Citizen Blethen

A few weeks back I wrote a post arguing that as bad as the fundamentals may be newspaper industry wide, struggling publishers need to take a little personal responsibility for their own poor business decisions:

For while the whole industry is struggling, the financial precariousness of some of our most threatened papers is at least partially due to the awful business decisions of their owners, in particular, the incredibly over-leveraged position they find themselves in as a result of ill-advised acquisitions and other bone-headed ventures.

For The Columbian, it was the construction of a new $40 million office tower that landed a shrunken newsroom back in its old digs, and publisher Scott Campbell in bankruptcy court.  For The Times, it was Frank Blethen’s ill-fated foray into the Maine media market that has left him with a couple hundred million dollars of debt coming due, and no obvious means of raising more capital.  Both papers are currently losing money on their daily operations, but neither would be struggling to survive this particular recession if the bankers weren’t pounding at their doors.

That’s the kind of critical analysis one doesn’t often read from a medium tasked with covering itself, and so it was no surprise to be castigated in my own comment thread for daring to challenge the self-soothing meme that it’s Google and bloggers and various technical and economic macro-trends that primarily threaten the industry, rather than the poor business decisions of industry leaders themselves. But it’s an analysis I stand by based on the available facts.

And, it’s an analysis that just got a dumpster load of support in the form of an incredibly in-depth and well-sourced article in the latest edition of Seattle Business Monthly that details the Blethen family saga, and how their own dysfunction accelerated the Times’ “slide toward insolvency…”

What is remarkable about the Times Co.’s current financial state is not that it is happening—newspaper companies from the august New York Times Co. on down are struggling. But while it is true that the Seattle Times Co. has been hammered by the same forces affecting others, the management performance of the Blethens themselves during the past decade has contributed significantly to the Times’ current troubles.

“We asked questions that any one of our own publishers would have known, and Frank didn’t know the answers,” says Tony Ridder, chief executive of Knight Ridder, which owned 49.5 percent of the Times Co. from 1929 to 2006. “It was,” Ridder adds, “a weak business leadership.”

Ouch. It’s one thing when this kind of critique comes from me, the Times’ self-proclaimed volunteer ombudsman, but it’s another thing entirely when it’s coming from Bill Richards, a former Wall Street Journal and Washington Post reporter who the Times had hired for three years to cover its own JOA battle with the P-I.

Among the many disclosures culled from board meeting minutes, interviews and a Harvard Business School case study:

• In 2005, the Blethens blew off a Knight Ridder offer of $500M+ for their share of the Times Co. This offer, which was never disclosed, was solicited by Frank Blethen, according to Ridder.

• In 1997, Tony Ridder blocked the Blethens from using the Times as collateral to purchase a chain of Maine newspapers.

• The owners of the Maine newspapers manipulated the bidding for the property so that Blethen ended up bidding against himself and overpaying for it, and no one else ever made a formal bid for the chain.

• During the run-up to the disastrous 2000-01 strike, Frank Blethen took such a hard line, anti-union negotiating stance that Times labor relations chief Chris Biencourt, in a post-strike assessment prepared for the Blethen Corp., called the resulting strike “inevitable.”

• Top Times officials were so sure the unions would fold they failed to secure adequate strike insurance before the 49-day walkout.

• Frank Blethen and his cousins have used their dominance of the Seattle Times Co. to attempt to redress wrongs and injustices they felt were done to them by their own parents, including forcing the Times Co. to buy the Blethen Maine chain and providing jobs for any family member who completes college.

Richards concludes:

Blethen’s pride has repeatedly driven him into endeavors and to actions that have undercut the Times’ ability to survive and remain the family’s centerpiece. “Journalistically,” says Tony Ridder, attempting recently to explain this dichotomy, “The Seattle Times was a good newspaper. But Frank absolutely did not make good business decisions.”

Double ouch.

It’s a fascinating and, at times, somewhat sad read. It’s easy to feel empathy for a man like Frank Blethen, who says that he took his first job at the Times at the age of 21, in order to become acquainted with his physically absent and emotionally remote father, a man who never sent him a birthday card or a letter, and never called throughout Frank’s entire adolescence. It’s a tortured tale of Citizen Kane-esque proportions.

And it’s hard not to respect Frank’s goal of building family cohesion, and instilling pride in the newspaper and its values amongst the fifth generation of Blethens.

But as a businessman, that doesn’t let Frank off the hook, and I’m tired of reading his editorial board demand that individuals take the same sort of personal responsibility for our actions that the Blethen family has thus far refused to publicly take for their own.