following median salaries for 2007 graduates:

• online, $37,400
• consumer magazines, $32,000
• newsletters, $30,500
• public relations, $32,000
• advertising, $32,000
• dailies, $28,000
• radio, $25,000
• weeklies, $26,850
• broadcast TV, $24,000
• cable TV, $29,300

1986 to 2005 salary data is at http://www.grady.uga.edu/annualsurveys under the "graduate surveys" tab.

Page 44: Update Alert. Jack Fuller retired at the end of 2004 as president of the Tribune Company's publishing group.

Page 45: Update Alert. The problem of women being stopped in their promotion upward is known as "the glass ceiling," a term first used by Gay Bryant, editor of Working Woman, in a profile of her in the March 1984 issue of Ad Week.

Page 45: Update Alert. Richard Parsons was succeeded as CEO of Time-Warner at the start of 2008 by Jeff Bewkes. Parsons stayed on as chairman until his full retirement in December 2008.

Page 46: Update Alert. Janet Weaver resigned in late 2003 as executive editor of the Sarasota Herald-Tribune to become dean of faculty at the Poynter Institute. In 2004 she became managing editor of The Tampa Tribune. In 2007, Kelly Brewer resigned as editor of Redding's Record Searchlight to pursue freelance and creative writing.

Page 47: Update Alert. In January 2004 the magazine Editor & Publisher switched from weekly to monthly publication.

Page 60: Update Alert. In August 2005, amid accusations that his father interferred and undermined him, Lachland Murdoch resigned his publisher's position at the New York Post to move to Australia and, he said, to spend more time with his family. He remains on the board of directors of News Corp and draws income as a consultant.

Page 60: Update Alert. Christopher Galvin was forced to resign in September 2003 as chairman and CEO of Motorola Inc. The company agreed to retain Galvin for two years as a consultant at his $1.4 million annual salary plus the average of his bonus for his last three years. He still serves on the boards of several other corporations.

Page 60: Update Alert. The Fang family sold the San Francisco Examiner in February 2004 to Denver billionaire Philip Anschutz and his Clarity Media Group for a reported $20 million. He converted it into a free-circulation daily.

About seven months later, Anschutz also bought three dailies in the Washington, D.C., suburbs. He combined those papers into a free tabloid called the Washington Examiner, and in February 2005 he started delivering about 210,000 copies each day to D.C.-area addresses plus 50,000 more each day in newstand boxes. In 2006, Anschutz started the free Baltimore Examiner, but he closed the Baltimore paper in 2009.

Anschutz has filed for trademark rights to the Examiner name in nearly 70 other cities, sending a signal of his hope to establish free Examiner dailies across the country. A discussion of Anschutz's strategy can be found at www.reason.com/news/show/32178.html. Is your city among those where Anschutz has the rights to the Examiner name? A complete list can be found here. By 2008, Anschutz also had established on-line versions of the Examiner in several of those 70 cities. If there is an Examiner on-line news site in your city, it will automatically show up by typing examiner.com into your browser. If not, you will be taken to the Examiner's national site.

CHAPTER 3:
Page 71: Update Alert. Total membership of The Newspaper Guild mentioned at the top of the page continued to grow after the book's publication in 2003, but the 2008-09 recession cost it at least 2,000 members in 2008 alone in layoffs and newspapers folding. That November the Guild's newspaper went from monthly to bimonthly publication as the union faced a $200,000 budget deficit.

Page 71: Update Alert. What had been the largest union in the printing industry, the Graphic Communications International Union (GCIU), merged in January 2005 with the most militant union, the International Brotherhood of Teamsters. It now is known as the Graphic Communications Conference of the Teamsters. Industry observers expect the combined union of about 1.4 million members will become more active in organizing newspaper workers. Similarly, the National Association of Broadcast Employees and Technicians now is part of the Communications Workers of America.

Page 72: Update Alert. Regarding the third full paragraph, it should be noted that there are also Pennsylvania and Nevada dailies still existing today that originated as strike papers. The Citizens' Voice of Wilkes-Barre, Pa., is still published in competition with a Knight Ridder daily there. And the Las Vegas Sun is hanging onto life in a JOA with Nevada's largest daily, owned by Stephens Media Group. (See Page 318's note on the Las Vegas JOA.)

Page 72: Update Alert. Gannett solved its 32-year competitive battle in Green Bay, Wis., in July 2004 by purchasing the rival daily newspaper, the Green Bay News-Chronicle. The 76-year-old publisher Frank Wood said his 7,200-circulation News-Chronicle had been profitable only two years since he bought it in 1976, and the only reasonable buyer was his long-time nemesis Gannett, which owns the 56,000-circulation Green Bay Press-Gazette. Gannett closed the News-Chronicle less than a year after its purchase, on June 3, 2005, making Green Bay a one-daily town again.

