The Financial Takeover of “Our” Newspapers

By Don Quijones, Raging Bull-Shit

In a newspaper like El País it is no longer possible to criticize the main Spanish banks. And you have to be very careful when talking about the Government, in case it gets angry: its benevolence is needed in order to avoid bankruptcy.”

The above words are from Enríc González, one of Spain’s most respected journalists. For well over two decades Gonzaléz worked for Spain’s biggest selling daily El País, during which time he served in numerous capacities, including as its London, Paris, Washington, New York and Rome correspondent.

But a few months ago his tenure at the paper came to a rather sour, abrupt end when he publicly renounced his position. In a blistering resignation letter in JotDown, an exclusively reader-funded magazine, he accused El Pais’s director, Juan Luís Cebrían, of suffering from an incurable addiction to gambling on the stock exchange and denounced the decadence and betrayal of the country’s press.

The reason for his resignation was clear: El País had just laid off dozens of its journalists while continuing, as González put it, “to bathe its senior executives in gold.” The newspaper claimed it could not afford to keep on such a large pool of journalists due to the huge debt that its parent company PRISA had accumulated during the heady days of Spain’s real estate boom. It was, Pere Rusiñol wrote in El Diario, “a text-book example of how bad management can bring down even the most solid journalistic institution Spain has ever had.”

By the time the bubble finally burst, in 2008, PRISA had somehow managed to rack up a debt of almost 5 billion euros (to put that number in perspective, it dwarfs the total combined debt of Spain’s top-division football teams). With the company’s assets plunging in value, the markets closed their door on the publishing group, leaving its senior management desperately scrambling to find new money to stave off bankruptcy. At the eleventh minute of the eleventh hour, their prayers were answered: a New York-based hedge fund manager called Nicholas Berggruen offered to pump 650 million euros into the ailing company.

It was a deal that benefited all the parties involved — except, of course, El País, which all of a sudden found itself in hock to one of Wall Street’s richest and most powerful financiers. And as so often happens when large sums of money begin pouring through C-suite executive booths, everybody wet their beaks — and no one more so than El Pais‘s director Cebrián who, in 2011, collected roughly 14 million euros in salaries and commissions – not bad for three years work, especially considering that during the same period El País had lost close to 450 million euros!

For Berggruen’s part, he received a succulent 7 percent annual return on his shares in the group, despite the fact that years had passed since the group’s long-standing shareholders had received a dividend on their shares — shares which are now worth 2 percent of their original value when PRISA went public!

The Financial Takeover of the Press

Five years after the crisis, the majority of PRISA’s shares no longer belong to the founding Polanco family, but instead to banking institutions such as Santander, Caixabank and HSBC, not to mention the Spanish telecommunications behemoth Telefoníca and Wall Street hedge funds.

Having sold out to the financial sector, one can’t help but wonder how El País will be able to discharge its reporting duties now that it is owned virtually lock, stock and barrel by the same banks and financiers on which it is supposed to report.

Naturally the new owners will want to have some kind of say on how the business is run. Indeed, they have already appointed “one of their own” to the position of PRISA’s chief executive officer – a man called Fernando Abril-Martorell, whose previous experience includes directorships with Swiss bank Credit Suisse and Telefoníca (hardly relevant experience, you’d think, for running a media company).

How much of an influence the banks and corporations will have over El Pais’s editorial decisions is impossible to tell, but suffice to say that the newspaper is unlikely to be biting the multiple hands that now feed it. None of which would be a problem, of course, if the interests of its new major shareholders were more or less aligned with those of El Pais’s readers or the wider public interest the paper is meant to serve.

However, as the last five years have shown, on most matters of import the financial sector’s interests could not possibly diverge further from the general public’s. Put simply, whenever the banks win, the rest of us tend to lose. For instance, when a government decides to award a huge taxpayer-funded bailout to a floundering institution, as Spain did with Bankia, that money must be taken from elsewhere – and it’s invariably from essential public services such as education or health.

Also, as Spain’s preferentes scam or the robosigning scandal in the U.S. have amply demonstrated, when the big banks hit choppy waters, they are more than happy to throw their customers out of the boat so as to ensure their own survival.

Just the Beginning?

With more and more media groups struggling to make ends meet in this new age of Internet journalism and plummeting advertising revenues, one can’t help but wonder just how many other newspapers will soon fall into the clutches of the big banks and corporations. After all, at the rate things are going, the TBTF banks will be the only ones left with enough resources to pay the exorbitant upkeep costs of a fully-staffed newspaper. But at what price?

According to a recent independent report commissioned by the European Commission, the dangers are all too clear: excessive influence of corporate owners or advertising clients inevitably leads to the covert manipulation of political decisions in favour of hidden economic interests. What’s more, in many European countries it is not possible for the public to find out who the actual owners of the media are, as a study co-authored by Access Info Europe and the Open Society Media Programme has found.

As Enric González recently wrote in an article for the purely readership-funded, advertising-free magazine Orsai (a full translation of which we hope to feature on this site in the near future), “Journalism survives and will always survive. The craft will not disappear. The problem is that journalism as a craft no longer serves the public.”

The challenge going forward both for the public and for the journalistic profession will be finding an ownership model that enables financially uncompromised newspapers and broadcasters to flourish, so that a diverse and independent media can once again serve as a protection against the entrenched interests of big business, finance and government.

And if one thing’s for sure, it’s that the free market logic and ongoing consolidation of the sector in ever fewer and fatter hands is not, and never has been, the answer. As David Simon, the creator of the award-winning TV series The Wire and a former beat reporter with the Baltimore Sun, said in recent testimony before a US Senate hearing, “High-end journalism can and should bite any hand that tries to feed it.”

Let’s hope that El País learns that lesson sooner rather than later. Contributed by Don Quijones


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