ABOUT TONY RIDDER
Tony Ridder is a 61 years old, tall and handsome CEO of Knight Ridder. A core business manager, Tony Ridder managed the affairs of Knight Ridder, a news firm as a full business. He maximized profit, reduced costs solely through layoffs and sale of redundant properties. His style of management is heavily criticized especially amongst journalists and news men. Considering the notable growth he has been able to foster at Knight Ridder, one would assume that he was also in the good books of investors from Wall Street. Surprisingly, he was also criticized for not maximizing enough profit and being sheltered by journalists. Tony Ridder’s dilemma is between finding the appropriate style of management for a news firm that’s publicly funded without the firm losing track of its initial motive i.e, to cover the news as a nonpartisan.
A handful of questions are notable from the case. They’re answered below:
What were the points of tension between Tony Ridder and Wall Street?
Tony Ridder was working towards improving Knight Ridder’s financial performance and its stock price. He did these through selling inoperative properties and layoffs. Wall Street is known for constantly criticizing and demanding for companies to do better. So, even when companies are doing good, Wall Street still demands for them to do better.
While Ridder is being accused of excessive layoffs by journalists, Wall Street still demands for much deeper newsroom cuts.
Also, Ridder believes that news firms are being selective in their reporting. When Knight Ridder employs 10 more newsmen, no firm reports that; when it lays off, the narrative is different. These frictions were the point of tension between Tony Ridder and Wall Street.
Do you think Tony Ridder lived up to his responsibilities to employees and shareholders?
To employees:
He did not live up to his responsibilities to his employees. A leader that focuses on maximizing profits solely by laying off staff is questionable.
To shareholders:
He has lived up to his responsibilities to the shareholders. Since the shareholders are more involved in profits, since becoming CEO in 1995, he has improved Knight Ridder’s financial performance and its stock price (formerly, $26. Now, $62). Revenues have increased from $2.2bn to $3.2bn. The profit margin has also increased from 10% to 20.8% in 2000.
Should profit maximization be the main motive for a news agency?
No, a news agency’s central mission is covering the news. Maximizing profit has the tendency of affecting the quality of their central mission. When a news agency focuses on profit, it can make unethical choices to make more money.
What would you advise Tony Ridder to do?
I advise Tony Ridder to seek other ways of keeping Knight Ridder sustainable beyond layoffs.
He should also seek ethical ways of settling differences amongst his staff to avoid the massive resignation especially for avoidable differences. Finally, on a long term, he should seek alternate means of funding the news firm beyond Wall Street. Being publicly funded exposes firms to scrutiny and forces the firm to maximize profit whichever way they can. This goal does not align with everything that a news firm stands for; it can reduce their credibility and quality of outputs.