Page 72: Update Alert. The IAPE union at Dow Jones & Co. is now directly affiliated with The Newspaper Guild as well as the Communications Workers of America.

Page 77: Update Alert. In the paragraph about the McClatchy newspaper chain, CEO Gary Pruitt's "economic cataclysm" apparently arrived in June 2008 when he announced that McClatchy would reduce its work force by 10 percent through layoffs and voluntary separations. For the first five months of the year, McClatchy's total revenues had dropped nearly 15 percent.

CHAPTER 5:
Page 144: Somehow the author dropped one of the types of decisions from the list of subcategories under a non-programmed decision. In addition to proactive and reactive, the list also should include Drucker's classification of the "irreversible" decision, discussed earlier on page 141.

Page 145: The acronym PERT stands for Program Evaluation and Review Technique, just as the book correctly said on the previous page.

Page 152: A typographical error in the first line of the Weighted Average Formula dropped the 1 from the subtracted investment total of $1,000,000.

CHAPTER 6:
Page 173: Update Alert. Michael Powell announced his resignation as FCC chairman in January 2005 and left the FCC that March.

Pages 10 and 175: Update Alert. The FCC's repeal of the cross-ownership ban and expansion of the network market limit was to go into effect in early September 2003, but a temporary injunction was issued by a federal court. Also, although silent during the months of FCC consideration, several members of Congress began speaking out about the need to keep the media rules intact after the FCC vote of June 2, 2003, to repeal them. Congress objected to the FCC's loosening of the national market penetration cap for TV networks from 35 percent to 45 percent, and in early 2004 a Congressional compromise settled at 39 percent. The compromise limit would protect Viacom Inc.'s CBS Network and News Corp.'s Fox Network, both of which already are at about that level. In June 2004 a U.S. Court of Appeals decision put the repeal of the cross-ownership ban between newspapers and TV stations on hold; the court also told the FCC to justify or modify its 2003 decisions to repeal the ban and to increase the number of TV stations one company can own in any one market.

Page 176: Update Alert. After settling with some states on antitrust lawsuits and being sued by others, the antitrust lawsuits still pending against Microsoft into 2004 were in Iowa, Nebraska, New York, New Mexico and Wisconsin. The last of these state lawsuits were settled in 2005, with Microsoft paying millions of dollars to each state for antitrust violations.

Microsoft's antitrust problems continue overseas, however, in an ongoing legal battle with the European Union's antitrust body, the European Commission, which won a $591.7 million antitrust settlement against Microsoft in 2004. In March 2006 the Commission declared that Microsoft was not living up to the terms of the 2004 settlement, and threatened to levy a fine of up to $2.4 million a day until Microsoft meets the 2004 requirements.

Page 177: Update Alert. In discussing non-compete covenants on pages 177-178, it should be noted that California courts will not enforce them in many industries.

Page 185: Update Alert. After the events noted in the book, The Times appointed its first editor (in effect, an ombudsman) to handle reader complaints about inaccuracies and other news coverage problems. Meanwhile, Jayson Blair was given a book-publishing contract about his experiences at The Times that was reportedly valued at a minimum of $150,000, with his book released in March 2004. Sales were poor.

CHAPTER 7:
Page 191: Update Alert. Of course, all the newspaper chains received their comeuppance in the 2008-2009 recession. Taking Gannett as a representative sample, it posted an 18.1 percent net profit in 2002. However, in 2009, Gannett logged a 60 percent drop in profit on an 18 percent decline in revenue, and Moody's reported Gannett might not be able to meet the terms of one of its debt covenants. Stock value crashed for Gannett as it did for most newspaper conglomerates: Worth nearly $90 a share in early 1994, Gannett stock declined steadily from that point to a little more than $2 for a time in early 2009 before starting a slow recovery. Other newspaper conglomerates suffered similar plunges in stock value.

Page 191: Update Alert. At the risk of sounding like I'm defending the oil companies, it should be noted that they are nowhere near the world's most profitable companies when measured as net profit rather than total profit, despite misleading news reports to the contrary. Financial writers only report total profits, and the oil companies therefore capture the headlines because they are such huge enterprises with hundreds of billions of dollars in gross revenue. However, when profit is calculated as a percentage of the total income (net profit), Microsoft remains one of the most profitable corporations in the world. For the third quarter of 2006, for example, Microsoft's net profit was 32.19 percent compared with the following oil companies: Exxon Mobil Corp., 10.53 percent; Chevron, 9.23 percent; and Royal Dutch Shell PLC, 7.05 percent. Nevertheless, financial reporters headlined the total profit figures of the oil companies rather than their profit margins, which are modest compared with Microsoft -- as well as many media companies seen in the chart on this page.

Page 193: Update Alert. John Kenneth Galbraith, the economist mentioned in the second paragraph and on the next few pages, died in April 2006 at age 97.

