The well-known business sagas in Seattle are about the creation of world-beating companies like Microsoft and Amazon. Another narrative is less well known: efforts to preserve important family businesses despite adverse winds. Chief among these dramatic stories concerns the press-shy Blethen family, majority owners since 1896 of The Seattle Times.
The current publisher, fourth generation at the helm, is Frank Blethen, who does not write much and is a modest figure about town. The Blethens have had their hands full in saving the family business, even as regional dailies sink beneath the waves of digital competition. Just this week, for instance, the once-mighty McClatchy chain of newspapers, owners of 29 dailies in 14 states including The News-Tribune in Tacoma and also a 49.5% owner of The Seattle Times, has declared bankruptcy and fallen into the hands of a hedge fund.
Blethen is working to navigate strong winds rocking the newspaper business. One strategy is to pursue a deeper engagement with the community, including local funding. Another involves working to change state and national legislation to support local ownership of daily newspapers.
He’s tried the usual things. Unloading an unwise investment in Maine newspapers (where the Blethen family has its roots); selling off the headquarters building and nearby real estate and a printing plant in Bothell; cutting the newsroom staff in half; pushing for digital subscriptions (currently a respectable near-50,000); reducing sections in the weekday papers; rationing the payout to the many Blethen relatives. Blethen doesn’t have a lot of cards left to play, aside from dropping some days of the print edition or taking on additional equity partners. So he’s dealing himself an interesting new hand.
Blethen outlined his new strategy to me in a lengthy interview recently. I found him to be charged up and eager to be playing on a national stage. “I’m finally having fun, again,” he tells me, saying he’s got the energy for at least another five years steering the ship (he’s now 74). It will be interesting, and nationally important to see how well this works out — and of course critical to the civic life of Seattle. Will it work, even though the odds (as with most rescue-journalism efforts) are pretty long?
The Seattle Times is an anomaly. It is one of about five (among the top 50 metro dailies) to be locally owned and family-run, a pattern that used to be the norm in America. Two ex-Times experts I talked to both rank the Times among the top 8-10 in the country in terms of quality.
It is no easy thing to sustain family harmony over the generations, as the Blethens have done. The paper has fended off purchase offers for years, stewarding the paper as its civic legacy. The Times may be stuffy (less so now), and its socially-liberal/fiscally-conservative editorial page grates against the progressive Seattle groupthink. But it hasn’t been snapped up, gutted, or chained. Amazingly, it’s still here, showcasing some terrific reporters and editors, proudly independent. That’s rare.
But for how much longer? Now the Blethen family lacks an obvious heir, though Frank’s son Ryan, now in the newsroom, is one possibility.
One aspect of Blethen’s new strategy is to seek changes in federal and local legislation. Blethen took the lead (with significant help from Sen. Patty Murray) in crafting a new national law that stretched out pension payments, dropping an expected Seattle Times‘ bill for $12 million this year to more like $2 million, according to Blethen. The relief measure, tucked into a $1.4 trillion spending bill, was lobbied by Blethen and is artfully limited to about a dozen publications that are privately owned and which operate mainly within a single state. The pension obligation remains the same, but postponed.
That takes care (for a while) of a big problem for papers such as the Times — steep pension payments negotiated in flush times. Blethen has often said that his papers are losing money, except that they would be marginally profitable if not for pension obligations.
The pension penalty is what has just driven the minority owner of the Seattle Times, the McClatchy Company, into bankruptcy and sale to a hedge fund. McClatchy owes a crushing $124 million in pension payments this year, and is using bankruptcy protection to shed the debt. McClatchy’s stake in the Times is 49.5%, though it has long been a silent (or silenced) partner to the Blethens. (The Times faced serious problems in the Depression, when it sold the 49.5% share to Knight Ridder, later acquired by McClatchy.) A looming question is whether the McClatchy stake might be sold off, perhaps to the Times.
Blethen’s pension victory is prelude to a more sweeping initiative to change state and national laws that could make it easier for communities to gain local ownership of their dailies. Blethen has convened a national group called the Save the Free Press Initiative that is studying various changes to the laws that regulate newspapers and ownership groups. His goal is to incentivize community-funded ownership of dailies, who seem otherwise to be going to cost-cutting chains, hedge funds, or unpredictable billionaires.
Despite the arms-length traditions of press and state, the government has long encouraged the media, notably with low postal rates for newspapers and magazines, and with monopoly exemptions for merged business functions such as the Times and the Post-Intelligencer used until the Hearst Corporation bailed on Seattle. Blethen wants to provide incentives for local ownership. Also, he wants to attack the excessive control of advertising by large tech platforms such as Google and Facebook, and give newspapers (who supply much of the content for these platforms) a greater share of the profits. No easy task.
The Save the Free Press Initiative is just getting started under the leadership of the Seattle Times. Blethen listed among the participants the Vancouver Columbian and the Atlanta Journal-Constitution, as well as media reformers such as Jay Rosen of NYU, a leading advocate for community-oriented journalism. It puts Blethen on a national stage, not exactly a natural fit.
