ESOP Fable

     Sometimes people really miss the point.
     There’s been a lot of hand-wringing and sighing in the world of journalism since The Tribune Company announced it was filing for Chapter 11 bankruptcy. Hand-wringing and sighing actually are part of a reporter’s job description, so there’s nothing terribly new about it. I’ve known reporters who’ve been worried about their jobs for the last 30 years.
     But the worry escalated with the Tribune announcement and, with the troubled state of the news business and the troubled state of the sanity of most journalists, the real story seems to have been buried.
     If you continue reading the Tribune bankruptcy stories long enough, you eventually run across an interesting little fact. This is from the second to the last paragraph of the Los Angeles Times story announcing the bankruptcy: “In Tribune’s case, all of the company’s equity is held by an employee stock ownership plan, or ESOP. As yet, the company has not allocated any shares in the ESOP to employees.”
     And how did this come to be? Well, I won’t go into all the details (mainly because I don’t know them), but it was part of the deal when a real estate guy named Sam Zell took the company private a year ago. It seems that if the employees “own” the company, you get tax breaks.
     Except that the employees never got any say in running the company, never got their stock, and, now, probably never will.
     At tribune.com you can find a Q & A about the bankruptcy that contains this enlightening passage:
     What happens to the company’s ESOP?
     The ESOP is part of the ownership structure, so its value and role long-term will be determined in the restructuring.
     Imagine how reassured all those owner/journalists at Tribune Co. must feel now.
     So the real point of this sad tale is: If management kindly offers to let you buy the company you work for, consider investing in something else. If no one else wants to invest in you, maybe you shouldn’t either.
     
     SAVING THE NEWS BUSINESS. So if ESOPs and real estate mogul white (or is it black?) knights can’t save journalism, what can?
     Pornography.
     Think about this.
     No, not about pornography – about news.
     Whenever the business of news is discussed these days someone wrings their hands and announces they can’t figure out how to “monetize” good journalism. What all these well-meaning hand-wringers seem to forget is that journalism has never been monetized. At least not directly.
     Yeah, you plunk down a quarter or 50 cents for a newspaper, but that doesn’t pay for the reporting. What does pay for it are the ads.
     Same with TV news – the commercial sponsors pay for what you see. And those sponsors don’t pay for news – they pay for the place to sell stuff.
     News has just not been a commodity that people, for the most part, pay for. You might think it’s a good idea to have someone on the police beat day after day keeping tabs on crime and the cops, but are you going to pay for it?
     Responsible journalists for a long time have been piggybacking on crass commercialism.
     So the solution for the news business is obvious: jump on the back of a pig that people will pay for.
     Bloomberg and Dow Jones do it with numbers that investors will buy. Courthouse News does it with lawsuit summaries that law firms will buy. Muckraking local weeklies live off entertainment listings and massage parlor ads.
     So if the Tribune Company is serious about getting out the news we need, all it has to do is sell some porn attached to breaking news.
     It’s a happy ending.

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