If Malin Burnham has his way, San Diego would have a new model for how journalism is done here. Burnham, a longtime San Diego philanthropist, and a group of supporters is interested in creating a nonprofit that would own the U-T San Diego newspaper. The paper would continue to run as a for-profit enterprise. He first confirmed his interest in the paper to the San Diego Reader over the weekend. If he’s successful, the U-T would have its fourth owner since 2009.
I spoke with Burnham Monday afternoon. He insisted any deal is far from guaranteed, and the next step is getting approval from the Internal Revenue Service for his plan. He said U-T’s current owner, developer Doug Manchester, has encouraged him to do that.
“We don’t have a handshake or an agreement,” Burnham said. “We feel we can go back and get an agreement.”
Manchester told Voice of San Diego in an email that a lot of the discussions were premature.
“Actually no comment as we have zero deal at this time!” Manchester wrote. “I have always admired and respected all that Malin has done for our community and continues to do. If Malin gets the necessary approvals then we will talk but we are a long way from any type of transaction if any will ever materialize.”
Manchester said that he respected and appreciated Burnham’s core philosophy, which Manchester described as “community before self.”
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If a conventional newspaper cannot make a profit, ownership by a non profit entity is not going to improve the economics one little bit. In fact, it probably makes it more difficult to obtain short term credit needed to buy newsprint, fund capital investments in printing and distribution, etc. So the real question is whether Malin Burnham can create an editorial strategy that is more appealing to a wider variety of paying readers. Older people read the paper. They like holding it in the morning. They participate in civic dialog. They vote. Younger people engage in dramatically different ways. Perhaps a newspaper needs to adopt a Yelp model of "scoring" news stories, editorials, etc. In any event, its critical that we have an independent investigatory body in San Diego or the politicians and bureaucrats are going to rob what's left of the store they have not already absconded with. Vote "Yes" on any acquisition that leaves the UT in local hands, concerned with local events, and tied to a gentleman who has given most of his life to making this a better place to live (and who knows how to find Tijuana by land, air and sea.)
Ken Doctor (newsonomics) wrote about this particular californian phenomenon today.
Looks like it's not just SD. It starts to get interesting when you consider that from Ventura County to Tijuana we have newspaper ownership in flux. He even hints at the possibility of there being an opportune time for the LA Times to landgrab from SD and OC as a result. At least, that's how I read it.
Worth checking out.
Also, @Liam Dillon gets a shout out several times in the article for his coverage here.
@Liam Dillon I neglected to also link to the Bay Area non-profit article also via Nieman Lab today.
Also, Liam added a nice foreword to this VOSD article when it got republished by Nieman Lab yesterday. The foreward reads like a summary of his responses to commenters (which is why we're here, amirite?).
@voiceofsandiego once the dust settles would be interested to know how big a bath Papa takes on his UT investment.
@gumballgary @voiceofsandiego Right - It seems that the U-T under Pappa has already been a "non-profit" for quite some time.
I thought the flight of subscribers from Papa Doug's political tract had already made it a non-profit enterprise, but then I remembered all the journalists no longer in the payroll and thought, "maybe not."
We would resume subscribing if/once Manchester is no longer involved in the U-T.
The 501 C 3 non-profit that I belong to is specifically prohibited from endorsing candidates for political office. How does Malin propose getting around this restriction?
@Liam Dillon @SDResident some background on how things work at Poynter: http://books.google.com/books?id=bTbtAwAAQBAJ&pg=PT266&lpg=PT266&dq=poynter+institute+501&source=bl&ots=QaChkZwe8i&sig=Oz3L3wl3jXMQInLJYpYZqfiPmhc&hl=en&sa=X&ei=QfIhVLi_NerWiwLRjIGIDg&ved=0CC4Q6AEwAjgK#v=onepage&q=poynter%20institute%20501&f=false
@SDResident Hello. You've asked a good question. The nonprofit would own the for-profit enterprise where the editorial board is housed. So the nonprofit wouldn't actually be doing the endorsing. This set up works for the Tampa Bay Times, which runs a similar nonprofit/for-profit model. http://www.tampabay.com/opinion/editorials/tampa-bay-times-recommendations-for-aug-26-primary/2189910
It is not unusual for a non-profit to own a for-profit enterprise that provides funding for the services rendered by the non-profit.Goodwill owns retail stores that fund its mission to train workers.The blood bank sells blood to fund its mission of collecting blood.