Page 194: Update Alert. In the third paragraph, it should be noted that Douglas McCorkindale was succeeded as Gannett CEO in July 2005 by Craig Dubow. In early 2006, Gannett announced that McCorkindale would retire as board chairman at the end of June. McCorkindale joined Gannett in 1971.

Page 194: In the second to last paragraph, the word "not" is missing. The paragraph should read, "Misfeasance and malfeasance require some privacy, he notes, but the structure of companies with team decision-making does not leave room for managers to run wild without someone finding out."

Page 196: Regarding the third paragraph, Victor Ganzi resigned as CEO of Hearst in June 2008, reportedly because trustees of the Hearst Family Trust disapproved of him leading Hearst to an increased investment in newspapers.

Page 198: Update Alert. Sinclair Broadcast Group closed its centralcasting endeavor at the end of March 2006 in Hunt Valley, Md., where it had coordinated national and local news coverage to most of Sinclair's 62 local television stations. At many Sinclair stations, all local news programming ceased with the shutdown of News Central, including stations in Milwaukee, Buffalo, Tampa and Raleigh. About 20 were provided what amounts to a broadcast wire service by a fraction of the original News Central staff.

Regarding the page's last two paragraphs, Jack Fuller retired as president of the Tribune Co. on Jan. 1, 2005. He was succeeded by Scott Smith, publisher of the Tribune, who was promoted to CEO of the publishing group.

Page 201: Update Alert. Here's the ending to this unprecedented stockholder rebellion against Conrad Black—on Dec. 10, 2007, he was sentenced to 6 1/2 years in prison for taking millions of dollars from Hollinger International Inc. without approval or disclosure to his board of directors.

After the incident in the book, the stockholder rebellion continued with the once-passive board of Hollinger International on the side of the stockholders. The board's audit committee reported that Black and his longtime top aide David Radler had taken $15.6 million in fees that never had been approved by the board. Another $15.6 million in unauthorized fees had been paid to Hollinger Inc., the holding company through which Black controlled Hollinger International Inc. As a result, Radler resigned Nov. 17, 2003, as Hollinger's president and COO and also as publisher of the Chicago Sun-Times. Black resigned Nov. 19 as CEO and then was ousted by the board as chairman on Jan. 17, 2004. The board also sued Black and Radler for $200 million in accusing them of "systematic schemes to divert corporate assets and opportunities to themselves." Immediately afterward, Black announced that he had sold his controlling shares in Hollinger to a pair of British brothers for $466.5 million. But a Delaware judge decided Feb. 26, 2004, that Black had acted in a "cunning and calculated way" to deprive other shareholders of the true value in the company, and the judge ruled therefore that the sale to the brothers was disallowed. With Black's attempt to make an end-run around the board thwarted, the board is proceeding with plans to auction off the Hollinger International assets for the benefit of all stockholders. The assets include the Chicago Sun-Times and a large group of Chicago suburban papers, as well as the Jerusalem Post (sold to an Israeli media chain in late 2004) and the London Telegraph.

In November 2004 the Securities and Exchange Commission joined the fray by filing a lawsuit against Radler and Black, accusing them of looting Hollinger of hundreds of millions of dollars for their personal gain, thus deceiving and defrauding Hollinger's stockholders.

In November 2005 Black was indicted by a Chicago grand jury on eight counts of mail and wire fraud. The indictment charged that Black and his business associates defrauded Hollinger shareholders of more than $80 million. In December 2005 federal prosecutors indicted Black and his associates on one count each of racketeering, money laundering, wire fraud, and obstruction of justice. On July 13, 2007, Black was found guilty on three counts of fraud and one count of obstruction of justice, which led to the sentencing in 2007.

It was announced in 2005 that Hollinger would sell its British newspapers but keep the Chicago Sun-Times. In January 2006 Hollinger completed the sale of virtually all of its Canadian newspapers and announced it would concentrate on operating its Chicago area newspapers. The Canadian assets were sold for $144.5 million to Glacier Ventures International. In July 2006 the name of Hollinger International Inc. was changed to Sun-Times Media Group, distancing the company from legal problems associated with the Hollinger name. Its stock ticker symbol was changed from HLR to SVN.

Page 201: Update Alert. A media stockholder rebellion erupted in March 2004 against the Walt Disney Company after years of stagnant earnings (which also led to an attempted hostile take-over by Comcast—see page 307's second update note). A no-confidence vote by 43 percent of Disney's shareholders, engineered by large institutional investors, resulted in the board stripping CEO Michael Eisner of his dual office of Chairman of the Board. Eisner, 62, later announced his retirement, and he was succeeded as CEO by Disney's president, Robert Iger, on Sept. 30, 2005, a year earlier than previously announced.

