Don Quijones: The Financial Takeover Of “Our” Newspapers

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Yves here. This post focuses on how the European media, like its US counterpart, is coming under the control of wealthy financiers and investors who curb its content. By way of background, see this discussion in Wikipedia of the political activities of hedgie Nicholas Berggruen, who among other things, has invested in El Pais.

By Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media. Cross posted from Testosterone Pit

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.

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  1. LucyLulu

    I don’t know if anybody else caught Amy Goodman on C-span’s Book Report today. She was also talking about the role of journalism today and stressed the importance of independent media, translation non-MSM. One story she told was of herself and two others from Democracy Now getting violently arrested and injured covering war protestors at the GOP Convention in 2008. Afterwards she was talking to a MSM journalist who couldn’t understand how she could’ve been arrested, he’d seen no problems. He’d never left the convention floor. She said reporters need to be willing to go where the story takes them (which that day wasn’t on the convention floor). BTW, Democracy Now sued the Minneapolis police and Secret Service (who ripped off her prominently displayed press credentials when she verbally identified herself as being with the press) and won six figures.

    Her closing point was that a free press was essential to the accountability needed for a functioning democracy. Hard to argue with that. Here in the US, we don’t only have to contend with corporate-owned media, we have increasing levels of government intimidation as well. How many journalists are so devoted to getting the story they’re willing to risk arrest and being jailed, much less subject themselves to police brutality? It’s easy to see why many would choose the path of less resistance and stick with the “safe” stories.

    1. dolleymadison

      Excellent points but you left out the willful blindness of those in the press who have become slobbering Obama sycophants. Living in Charlotte, NC – this willful blindness is exacerbated by being the home of BofA. I mourn the capture of the 4th estate even more than regulatory and judicial capture…because with a free press we have a chance of righting those ships…without it we are sunk.

  2. Maju

    El País was never really considered, at least not since 1982, an independent newspaper but rather the mouthpiece of the Socialist Party (or rather its most bourgeois and liberal sectors, which eventually became dominant). Today the referential daily for the left in Spain (and not too radical anyhow) is rather Público (nowadays only digital), but even that is not critical enough sometimes and one has to dwell in biweekly or monthly media like Diagonal or La Marea (created by former workers of Público), as well as on independent online sites like Kaos en la Red and blogs.

    Paper media anyhow is in clear decline: today you rarely see anyone in the subway reading a paper, unless it’s one of those free newspapers that they give away at the entrances of the metro (fully financed by publicity and with very limited content). Most people is busy with their mobile phones. Similarly, at work people reads the news on the Internet.

    1. Massinissa

      “El País was never really considered, at least not since 1982, an independent newspaper but rather the mouthpiece of the Socialist Party (or rather its most bourgeois and liberal sectors, which eventually became dominant)”

      Isnt EVERY European socialist and eurocommunist party dominated by liberal bourgeoisie?

      1. Maju

        Socialdemocratic parties in Europe today are like the Democratic Party in the USA, even if this similitude is caused by convergent evolution rather than similar “genetic” origins. In many cases they have been very similar also historically, for example: I was recently reading on the birth of the Spanish Socialist Workers Party (PSOE) in the early 20th century and how it quickly joined forces with the far right (Monarchist League).

        As for communist or “eurocommunist” parties the answer is probably not, at least not in principle. However they can be attracted to the “dark side”, as the Italian example (PCI→PDS→PD) shows very clearly. In any case they are ingrained in the bourgeois representative system and limited in their ability to drive changes by dominant liberal ideology (sustained by private media brainwashing) and by the bourgeois legal framework, which can hardly be changed overnight even in the best case.

        Parties that radically oppose the bourgeois system are often declared illegal, as happens to Turkish communists or the Basque independentist left (intermittently illegal), or in the past to the German communists. Individuals and currents that do show a greater willpower of radicalness, fall often victim of institutional-mediatic campaigns of discredit and criminalization. This is happening right now in Spain to like communist mayor of Marinaleda and co-leader of the Andalusian Workers Union and the Andalusian Left Bloc, Sánchez Gordillo. Another such campaign is being executed against the German Greens. And let’s not forget the likely institutional murder of Petra Kelly and her husband in the 1980s, considered too radical, charismatic and therefore dangerous, or the similarly motivated murder of Olof Palme, leader of the last European socialdemocratic party worth that name and pretty much irreducible to ultra-capitalist siren songs.

        That’s how the system works: formal democracy as facade and a more subtle quasi-fascist control based on (1) media control by a few tycoons, (2) criminalization and delegitimization of any sort of real opposition (including actual political persecution by legal or illegal means) and (3) absorption of malleable opposition (including unions) into a lackey role and finally (4) persistent threat of fallback to fascism or similar “iron fist” regimes (including feeding fascist organizations and putchist officers).