But it is highly unusual, if not downright bizarre, for a non-profit to own a for-profit that has nothing to do with the mission of the non-profit except to provide it with money to distribute outside the non-profit for whatever its board feels is a worthwhile cause.
But, as I read you Liam, Burnham’s idea is to do just that; to restructure the UT as a revenue generator for a civic foundation (?) through which he and his friends will send money to the causes they favor most. We must assume, given the players, this means political causes along with standards like the arts and human services.
It is equally bizarre, given the players, that if, as Burnham states, the UT is profitable, that Papa Doug would sell it to a non-profit, as non-profits by nature have little to no money for buying for-profit businesses, nor, if they did, could they come close to what a for-profit buyer could pay, given a potential return.
But then, as you point out, we don’t know who else is involved, how much money they can bring to the table, the valuation of the paper, or what is really going on here, especially given the nature of Republican power in San Diego and the role these men and this newspaper play in promoting conservative Republican ideology.
The whole thing smells. Let the investigative journalism begin.
@Arizona Bread Burnham didn't say the Union-Tabloid was profitable. He said it's doing better under Manchester than it was when the Coleys dumped it, which is like saying the Chargers did better under Mike Riley than Harland Svare.
Point 1: So this would be a non-profit in the same way the NFL is a non-profit.
Point 2: Do they really think they'll be so flush with cash that they can become a foundation? This is inspired thinking but the revenues will hardly come from the newspaper side of the house. @Liam Dillon you should press him on those deets.
@Kelly Abbott Hi Kelly.
Point 1: It's better to think of it as two separate things. A for-profit newspaper whose owner is a nonprofit. Profits from the newspaper, if there are any, would go to the nonprofit to distribute rather than to an individual or shareholders.
Point 2: Yes, I asked a few times about the state of the newspaper business and whether he thinks it would deliver any profits at all. He said the paper was better off now than it used to be and he envisioned a digital transition that would ultimately make the actual printed edition less relevant. But he believed this could make money.
Essentially this would deal with one aspect of the Future of News Revenue puzzle. It would eliminate the need to deliver profits for an owner or shareholders, which for-profit news companies by definition have to do. But by itself it doesn't solve the How Does News Make Money -- or at least not lose money -- problem.
@Liam Dillon I think your points contradict themselves at the for-profit level entity. Doesn't the newspaper still have to report profits? If so, then that means they're using the non-profit to house the losses which makes me as a potential donor say WTF? Again with the NFL reference, why would I donate to such an entity? Is there any non-profit activity to it or is it just a convenient accounting trick? Furthermore, even a non-profit pays taxes on unrelated income. What will be the mission-related activity of the non-profit and what will be unrelated? Lots of questions...
@JoelCHoffmann what do sources say about that rumor?
@dillonliam Sources confirm that it is a good synopsis, and it currently appears on multiple nodes of the World Wide Web.
@dillonliam I'm disappointed that you didn't include the rumor about Burnham wanting to blow a hole through the Silver Strand, though.
Great article, and I agree about the hair. We can only hope that whoever runs the new endeavor will (a) dump the existing editorial board and "glibertarian" columnists like the bag of rocks that they are and (b) bring back Don Bauder on the business page.
@Steven Greer Would also help if they stopped dismissing sportswriters for disagreeing with that stupid downtown Chargers stadium idea.
@Steven Greer Until then, we can enjoy Bauder's reporting of rumors at the Reader. It's OK, the Reader says, because sometimes they're true!
@Steven Greer The only way Bozo Bauder returns to the U-T is if it's purchased by Barnum & Bailey.