Bottom Line: It’s Not Just About the Bottom Line
An upside of sacrificing a job on the altar of principle over profit is that, on a mid-work-week midday, a man can throw on an apron and dish up some quiche.
“Help yourself,” Jay Harris, the now-famously-ex-publisher of the San Jose Mercury News, said the other day, tossing salad. It was a month, almost to the day, since the 52-year-old newspaper executive quit his seven-year job rather than meet profit goals that were being sought by his paper’s parent company, Knight Ridder Inc. His teenagers were out, his wife was at a foundation committee meeting. His kitchen was huge.
An upside of heading Silicon Valley’s hometown paper during a boom is that you can buy a million-dollar-plus home such as this one, on 2 1/2 forested acres of rustic hillside.
A downside, of course, is what happens when the boom goes away.
Harris resigned March 19, in the face of a $2.5-million drop in help-wanted advertising at his paper even as his parent company had promised Wall Street that profit margins wouldn’t fall. Until then, he’d been virtually unknown outside the clubby world of newspapers. Colleagues viewed him as a loyal defender of Knight Ridder’s chairman and chief executive, P. Anthony Ridder. None would have predicted that, as he puts it, the “magnitude and momentum” of the chain’s profit motive would drive him to such a public response.
His dramatic departure--intended, he later said, to forestall what he saw as crippling cuts in his paper’s budget--resonated in an economy that has felt whipsawed by the stock market’s demands. It became national grist, from the Internet to the talking heads of PBS’ “NewsHour.” Supportive e-mail from politicians and neighbors and fellow journalists poured in.
“The reaction has been much more than I’d ever expected,” Harris marveled over lunch in the aftermath of the uproar. Harris, who is African American, is tall, bespectacled and balding. Born in Washington, D.C., he rose from the ranks of East Coast reporters to become one of the newspaper industry’s more influential minority voices. His manner was easy, but when his ex-employer was mentioned, he flushed and crossed his arms and chose his words carefully.
This month, those words elicited a standing ovation from the American Society of Newspaper Editors. In coming weeks, he’s slated to speak at Columbia, Harvard and Northwestern, where, earlier in his career, he served as an assistant dean at the journalism school. Several Bay Area colleges, he said, have broached the subject of his future employment, which he has put off mulling until later this summer.
“Right now, all I know is that I’m not going to be in newspapers in the immediate future,” he offered, “because we don’t want to move, and there’s only one Bay Area paper I’d work for, and that’s the Mercury News.”
His son is grown, and his two daughters’ college expenses “are taken care of.”
“Put it this way,” Harris said, “we aren’t living paycheck to paycheck.” Later, however, he acknowledged that the emotional cost of his decision still hasn’t fully hit him. “I’m still waiting,” he said, “for it all to sink in.”
Harris started his career in Delaware, moved up to editor and spent a few years in academia before becoming a national correspondent for Gannett News Service in Washington, D.C.
Then came a stint as the executive editor of the Philadelphia Daily News, during which he caught the eye of Ridder, who brought him into the corporate ranks and became his mentor. When Ridder determined in 1994 that the idealistic news writer had become businessman enough to finally lead his own paper, he gave him the Mercury News, where Ridder himself had once been publisher.
“Those were real glory days,” Harris said, smiling.
Silicon Valley was just beginning to boom. Advertising ballooned. Journalists tend to prefer the morally superior to the fiscally comfy, but Harris got to have it both ways. The Mercury News was racking up 29% profit margins--well over the industry average--even as he launched expansion after expansion: foreign language editions, a small army of business and technology reporters, a highly publicized push into San Francisco. Every new hire was extra-expensive due to the high housing costs in Silicon Valley and competition from dot-coms. Between 1995 and 1999, the newsroom staff rose from 376 to 415 and the editorial budget increased from $20.6 million to $28.1 million. It was a 10% increase in manpower for a 36% budget increase.
Then things changed. “It began to become clear, oh, by late January or early February that this was likely to be a significant downturn,” Harris remembered. Worse, he said, attitudes within Knight Ridder had hardened considerably.