Page 201: Update Alert. The perils of selling your company's stock on Wall Street became clear to Knight Ridder in November 2005 when its largest shareholder, Private Capital Management, which owns 19 percent, declared that Knight Ridder should be sold because the stock was under-valued. It also signaled that it would support a hostile take-over of Knight Ridder by another company. That led to more of its institutional shareholders joining the call for a sale, frustrated by what they called the company's poor stock performance. On Nov. 18, a group of former publishers and editors sent a letter saying that Knight Ridder was mismanaged, and they threatened to run a slate of different candidates for the board of directors.

On March 13, 2006, it was announced that McClatchy Company won the bid to purchase Knight Ridder for $4.5 billion in cash and stock, which equaled about $67 a share. McClatchy also will assume about $2 billion of Knight Ridder's debt. Knight Ridder had about $3 billion in revenue in 2005. McClatchy then sold 12 of the 32 Knight Ridder dailies, including the Philadelphia Inquirer and the San Jose Mercury-News.

In 2006 it appeared that the Tribune Co., publisher of the Chicago Tribune, Los Angeles Times and other major dailies, might also meet the same stockholder-fueled demise that did in Knight Ridder. After months of speculation, Tribune Co.'s Board of Directors voted in September 2006 to establish a committee of directors to explore alternatives for "creating additional value for shareholders," which opened the door for possible sale of the company or a management buyout. See also notes for Page 239. In December 2008 the Tribune Company entered into Chapter 11 bankruptcy, jeopardizing its employees' ownership stake through an ESOP.

Chicago's other major daily, the Chicago Sun-Times, also went into Chapter 11 bankruptcy in March 2009 beleagured by more $608 million in debt to the IRS caused by the looting of the company by now imprisoned Conrad Black. (See Page 201 update.)

Page 206: Update Alert. Regarding the fourth paragraph, the company owning the Milwaukee Journal Sentinel did go public later in 2003, and that might have doomed the newspaper to being eventually taken over by a chain. When its stock price plummeted in 2006, speculation began that the company might be snapped up by a conglomerate.

Page 209: Update Alert. With the rise of popularity in the LLC since 2000, it would be more accurate to say there now are four models for business organization: sole proprietorship, partnership, corporation, and limited liability company.

Page 212: Update Alert. The stock-ownership vulnerability mentioned at the end of the publicly held corporation paragrah led to the take-over of Dow Jones & Co. and its flagship paper The Wall Street Journal in mid-2007. The Bancroft family, which had owned the corporation for more than 100 years, retained a 37 percent interest after taking Dow Jones public in 1963. Three months of courtship by Rupert Murdoch of News Corp. resulted in enough family members voting to sell that, combined with other shareholders eager to cash in on an offer of $60 a share (a 67 percent premium over the stock price on the day his offer became public), resulted in Murdoch being able to buy Dow Jones in late July 2007 for $5 billion. Though News Corp. has extensive holdings overseas, the only other U.S. paper Murdoch owns is the tabloid New York Post.

Page 213: All references to an LLC should be "Limited Liability Company," not corporation. Though an multi-member LLC can be treated as a corporation by the IRS or the state, depending on circumstances and depending on the state, and despite the fact that it is formed through a state's corporation division, an LLC is still considered a company instead of a corporation. Its main benefit is that an LLC can protect a sole proprietorship or partnership by limiting the owners' liability.

CHAPTER 8:
Update Alert. For a compilation of some cost-saving strategies being taken by media companies (other than layoffs, buy-outs and wage freezes) in the 2008-09 recession, go to the Plato-inspired Necessity -- Who Is The Mother of Invention.

Page 227: Update Alert. Milton Friedman died in November 2006 at the age of 94.

Page 239: Update Alert. Regarding the paragraphs on James D. Squires, it should be noted that in 2006 the Tribune Co. began facing a possible breakup or sale. The Chandler family trusts, who sold the Los Angeles Times to Tribune Co. in 2000 to become Tribune's second largest stockholder with three of the Tribune board's 11 members, became unhappy with Tribune management. The Chandler family members' feud became public in June 2006 when they called for the board to consider breaking up the company after objecting to a proposed restructuring of the company that could include a spinoff of its 26 broadcast stations. Speculation suddenly focused on the possible sale of Tribune Co. itself, a 160-year-old media conglomerate. In September 2006 an investor sued Tribune Co. alleging that the board hurt Tribune Co. shareholders by refusing to consider selling the Los Angeles Times to three Los Angeles billionaires who had expressed interest in buying the paper. Later in September the Tribune board voted to establish a committee of directors to explore alternatives for improving shareholder value, often a euphemism for sale of a corporation.

In early 2007, Tribune Co. accepted a buyout offer from real estate mogul Sam Zell in a deal valued at about $8.2 billion, with most financing coming from the company's employee stock ownerhip plan. Sale of the Chicago Cubs and other properties are being proposed to help finance the deal.  

