Sunday, July 20, 2008

New York Times v. Sullivan: Should the NYT Go Private?

The New York Times reports earnings on July 23, 2008. Its stock price has declined as younger readers eschew newspapers for the internet. The NYT's reporting itself is still stellar--its recent reports on the economy have been fantastic, and its charts and easy-to-read graphs showing various economic statistics are unparalleled. Many outlets use the NYT's links or re-publish their articles and statistics, so demand isn't the NYT's problem. The real issue is monetization: "How does the NYT maintain its dual roles as a pillar of news reporting, which requires wide distribution, and as a public corporation, which requires more cash flow to please shareholders?" Both aims are not necessarily synonymous, because free content is more widely distributed, while paid content reaches a smaller audience. These conflicting aims render the NYT heavily dependent on advertising dollars, which are being shifted more to Google and other internet outlets. If Google's recent earnings results are any indication, the NYT may have a difficult future. Still, cash flow is not everything, and the NYT's reputation is still gold in terms of goodwill.

It is vitally important to remember that the NYT is directly responsible for one of the defining legal principles of our country--free speech. Every American should read Justice Brennan's opinion in New York Times Co. v. Sullivan, 376 U.S. 254 (1964):

The First Amendment, said Judge Learned Hand, "presupposes that right conclusions are more likely to be gathered out of a multitude of tongues, than through any kind of authoritative selection. To many this is, and always will be, folly; but we have staked upon it our all." United States v. Associated Press, 52 F. Supp. 362, 372 (D.C. S. D. N. Y. 1943). Mr. Justice Brandeis, in his concurring opinion in Whitney v. California, 274 U.S. 357, 375 -376, gave the principle its classic formulation:

    "Those who won our independence believed . . . that public discussion is a political duty; and that this should be a fundamental principle of the American government. They recognized the risks to which all human institutions are subject. But they knew that order cannot be secured merely through fear of punishment for its infraction; that it is hazardous to discourage thought, hope and imagination; that fear breeds repression; that repression breeds hate; that hate menaces stable government; that the path of safety lies in the opportunity to discuss freely supposed grievances and proposed remedies; and that the fitting remedy for evil counsels is good ones. Believing in the power of reason as applied through public discussion, they eschewed silence coerced by law - the argument of force in its worst form. Recognizing the occasional tyrannies of governing majorities, they amended the Constitution so that free speech and assembly should be guaranteed."

Thus we consider this case against the background of a profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials.

To summarize the decision, American libel law after the NYT case made it very difficult for a public figure to sue someone for criticism. Europeans and Singaporeans, in contrast, sacrifice free speech for more civility. This remarkable difference would not exist had the New York Times not chosen to fight a libel judgment all the way to the Supreme Court. Today, one wonders if the NYT would have authorized such legal fees for the sake of principle. Would shareholders today agree to receive fewer dividends if it meant spending money to establish a long-term legal principle? The more I think about it, the more I believe the New York Times and newspapers should go back to being privately held so they can focus on long-term trends rather than short-term shareholder whims. Perhaps the earnings release on July 23, 2008 will force that result if it is bad enough. If earnings are good, we win because NYT's stock goes up; and if earnings are poor, we win, because we might get a newspaper more focused on reporting, not pleasing shareholders.

Indeed, America's Founders--as much as they hated their newspapers (just ask Alexander Hamilton, whose affair was exposed by the media, making him the original Bill Clinton)--intended media outlets to be the "fourth pillar" of government, keeping it in check. But as media have consolidated operations and focused on profit, it is hard to see any real criticism of government policies. Having hundreds of channels and outlets competing for our attention has fractured the public and its ability to engage in deliberative democracy. Keith Olbermann and Jon Stewart aside, where are our modern-day Edward R. Murrows? It is a sad and telling commentary on today's media that the most critical pundits of government policies are a former sports newscaster (Olbermann) and a comedian (Stewart). As good as they are, we deserve better.

Here are some excerpts from the Supreme Court's decision:

Justice Black:

[S]tate libel laws threaten the very existence of an American press virile enough to publish unpopular views on public affairs and bold enough to criticize the conduct of public officials...We would, I think, more faithfully interpret the First Amendment by holding that at the very least it leaves the people and the press free to criticize officials and discuss public affairs with impunity...I doubt that a country can live in freedom where its people can be made to suffer physically or financially for criticizing their government, its actions, or its officials...An unconditional right to say what one pleases about public affairs is what I consider to be the minimum guarantee of the First Amendment.

Justice Goldberg is even better:

In my view, the First and Fourteenth Amendments to the Constitution afford to the citizen and to the press an absolute, unconditional privilege to criticize official conduct despite the harm which may flow from excesses and abuses...The theory of our Constitution is that every citizen may speak his mind and every newspaper express its view on matters of public concern and may not be barred from speaking or publishing because those in control of government think that what is said or written is unwise, unfair, false, or malicious. In a democratic society, one who assumes to act for the citizens in an executive, legislative, or judicial capacity must expect that his official acts will be commented upon and criticized...Our national experience teaches that repressions breed hate and "that hate menaces stable government."

Justice Brandeis from WHITNEY v. PEOPLE OF STATE OF CALIFORNIA, 274 U.S. 357 (1927) (a Bay Area/Alameda County trial case):

Those who won our independence believed that the final end of the state was to make men free to develop their faculties, and that in its government the deliberative forces should prevail over the arbitrary. They valued liberty both as an end and as a means. They believed liberty to the secret of happiness and courage to be the secret of liberty. They believed that freedom to think as you will and to speak as you think are means indispensable to the discovery and spread of political truth; that without free speech and assembly discussion would be futile; that with them, discussion affords ordinarily adequate protection against the dissemination of noxious doctrine; that the greatest menace to freedom is an inert people; that public discussion is a political duty; and that this should be a fundamental principle of the American government.

1 comment:

Anonymous said...

With the downsizing of newsrooms, it makes my job a lot harder as a PR professional to pitch stories.

Last week, a major Bay Area newspaper told me that they wouldn't cover my client's story because they simply didn't have the staff to cover it.

Because newspapers now operate with bare bones staff, readers are not given the same array of news they received in the past. This impacts the quality of the news and impacts our community. In the end, this creates a lose-lose situation for everyone.

Newspapers need to find innovative ways to generate online revenue. Because if they don't, they surely will become relics of the past.