In January, the company had told Wall Street analysts that, despite rising newsprint costs and the slumping economy, it would increase its overall profit margins within three years from slightly more than 20% to the mid-20% range. A company that wants to maintain its $54-a-share stock price breaks such promises at its peril. Harris said that never before in his years at Knight Ridder had he seen such a focus on hitting a profit target.
“We were moving too fast,” he said.
He would not specify what trims and margins his bosses demanded, but an e-mail from the president of the company’s newspaper division stated that the 22% to 29% range the Mercury News had earned in the past would have to be increased. This couldn’t happen, Harris said, without severe cuts. He warned of layoffs, creating a predictable uproar in the newsroom, where a paper’s commitment to informing readers is viewed as directly proportional to the number of experienced--and thus expensive--reporters it deploys. Sources said, and Harris confirmed, that when Knight Ridder executives suggested that he just quietly cut in other departments--circulation, for instance, or advertising--he refused, saying that it was unfair for the majority to suffer for a minority of his 1,700 subordinates.
Finally, at 3 a.m. on the Saturday before he resigned, he said, he decided that leaving “was the only way to slow the process down.”
To editors at other papers, Harris’ departure was the principled act of a corporate martyr. But those more attuned to the boardroom viewed it as either a sanctimonious cop-out or an act of stunning naivete.
“Impact? There will be absolutely none. Shareholders have no interest in journalism,” scoffed the head of Stanford University’s graduate journalism program, Theodore Glasser, to the San Jose Business Journal.
“I’m happy to be quoted saying I’m proud of this man I’ve never met for resigning on a principle that I certainly embrace,” said Washington Post Associate Editor Robert G. Kaiser, whose book on the pressures facing the news business, due out in December, is being reworked to include a section on the Harris incident. Kaiser refused to confirm persistent rumors that the book will be sharply critical of Ridder’s emphasis on profits over journalistic excellence.
“But,” he said, “as I’m sure Tony Ridder will tell you, Tony is running a publicly traded company whose concerns are different from those of the publisher of the San Jose Mercury News.”
In fact, Ridder has said little. He has declined virtually all requests from non-Knight Ridder media outlets, including The Times. But after Harris’ ovation from the nation’s editors, the embattled CEO, who has developed a reputation as a determined cost-cutter, defended himself and his legacy in a Mercury News op-ed piece.
“I was as surprised by Jay Harris’ resignation as anyone,” wrote Ridder. “I learned of it . . . a few minutes after he announced it to the Mercury News staff via e-mail. He came to the Knight Ridder office, stayed only a few minutes and made clear that he did not wish to discuss the issue with anyone on the corporate staff--including me. That, too was surprising; I was in my office at the time. To this day, I still haven’t heard from him.”
Ridder denied the “misperception” that he had “mandated” newsroom layoffs or increased profit margins. His only instructions, he wrote, were that Harris’ margin not fall as low as it had in some prior years. Other than that, he wrote, what and whether to cut were Harris’ decisions.
“We expect that by the time someone rises to the publisher’s rank, he or she will have come to terms with accepting responsibility for simultaneously managing revenue and expenses while creating excellent newspapers,” Ridder wrote.
“I scanned it,” Harris said coolly of his ex-boss’s essay. But when asked to address it, he replied, “I don’t want to get into a public debate.” He still hasn’t spoken to Ridder, he said, though “we will talk.” The new publisher of the Mercury News, Joseph Natoli, was recently a guest at his house, he said.
He is, he said, at peace with his decision. “Part of the reaction expressed in the literally hundreds of letters and e-mails I’ve received is that too few people today actually act on their principles,” he said. “It’s one thing to talk the talk, but another thing entirely to walk the walk. . . . “
An upside, he said, is that his resignation seems to have worked. After his departure, Mercury News editors announced to the staff that Knight Ridder had lowered the paper’s profit targets. Since then, the paper has axed its Sunday magazine, frozen jobs, cut overtime, scaled back its glamorous San Francisco effort and adjusted its aspirations to a less-golden present. But the newsroom remains unscathed--for now.
