Owning a private media publication that loses money is not that much different than donating money to a nonprofit. Your losses can be written off on your taxes (within limits), similarly to charitable contributions, and you can feel good about boosting journalism and enriching American life.
So one question raised by the meltdown of the New Republic, during which most of the editors resigned en masse last week, is why owner Chris Hughes was not willing to continue losing money on the magazine in its current form, as previous owners had done.
TNR was losing an estimated $3 million a year when Hughes bought it and, given the additional investments by the Facebook cofounder in the magazine, that number probably climbed higher. But Hughes is worth hundreds of millions of dollars, and—assuming he's held onto a decent chunk of his Facebook stock—is a lot richer now than when he bought TNR, since FB stock has tripled in value since mid-2012. Which means that there's really no way he could ever get to the point, as Martin Peretz did, where bankrolling an august magazine would become an unaffordable hobby.
But Hughes is clearly not interested in TNR as a philanthropic endeavor, much to the dismay of the highbrow media establishment, which has basically argued that by buying TNR, Hughes had an obligation to continue losing money on it in something close to its present form.
Before debating this point, it worth's asking: Why does Hughes see TNR as a business project and not as a charitable one?
One answer is that, while Hughes is an engaged philanthropist, journalism is evidently not one of his causes. Instead, he has said that he focuses his philanthropy mainly on a single goal: reducing poverty in developing countries by backing direct cash transfers to poor households.
As we wrote recently, Hughes is a big booster of an organization called GiveDirectly, which is the most prominent NGO pushing the idea that what poor people need most is money, and that affluent Westerners should just give them cash, as opposed to supporting fancy development projects that often fail. Another Facebook cofounder, Dustin Moskovitz, is also jazzed about this idea, and has donated millions to GiveDirectly.
But in a Washington Post op-ed yesterday, Hughes made clear that he doesn't see journalism as a focal point of his philanthropy—he also doesn't think that TNR should depend on that kind of charity. He wrote, "At the New Republic, I believe we owe it to ourselves and to this institution to aim to become a sustainable business and not position ourselves to rely on the largesse of an unpredictable few."
Hughes mentioned in his piece that there is "much experimentation in nonprofit journalism... and that may be the right path for certain institutions." That's certainly so. Pierre Omidyar is spending millions to finance investigative reporting (an effort which, by the way, has also been rocky). Retired hedge fund billionaire John Arnold has been writing big checks to places like the Center for Investigative Reporting and ProPublica. Another retired finance guy, Neil Barsky, has bankrolled the launch of the Marshall Project, which focuses on criminal justice. Herb and Marion Sandler underwrote the creation of ProPublica after selling their California bank. And a host of established foundations have stepped up in support of journalism, most notably the Knight Foundation.
So it's interesting that even as more rich people have come forward to give money for journalism with no expectation of a financial return, Hughes is taking a different path by seeking to make the New Republic financially sustainable—an idea that strikes many top journalists as outrageous. The former New Republic editors and writers said this about TNR:
It has never been and cannot be a “media company” that markets “content.” Its essays, criticism, reportage, and poetry are not “product.” It is not, or not primarily, a business. It is a voice, even a cause.
That statement, like a lot of what's been said about the changes at TNR, expresses fear and outrage about the barbarians at the gates of journalism. But what I haven't seen is much serious discussion of what it actually means for a magazine like TNR to be dependent on the largesse of benefactors as it hemorrhages cash.
Critics of Chris Hughes have rightly found fault in how he handled things at the New Republic. And they've opined nostalgically about the tradition of rich people bankrolling small magazines. Along the way, though, they've sidestepped hard questions about the model they're implicitly embracing, whereby journalists are wards of the rich.
You don't have to look very hard, or even far beyond TNR, to find problems with this model. When a bunch of editors and writers are at the mercy of a single rich guy, bad things can happen. For example, they may feel they have no choice but to suppress their qualms about the racially offensive views of the owner, or to indulge his extreme views on certain issues, like Israel.
TNR's aggrieved alumni wrote that TNR was "a kind of public trust." But that's a hard case to make about an institution that, for many years, was beholden to a private individual and, later, to several other investors that included Roger Hertzog, who holds political views that are anathema to many scribes in the TNR orbit.
Eccentric or offensive owners are one risk when a magazine is a charity case. Another is that when journalistic enterprises take money from wealthy donors or foundations with a strong point of view, serious conflicts of interest can emerge.
We're seeing more of these situations as the nonprofit reporting model spreads. For example, the PBS affiliate in New York gave back a $3.5 million grant from the Laura and John Arnold Foundation for a series on public pensions after receiving criticism for taking funding from a vocal advocate of pension reform. NPR has been criticized for getting support from the Bill and Melinda Gates Foundation to report on education, and I've raised questions here about NPR and its affiliates taking funds to report on healthcare from the Robert Wood Johnson Foundation, which has a clear agenda in this area.
Of course, even successful for-profit media entities can face challenges to their independence from ideological owners or major advertisers. But it's fair to say that the best innoculation to ethical or moral compromise is to be financially sustainable, with your support resting on a very wide base of subscribers and advertisers.
In that sense, Hughes' vision of a TNR that isn't forever a supplicant is very attractive.
The other problem when media publications rely on the largesse of the wealthy or foundations is that they can duck the kind of reality check that comes when you have a bottom line. And that, too, seemed to be on Chris Hughes' mind as he pushed major changes to the New Republic, a magazine that has steadily lost readers and relevance under the beneficent ownership of rich guys who didn't much seem to care.
The easy thing for Hughes would have been to follow that same path, enjoying the prestige of owning a fabled but failing magazine while barely noticing the annual hit to his bank account. Hughes took a harder path—and certainly a more expensive one—because, as he wrote, "Unless we experiment now, today’s young people will not even recognize the New Republic’s name nor care about its voice when they arrive in the halls of power tomorrow." And for that all he's getting is grief.
I've been reading the New Republic since I was 15, and share the anxiety of many that the magazine may permanently lose its essential DNA amid the changes that Hughes is orchestrating. But the only way to view the full picture here is to engage the pitfalls of an alternative model whereby magazines like the New Republic forever depend on wealthy benefactors.
Chris Hughes thinks that's the wrong model for journalism's future. And he's right.