The Very Valuable Associated Press
by Peter Osnos
The Associated Press (AP) is the most venerable major enterprise in the American news business. It was founded in 1846 (five years before the New York Times) and is a nonprofit cooperative owned by its members, the country’s newspapers. In many respects, it is to news, what AT&T and Western Union were for so long in communications, an invaluable utility. The AP provides a basic resource for newsgathering, with 4,100 staffers in 243 bureaus in 97 countries. Right now, the media is undergoing a fundamental transformation, so it is not surprising that the pressures buffeting the world it serves would affect the AP also—but not in the ways you might expect.
The AP is actually doing very well. Global revenues are up. Its finances are strong. It has a digital strategy that includes video, mobile news, and plans for delivery of enhanced content to outlets both traditional and unfolding. The AP’s English-language competitors, Thomson-Reuters and Bloomberg, are heavily reliant on business news for most of their revenue, whereas the AP is supported by its general news services. And as I pointed out in last week’s Platform, “Make Google Pay,” the AP was authorized by its board years ago to license “aggressively,” so it does benefit from the emerging power of Web-based news on Google and other search engines.
But to the extent that anyone outside the news business would have noticed, the main story line about the AP recently has been that some of its members, including the Tribune Company, have declared their intention to cancel the service after a mandated two-year waiting period. The issue seems to be that with money so tight, the AP is expendable and should accommodate the demands of its members instead of expanding its franchises and growing (adding, for example, a bureau in Saudi Arabia). However, the closer you look, the less clear-cut the tension between the AP and the newspapers becomes. Whatever else may be going on at Tribune, its chairman Sam Zell’s position is apparently that the AP should find a way to monetize its substantial asset value—say by going public as Reuters did in the 1980s—and then Zell can turn his ownership into cash, which he desperately needs to pay down the debt he assumed to take over the Tribune properties. In what is his signature style, Zell’s posture is belligerent: he will have his newspapers make do without the AP just as he has slashed their news resources in every other respect.
Other newspapers say that the AP is giving them less locally of what they want or that they can get news more cheaply in regional alliances. There may well be other grievances in what is an exceptionally bad time for proprietors, who understandably want to challenge anyone (including the AP) who is doing better than they are. Their leverage is limited. The AP now derives about three-quarters of its revenue from sources outside its U.S.–based membership. The loss of what is up to around one hundred newspapers would be a hit, but hardly crippling.
So, more significant than the money issue is the souring chemistry between the AP and the U.S. newspapers that are, after all, still its owners. This is where AP’s senior management, led since 2003 by Tom Curley, the chief executive who has substantially upgraded and modernized the organization, has to tread carefully. His improvements in technology and business strategy have clearly worked well for the enterprise he runs, but the American news business (with few exceptions) is hurting badly in fiscal terms—even as the audience for news overall is growing,
The AP exists to serve its members, among fifteen thousand news clients “reaching billions of people around the world,” as the AP says of itself. Yet it cannot fully achieve its objectives unless it diversifies, expanding its revenue base and newsgathering techniques. This creates friction with owners who continue to regard the AP as a utility and not a media innovator. Ultimately then, this seems to be less a business issue—the AP is from all accounts being very well run—than it is a reflection of the turmoil in the industry that created the AP and is the core recipient of its time-honored news output. The problems for the AP are as much in the handling of frazzled nerves and battered pride among the editors and managers that rely on it as anything else.
Because the AP mainly delivers news through other outlets rather than directly, most readers, viewers, and listeners cannot fathom its role in the information flow around the world. With so much else about the media in jeopardy and news standards being sacrificed to diminished cash flow, the AP has probably never been more important than it is now in that respect. But it is a cooperative, and that means satisfying and serving many constituencies, which has never been harder. Any way you measure it, the Associated Press is worth very much to a great many people.