Page 245: I have no idea what I could have been thinking in the first paragraph when I wrote that income statements are often provided on a quarterly basis. Even in my own company I calculated income statements every month. Most companies use monthly income statements, not quarterly. Mea culpa.

CHAPTER 9:
Page 267: Update Alert. Scandals involving inflated circulation totals plagued three of America's major newspaper chains in mid-2004. Hollinger International's internal audit committee admitted that circulation figures for the Chicago Sun-Times had been over-reported by at least 25 percent for the past few years. The best estimate now for the Sun-Times circulation that is reported in the book's chart is a little over 400,000, dropping the Sun-Times from the 13th largest American daily to the 17th largest. At about the same time, Tribune Co. reported circulation was exaggerated for two of its dailies, Newsday on Long Island and the Spanish-language Hoy. A follow-up report by Tribune Co. in September 2004 dropped Newsday's circulation by about 100,000, dropping that New York daily out of the list of the nation's dozen largest newspapers. Along with Tribune Co. in June 2004, Belo reported that its circulation total for the Dallas Morning News was inflated. Millions of dollars have been set aside by each of the chains to settle advertisers' complaints of fraud and deception. In October 2004 the enforcement division of the Securities and Exchange Commission investigated the circulation records of six shareholder-owned corporations: The New York Times Co., Dow Jones & Co., Knight Ridder, McClatchy, Gannett and Washington Post Co.

In a major merger of new media and old media in May 2008, Cablevision Systems Corp. purchased Newsday from the Tribune Co. Cablevision is also an Internet provider in addition to its core business of television and telephone services.

Page 281: Update Alert. Tim Berners-Lee, creator of the World Wide Web, received the first Millennium Technology Prize with its $1.2 million award at a ceremony in June 2004 for his achievement. The prize committee cited the importance of Berners-Lee's decision not to commercialize or patent his contribution to the Internet technologies. "If I had tried to demand fees...there would be no World Wide Web," Berners-Lee explained. "There would be lots of small webs."

Page 290: Update Alert. The Journal Register Co. entered Chapter 11 bankruptcy in February 2009, emerging in August 2009 after cancelling its stock and becoming a private company controlled by its lenders. The chain had a 19.3% operating profit margin (Earnings Before Interest and Taxes). The reason cited for its bankruptcy is the chain's mountain of debt, $628.4 million, which led to a 99% drop in its stock price, from $21.84 in 2004 to 26.5 cents in April 2008, resulting in its delisting from the New York Stock Exchange. By the time of its bankrupcy filing, Journal Register Co. stock was worth less than a penny. In a depressed economy, Journal Register is having trouble meeting its debt payment obligations. In February 2009, Journal Register closed or put up for sale dozens of its weekly newspapers.

Page 291: Update Alert. Liberty Group Publishing, following the failure of its attempted Initial Public Offering in 2003, put itself up for sale in August 2004. Heavily leveraged with a reported $360 million in debt from seven years of paying top dollar in acquiring 325 newspapers in 15 states, Liberty was paying out about $60 million a year in interest expense alone. Liberty lost $3.9 million in the quarter ending March 31, 2004. In June 2005 Liberty Group Publishing was sold by the leveraged buyout firm of Leonard Green & Partners to an affiliate of an investment and asset management firm, Fortress Investment Group of New York City.

Also, the Westward chain has been sold by Banc One Capital Partners and now is owned by American Securities Capital Partners. The chain's new name is ASP Westward, L.P.

In addition, another newspaper chain, Heartland Publications LLC, was founded in 2004 by investors led by Wachovia Capital Partners and the private equity firm of the Wicks Group of Companies. The new chain started fast, buying 22 newspapers from CNHI in one day in April 2004.

Page 294: Update Alert. In the Iowa map on newspaper clusters, most of the papers in clusters 8B and 17 were eventually purchased and combined into a new cluster by Rust Communications of Cape Giradeau, Mo.

Page 295: Update Alert. Mel Karmazin, mentioned in the first paragraph, resigned in June 2004 as president and COO of Viacom. He now is CEO of Sirius Satellite Radio Inc.

Update Alert. Viacom split off CBS as a separate company, effective the first quarter of 2006, and renamed Infinity Broadcasting as CBS Radio.

CHAPTER 10:
Page 304: Update Alert. In reference to the parenthetical observation at the top of the page, a long-awaited thorough revision and update of Ben Bagdikian's book was published in May 2004 titled The New Media Monopoly. Previous reprints of the classic 1983 book were limited to rewriting the preface each time. The latest edition includes seven new chapters and is updated throughout.

