NewsInc. Logo Jan. 19, 1998, Vol. 10, No. 2

SUPERB ’97 AIMS BIG BUCKS AT INDUSTRY LEADERS' POCKETS

On paper, the big year on Wall Street has yielded sizeable returns

As Frank Sinatra might have sung, it was a very good year.

If you were a newspaper company stockholder, 1997 showed you a pretty good time. If you were a newspaper company chief executive, you might be up there singing on stage with the real Chairman of the Board.

Inside, Correspondent Marion J. Love outlines how stock options for the publicly traded companies' CEOs made these men rich – on paper, at least. With an average stock price increase of 42.2 percent for the companies we follow, top executives who were partly remunerated in stock options garnered impressive multimillion-dollar packages (should they elect to liquidate the options).

The real issue here, though, is whether these packages are out of line with how newspaper company leaders should be compensated. There are two ways to look at the issue:

  • In terms of compensation packages of similarly sized businesses, it appears that newspaper company executives are fairly rewarded. There's no question that by using stock options, the boards of directors of the businesses tend to penalize newspaper executives when things – whether in their control or not – go badly. Conversely, when things are good – whether the chief executives had anything to do with that good or not – the top dogs make money.

  • In terms of the disparity between the pay scale of a newspaper leader and a newspaper reporter, it appears that either the top executives are overpaid or the reporters are underpaid. For many of the companies we write about, it isn't unheard of to find that starting editorial salaries at their smallest papers are as low as $350 a week.

    When newspaper firms are returning so much to stockholders and rewarding top executives so well, isn't it time to rethink our overall payment policies?

    The story is probably apocryphal, but it's alleged that a decade ago, when the futurists were saying that the telephone companies were going to get into the information business, someone pointed out to Raymond Smith, chief executive of Bell Atlantic, that he didn't have any reporters on the phone company's staff.

    Smith, it's said, pulled a New York Newspaper Guild contract out of his desk drawer and showed his questioner the pay scale page. The kicker: "We have secretaries who make more than this."

    If newspapers don't start rewarding our "content creators" – the reporters, editors, photographers and artists – the same way we reward our leaders, we may not have a business that rewards anyone.

    ***

    Also inside is Senior Editor Pete Wetmore's report on downsizing at the New Century Network and InfiNet.

    The InfiNet situation – getting the company out of the content creation business – is pretty straightforward. Less so is the NCN situation. At least one media industry analysis summed up the layoffs of seven people – less than 10 percent of its total workers – as the "failure" of NCN. Though there's no question that NCN has had a rough time of it, or that many within its nine-member consortium are unhappy with its direction, I think it's a little early to concede the death of the entire enterprise.

    I talked with quite a few NCN-member new media executives who didn't like the NewsWorks concept – where bits and pieces of members' sites were uploaded to the NewsWorks server – and it's obvious that those voices were finally heard. But there is definitely a place for a consortium of newspaper web sites, specifically in the arena of advertising sales and technology exchange.

    As the NewsWorks technology is modified to be used by members on their individual sites and the organization pushes the concept of newspaper-originated news web sites, New Century Network has the potential to help the industry move into new media. But, don't forget how internally contentious your organization is about new media: NCN has nine strong voices shouting at it.

    With all that, to have survived at all proves that NCN also had a good year.

    – David M. Cole

    Inside ...

    From NEWSINC., Jan. 19, 1998, Copyright © 1998, The Cole Group. All Rights Reserved.

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