Tony Ridder Just Can’t Win

Introduction

Tony Ridder served as the chairman of the board and CEO of Knight Ridder from 1995 until the company’s sale in 2006. The newspaper was founded by his great grandfather in 1892. It was the second-largest newspaper company at the time in the States.

Tony Ridder was under pressure from different stakeholders of his organization. His shareholders put pressure on him to maximize returns on their investment no matter how he did it. Wall Street, where he was sourcing for funding was concerned about the staffing levels in his company. They asked him to cut down on labour costs. He was also under pressure from his employees. They felt he was chasing profits at the expense of journalistic quality.

Pressure from various stakeholders

Tony Ridder was completely at the mercy of shareholders whose only interest was the best possible return on their investment. The owner of a company and how it is structured can impact a business, its finances and its management. He should have considered changing the ownership structure to give members of the founding families voting shares. Because they usually agree with the journalism comes first credo and then shareholders would have non-voting rights. This would allow strong ownership control and he would not be under pressure to do anything possible to increase profit like cutting costs to the detriment of journalistic integrity or quality.

He appeared to be someone whose drive was to boost operating profit margin. However, he did not go about it in the best way by cutting the workforce. He could have found other ways to increase revenue. By making the newspapers better, striving to make more sales and diversifying into other forms of media.

Sourcing for funds from Wall Street was another point of tension for Tony Ridder. Wall Street was concerned that staffing levels in Knight Ridder were too high and consistently asked them to lower labour costs. Tony Ridder should have considered looking elsewhere for funding. A Bears Stearns analyst even mentioned that if newspapers were to continue asking Wall Street for Capital, they would have to play by their rules.

Tony Ridder’s Actions

Tony Ridder was focused on increasing the stock price and profit margins of his company and this resulted in him reducing editorial staff regularly for him to keep labour costs down. He became known as a ruthless downsizer. In one instance, when the publisher of one of his newspapers Jay Harris was pressured to keep profit margins in the high range of 20%, the only way he saw fit to do that was to lay off employees. He relayed his concerns to Ridder. When Harris proceeded to lay off employees, Ridder claims he was never aware that there would be layoffs.

Such practices create an environment where employees do not feel secure in their jobs. It prompts an increase in competition for jobs and does not foster collaboration between employees and in the process hampers employee morale. When employee morale is low, they are not productive. In a time of economic downturn, Tony Ridder needed employees to be at their best so that they can come up with creative ideas on how to generate more revenue for the company.

Should Tony Ridder have been so concerned about profits?

Although profit is important in any business, profits should however not be the primary concern for a newspaper business because it is not like just any business. There is a public service component to newspapering in that the media has an important role to play in the socio-political life of society. The press and news media have a great responsibility towards society in shaping public opinion, spreading awareness and leading it towards constructive work.

The media plays a watchdog role in investigating misbehaviour by politicians, officials and businesses. Therefore, the media is a crucial instrument of accountability in addition to being an instrument of communication.

Conclusion

When Knight Ridder the USA’s second-largest newspaper chain was sold, it received a lot of attention in the business press. A lot of people wondered how an organization that appeared to be doing well got taken over. Tony Ridder had lost touch with journalistic integrity and focused on profit margins. By doing so he lost several talented employees that could have helped him continue to keep his business.