Page 305: Update Alert. The rankings of the top six media companies by revenue changes every year. By 2004—two years after the book's selected rankings—Advertising Age's annual report revised the rankings of the six largest media companies to be, in order, Time Warner, Comcast Corp., Viacom, News Corp.-Direct TV, Walt Disney Company and NBC-Universal. Their revenues totaled more than the next 65 media companies combined.

Page 305: There is a major typographical error by the author in the fourth paragraph. The omission of a decimal point makes the merged revenues of AOL and Time Warner appear to be ten times larger than they actually were in 2001. The total should be about $35 billion.

Page 307: Update Alert. As predicted in the book, on Sept. 19, 2003, the board of directors of AOL Time Warner voted to drop the letters "AOL" from the corporate name. The name change, to be phased in over several months, even affected the corporation's ticker symbol on Wall Street, which had been "AOL" but reverted to "TWX" with the decision. AOL continued simply as a division of Time Warner.

Page 307: Update Alert. An unsolicited all-stock buyout of Walt Disney Company by cable giant Comcast was made in mid-February 2004. Disney quickly rejected Comcast's $54 billion buyout as too low, but Comcast left the offer on the table. Finally in April 2004 Comcast abandoned its hostile take-over attempt against Disney and said it would seek to acquire a different company—perhaps Adelphia Communications.

 Page 311: Update Alert. Green Bay, Wis., should be deleted from the list of two-daily cities. Gannett bought the rival daily in July 2004 and closed it 11 months later. (See details in the second updated note for page 72.)

On the other hand, Philadelphia should be moved from the "two dailies with same owner" column to the "two or more owners" column because that rarest of media events—the startup of a new daily newspaper—occurred Nov. 22, 2004, with the first issue of a new daily with an old name in Philadelphia, The Evening Bulletin. Its arrival gives the city three dailies.

Page 315: Update Alert. Six of the nation's Joint Operating Agreements have ended since the book's publication.

Three JOAs ended with the smaller papers closed in recent years. The Birmingham, Ala., JOA was dissolved and the Post-Herald was closed in 2005, and the Cincinnati JOA expired at the end of 2007 with the Cincinnati Post going out of business. In Albuquerque, Scripps published the last issue of The Albuquerque Tribune on Feb. 23, 2008, and that JOA was dissolved.

Two other JOAs were disbanded in early 2009 alone with the weaker papers going out of business. In Denver, Scripps closed the Rocky Mountain News on Feb. 27, 2009. In Seattle, Hearst published the last issue of the 146-year-old Seattle Post-Intelligencer on March 17, 2009, but vowed to continue the daily as an online-only publication at seattlepi.com with a greatly reduced work force.

In Arizona, Gannett had planned to publish the last issue of the Tucson Citizen on March 21, 2009, but granted a temporary reprieve because of negotiations with a possible buyer. Gannett finally closed the 138-year-old Citizen on May 16, 2009.

Two other JOAs have unusual arrangements:

• At the JOA in Las Vegas, Nev., the Sun was published as a daily insert inside the Review-Journal from 2005 to 2008, and since then the Sun has switched to a twice-a-week print paper insert and a daily online news Web site.
• The JOA in York, Pa., was restructured in an extraordinary swap of properties in May 2004. Buckner News Alliance sold its York Daily Record to MediaNews Group, and MediaNews Group in turn sold its York Dispatch to one of the principal owners of the Buckner chain, Philip Buckner. The expiration of the JOA was moved up from 2090 to 2024.

Also in the table, a swap of newspapers in August 2005 resulted in Gannett and MediaNews Group as the Detroit JOA partners.

Page 317: Update Alert. In December 2005, Gannett and MediaNews Group modified their Texas-New Mexico Newspaper Parntership by returning control of the New Mexico dailies to MediaNews Group along with Gannett's former paper in El Paso. The chains also expanded the Texas-New Mexico pact to include, curiously, four newspapers in Pennsylvania.

That deal, along with MediaNews Group agreeing in April 2006 to buy four of the former Knight Ridder dailies from McClatchy and picking up the Detroit News in August 2005, has moved MediaNews in size from seventh to fourth place in newspaper chains.

Page 318: Update Alert. In reference to the fourth paragraph, see the explanation on JOAs in the Update Alert for page 315.

Page 318: Update Alert. A major swap of properties by three newspaper chains was announced in August 2005 affecting Detroit and and four other cities. The Detroit Free Press is owned by Gannett, and it will publish a Sunday edition alone that previously was shared with the Detroit News. The Detroit News is taken over by MediaNews Group and published six days a week. In return for bailing out of the Detroit newspaper rivalry, Knight Ridder takes over three former Gannett dailies in the West—in Boise, Idaho, and in Olympia and Bellingham, Wash.—while Gannett takes over the former Knight Ridder daily in Tallahassee, Fla. The Detroit JOA will continue until 2089, but now it will be between Gannett and MediaNews Group.