    2. holygrail

      Agreed. El pais has always been very obviously biased, critizicing only the right wing parties while they let the socialists and their friends get away with anything. Most of the other mainstream press is pretty much the same, substituting right with left.

      At this point trust in this media to inform is poor to put it mildly. They know it and are lately trying to look better getting exclusives reporting on some corruption scandals (it’s not like there’s a shortage of those). That plus the printed press decline Maju mentions plus the economic situation described in the article above makes for a pretty desperate situation.

      The most widely read newspaper in Spain is Marca, which is a sports (mostly soccer) paper. They are doing well and contain a similar amount of useful political or social commentary.

  3. YankeeFrank

    I don’t know if you can separate the craft of journalism from its purpose of providing relevant and timely information to the public. If it no longer fulfills its purpose its not really journalism. The scabs and integrity-impaired whores that continue to work for utterly compromised rags controlled by giant media corporations are not journalists, they are corporate spokes-whores and media stars.

  4. jake chase

    I don’t know why anyone is surprised about this. There hasn’t been a newspaper worth reading for at least 30 years. The business is driven by corporate advertising and cannot bite the hand that feeds it. From end to end they are propaganda, sanitized mush, celebrity worship, advertising and ball scores.

    I always thought their purpose was as blinders for commuters on trains and subways, where nobody with any sense looks even obliquely at the people around him.

    Newspapers can be very useful. Just don’t read them.

  5. OMF

    All of the three national Irish newspapers are in the pockets of the banks. Their coverage of the financial crisis has been so bad that it verges on sedition.

    The Irish Independent, owned by INM, was in debt trouble for a long time. Recently, the group had a huge portion of its debt written off courtesy of the Irish banks (and taxpayers). It’s largest shareholder, Denis O’Brien, is somewhat notorious for his friendly “donations” to politicians.

    The Irish Examiner, vis its parent the Crosby Group, recently went through a “pre-pack” recivership (think Chapter 11) again courtesy of Irish state owned banks. The fate of the Sunday Business Post in the same group is still up in the air. Personally, I think O’Brien will go for it.

    Finally, I have no firm knowledge of whether the Irish Times is in debt trouble or not. But what I can tell you is that the board chairman is one David Whent, formerly CEO of the (now bust) bank Irish Life and Permanent, and currently on the board of Goldman Sachs Europe. It’s right there on the site.

    I regard the entirety of the Irish media as having been completely captured by the criminal banks. It seems that bankers may well be useless at running their own institutions, but they are shrewdly intelligent when it comes to coup d’etats.

  6. Ignacio

    In the last sunday edition of El Pais there was an interview with Mr. Gorigolzarri the current Bankia CEO. Bankia is the bank that has received, by far, more taxpayer money (22 billion euros). In the interview, the bankster sayd that with this money nor the shareholders, nor the employees nor the directives of bankia were bailed out. In fact, according to Mr. Goirigolzarri, the depositors were bailed out!!!

    Of course, the newspaper did not challenge Mr. Goirigolzarri with questions that could made him feel uncomfortable. For instance, what about the massive bonds issued by Bankia, and many held by creditors abroad? Wasn’t this the real target of the rescue money?

  7. Citizen Hurst

    There were calls to frog march the NYT into the Hague for their role in the Iraq war. But then, the ICC itself depended on propaganda. Should the Kochs buy the LA Times?
    Why not? More investigative reporting on the ever popular Manson murders, to titilate the fans.

  8. Jazzbuff

    In the ’90s I was looking at a diagram of ownership interest in European TV and satellite companies. There were several hundred companies many owning partial interest in each other. When you analyzed who owned what it turned out that those hundreds of entities were actually owned by only half a dozen players.

  9. Art Eclectic

    One of the first tasks in any coup is to take over and control the media. We ceded control of our media here in the USA long ago. Just about every major newspaper is owned by a massive corporation, almost all of our radio and television as well.

    Control the masses, control the message.

  10. washunate

    Changes in media have been very interesting. The rise of the internet generally, and the web in particular, haven’t changed the media model – rather, it has revealed it.

    Subscriptions to magazines and newspapers and cable TV never funded those organizations. Corporate media was always funded by its local monopolies on advertising and its sales of demographic data to third party companies.

    That the media companies never thought to create Match and Craigslist and Google Search and Monster is their own stupid incompetence for which they have been and will continue rightfully losing profit and relevance.

  11. allcoppedout

    I never mastered the origami needed to read broadsheets on trains. It took me a while to realise the only real purpose of newspaper was in lighting our coal fire or ripped into convenient sheets and nailed-up in our outside loo.

    There is no story here. On reflection almost none of what I know of the world came to me via our media.

  12. Hurm

    It seems to me the most straight forward way to ensure media companies aren’t financially compromised is to disallow people and corpoerations from becoming so rich and powerful that they can financially compromise newspapers and broadcasters.

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