The other stage Blethen is mounting is the Seattle world of establishment figures, particularly wealthy corporations and donors. Always one to shrink from civic entanglements for fear of their compromising the independence of the newsroom, Blethen is now busily beating the bushes for contributions from local philanthropists including the Gates Foundation, the Allen Foundation, Kemper Freeman, Amazon, the Seattle Foundation, and Madrona Venture Group.
Beginning in 2013, Blethen started finding ways for dozens of these donor institutions to support projects at the Times. [UPDATED] It began with a public service campaign, the Greater Good campaign, that pushed for restored funding for higher education
It began with an “education lab” that pushed for restored funding for higher education badly cut by the Legislature during the Great Recession. The main money came from the Gates Foundation and the Knight Foundation, The main money for that campaign came from “a group including Microsoft, The Bellevue Collection, Safeco Insurance and others funneled through the Solutions Journalism Network. There are now four such community-funded projects, focused on highlighting solutions for homelessness, traffic, and education. The newest one funds investigative journalism, and this project takes the next step by soliciting community donations from ordinary citizens and readers.
These projects each typically bring in about $500,000 a year, hiring an editor, two reporters, and support staff. They are funded through the Solutions Journalism Network for Education Lab and the Seattle Foundation for the other three community-funded initiatives. This fiscal sponsorship role takes contributions and redirects it to for-profit media outlets. [UPDATED] (That’s how the Gates Foundation can give money to a for-profit newspaper.) This approach funds projects that look for ways citizens are responding to problems and “spotlights promising approaches.” That emphasis on solutions appeals to funders and helps position the newspaper in positive ways, supposedly helping to build trust in the media. “It moves newspapers closer to being funded by the community they serve,” says Blethen, a clear convert to the idea. The solutions-orientation also puts these projects a step away from traditionally more critical, independent journalism. It positions these projects, Blethen says, as a straddle between the newsroom and the editorial page.
There are firewalls to keep the reporters distant from the funders. Blethen has a long record of standing up to major advertisers and reporters and editors of these projects trust him to protect newsroom independence. Even so, this public-broadcast model of funded areas for reporting risks subtly internalizing the funders’ goals over time. It also can be tough to get second-round funding, since foundations prefer to fund projects for just a few years before their attentions change. Blethen told me only two or three funders have chosen not to re-up after a
three two-year commitment, though their disaffection was not directed at the projects themselves but at other perceived sins in the regular paper’s news coverage, he says.
This toying with a nonprofit model suggests to me that the Times, like the Philadelphia Inquirer or the Salt Lake Tribune, might be heading toward a full non-profit solution. “That’s nothing we’re interested in,” says Blethen without hesitation, adding that non-profit media “have trouble getting up to mass-market scale and are mostly aimed at elite audiences.” Blethen is fundamentally committed to finding a for-profit solution for ailing local papers.
Certainly many other papers, including the lordly New York Times, are also tapping local philanthropic support, though few are as aggressive as the Seattle Times. To go full non-profit, the Blethen family would have to be brought along to donating the business to a nonprofit corporation, as would be required.
There are some early, unproven examples of this shift from shaky for-profits to tax-deductible nonprofits. The best example is The Philadelphia Inquirer, a once-distinguished daily that had been a part of the Knight-Ridder chain, but which stumbled badly in the digital transition and was rescued by a cable-television entrepreneur who then donated the entire company to a public-benefit corporation.
The donor, philanthropist Gerry Lenfest, also set up the Lenfest Institute for Journalism, which supports journalism projects around the country, putting in extra money for “public-benefit journalism,” seeding technological innovation, encouraging diversity in the newsroom, insisting on community engagement, and employing a hands-on, venture-capital-style management. The Inquirer must break even from traditional ad sales and subscriptions. The foundation funds important steps to sustainability and community benefit and tries to give the paper runway for reinvention, much as Jeff Bezos has done with a private corporation, The Washington Post.
There are other, hybrid way-stations on the spectrum between for-profit and nonprofit models. One is a low-profit LLC, where the media property commits to clear social benefit, caps profits at 5 percent, and in exchange may receive tax-deductible donations. A full non-profit is like public broadcasting, though presumably without federal funding; and non-profit media outlets must not endorse candidates in elections.
Perhaps one of these models could be a happy ending to the long saga of Blethen ownership. It would also solve a vexing problem that hangs over the Blethen family, which is the absence of a clear next publisher. When I asked Blethen if there was a succession plan or a timetable for his passing the baton, he waved it off. Close associates predict he never will retire.
His moxie is impressive, especially considering the harrowing history of the past 20 years of media. That said, the new strategies are far from sure bets. The Blethen family doesn’t have more real estate to sell. Newsroom jobs continue to plummet nationally, down 47 percent since 2008, according to a Pew Report. It’s not easy to imagine Congress (or the large media chains) passing legislation to help pesky local newspapers. The Blethen family, one insider reports, “doesn’t have a lot of unity.”
Marvels Mike Fancher, a former executive editor for Blethen who is now helping his old boss craft a national survival strategy for papers such as The Times, “I don’t know how he does it.”