Page 321: Update Alert. Regarding the box on America's largest circulation magazines, AARP recently realigned its publications. Modern Maturity and some other publications by the organization have been combined to form AARP The Magazine, which is now America's largest magazine by circulation. The Bulletin was converted to a tabloid newspaper format.

Page 321: Update Alert. The publisher of TV Guide announced major changes in July 2005 that will soon drop that magazine out of the top circulation ranks. TV Guide circulation was down to 9 million by 2005, and the changes are expected to drop its circulation to about 3 million and return it to profitability. TV Guide's business model will change in that it will carry reduced TV listings and increased articles in a larger format. In 1978 the circulation of TV Guide was 20 million. In January 2009, TV Guide and the TV Guide network were sold to Lionsgate for $255 million.

Page 321: Update Alert. The Reader's Digest Association announced in August 2009 that it would enter Chapter 11 bankruptcy in a restructuring that will see the private investors group, Ripplewood Holdings, lose its ownership — with the company taken over by its debtors. Reader's Digest has $2.2 billion in debt, which will be reduced to $550 million under the bankruptcy agreement. Ripplewood bought the nation's third largest circulation magazine, Reader's Digest, and the Reader's Digest Association's other publications in 2007 for $2.8 billion. Details can be seen at http://www.nytimes.com/2009/08/18/business/media/18mag.html?_r=2&ref=media.

Page 323: Numbers are transposed in the final full paragraph. The number of commercial TV station owners actually decreased from 534 (not 543) to 360.

Page 324: Update Alert. In a reorganization to take effect in the first quarter of 2006, Viacom split off CBS as a separate company, with Sumner Redstone as the CEO of both Viacom and CBS. Viacom will focus on cable networks and CBS will focus on the broadcast television and radio.

Also, in one of the largest-ever deals in which a public company has been taken private, an investor group led by two private equity firms purchased Clear Channel Communications on Nov. 16 2006, for $26.7 billion, which includes assumption of Clear Channel's $8 billion in debt. Clear Channel had recovered from the financial performance woes described on page 22, posting quarterly profits ranging from 10 percent to more than 12 percent in 2005-2006. The new owners announced an aggressive sell-off of the nation's largest broadcaster's assets to finance the purchase, including the sale of 448 of Clear Channel's current 1,150 radio stations and all of its 42 television stations, all of which are in smaller markets.

Page 325: Update Alert. Univision Communications Inc., the largest Spanish-language television and radio station in the nation, put itself up for auction in February 2006. The bidding in June was won by a consortium headed by Los Angeles billionaire Haim Saban and four private equity firms. Mexico City-based Grupo Televisa remained in negotiations until mid-September 2006, however, before finally dropping out and clearing the way for sale of Univision to the consortium for $12.3 billion plus assumption of Univision's $1.4 billion in debt. Univision went into private ownership by the consortium with approval of the buyout in March 2007 by the FCC.

Two major newspaper acquisitions in 2007 were the purchase of Chicago's Tribune Co. for $8.2 billion by real estate investor Sam Zell, and purchase of Dow Jones & Co. and its flagship paper The Wall Street Journal for $5 billion by Rupert Murdoch and his News Corp. The deals took both of those companies private, ending Dow Jones's 44-year reign as the longest publicly-held media corporation.

A major global media buyout in 2007 was the purchase of the British news service Reuters by the Canadian-owned Thomson Corp. for $17.24 billion. The news service now is known as Thomson-Reuters.

Page 328: Update Alert. Upon emerging from bankruptcy in April 2004, a reorganized WorldCom reverted to its original name of MCI, Inc.

Page 328: Update Alert. In the paragraph about Mario Monti, head of the European Union's Competition Commission, the anti-trust regulators in all 15 EU countries eventually endorsed Monti's findings that the commission should find Microsoft in violation of EU competition rules—despite Microsoft's successful defense of its business practices in the United States. In March 2004, the Commission reached a settlement with Microsoft that imposed a fine of $613 million. It also required Microsoft to begin offering its Windows software without a media player in EU nations and to help competitors make software that is compatible with Windows. In March 2006 the Commission declared that Microsoft was not in compliance with the 2004 settlement and threatened to impose a fine of $2.4 million a day against Microsoft.

Monti was succeeded in late 2004 by Neelie Kroes of the Netherlands, and she has continued the European Union's strict views as an anticompetition enforcer.

CHAPTER 11:
Page 345: Update Alert. Media Management in the Age of Giants provides one of the first discussions of free daily newspapers, even though a few have been around since the 1970s. The start-up of about 10 more free U.S. dailies just since the book's publication, however, finally made this business model too large for the newspaper industry to continue pretending it doesn't exist. Editor & Publisher magazine published a six-page cover story on free dailies in its March 2005 issue. An earlier article on free dailies was in the Feb. 3, 2005, issue of the Christian Science Monitor titled "All the news that's fit to be given away"; it is available at <http://www.csmonitor.com/2005/0203/p12s01-ussc.html>.

Page 345: Update Alert. Free dailies started by David Danforth, as described in the second full paragraph, include the Palo Alto Daily News near San Francisco. The Palo Alto paper with its four Bay area editions serving San Mateo, Redwood City, Burlingame and Los Gatos were purchased Feb. 15, 2005, by Knight Ridder. Danforth lost a legal battle with his original partners in the Palo Alto paper in 2001, but still owned 40 percent.

Page 345: Update Alert. Regarding the final two paragraphs, The New York Times Co. announced in December 2004 its decision to buy a 49 percent interest in the Metro commuter newspaper in Boston for $16.5 million. The rival Boston Herald unsuccessfully fought the purchase because the Times already owns The Boston Globe. By 2008 Metro International S.A. published free dailies in about 100 major cities across the world, but in January of that year Metro put its three U.S. papers in Boston, New York and Philadelphia up for sale. The company reported its three U.S. papers lost $10.6 million in 2007. Interested buyers reportedly include free dailies publisher Philip Anschutz.

Page 346: Update Alert. The New York Sun celebrated its second anniversary on April 16, 2004, by announcing that circulation was above 50,000 and advertising lineage was up 90 percent from the same month a year ago However, the Sun published its last issue on Sept. 30, 2008, citing lack of adequate financing and reporting a loss of $1 million a month.

Page 359: Update Alert. Regarding Malcolm Forbes Sr., a similar example is the late U.S. Sen. Paul Simon. He became the nation's youngest publisher in 1948 at the age of 19 when he dropped out of college and bought a weekly newspaper in Troy, Ill.

CHAPTER 12:
Page 367: Update Alert. Roger Fidler is now on the faculty at the University of Missouri-Columbia.

Page 369: Update Alert. In the next-to-last paragraph, it is noted that at the time of the book's publication there were six ways to receive The New York Times—but now there are seven. The original six ways are the traditional printed paper, articles on the Times Web site, a subscription to NewsStand's Electronic Edition, the fax edition, downloads to personal digital assistants, and print-on-order service from NewspapersDirect. In 2004, the Times also began offering downloads of its articles to cell phones.

Page 370: Update Alert. The advent of mainstream Web-only news sites really came to the forefront in early 2008. As one example, the Madison (Wis.) Capital Times discontinued its daily afternoon print edition in February 2008, switching to a daily news site at http://www.madison.com/tct and only a twice-a-week print tabloid. Also, the Center for Independent Media now has six Web-only daily newspaper sites across the nation, listed with links at http://newjournalist.org, one of the most recent starting in mid-April 2008 in New Mexico a few weeks after The Albuquerque Tribune ceased publication. In addition, Philip Anschutz is setting up news sites in many of the 70 cities across the nation where he owns the rights to the Examiner name, and Google started an aggregator news site available nationwide that viewers can customize for local news.

The first national daily to announce it will go to Web-only publication and cease its print edition is The Christian Science Monitor. The paper published its last print edition on March 27, 2009. The paper now publishes daily on the Web on its site at CSMonitor.com, although it will still print a weekly edition for subscribers and a printable three-page daily news digest by e-mail. For details of the plan, click here.

Hearst Corp.'s Seattle became a Web-only paper in March 2009 (See Page 315 entry). Another daily, the Ann Arbor News in Michigan, plans to go Web-only in July 2009, and three other Michigan dailies in Flint, Bay City and Saginaw plan to publish a print edition only three days a week starting in June 2009. The Michigan papers are owned by Advance Publications.

Page 375: Update Alert. By mid-2007, The Wall Street Journal announced it had about 1 million paid subscribers to wsj.com, generating about $50 million in subscription revenue, making it far and away the most successful paid-Web operation. However, in November, new owner Rupert Murdoch announced he would switch wsj.com back into a free site, saying he could make more money from advertising with a free site than from subscriptions. The compromise was to continue wsj.com as a subscription site but to offer short previews of its stories as free content.

The New York Times ceased its experiment with paid access to its Web site on Sept. 18, 2007. It had been charging for access to columnists and some other parts of the site. Its experiment with paid access had resulted in 227,000 Web subscribers. For a discussion of the paid-Web business model, click here.

Page 380: Update Alert. Regarding the electronic paper being researched by Philips Electronics NV, the company announced in late 2003 that it will start making a test line of bendable electronic displays for release in 2006. A few weeks later the U.S. Army announced that it would spend $43.7 million over the next five years on a project at Arizona State University to develop flexible electronic displays for soldiers in the field.

Page 383: Some other relevant breakthroughs: 1955, Zenith introduces the first wireless TV remote control, ushering in the wireless age; and 1976, Kodak produces the first working prototype of a digital camera.

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