It is no secret that The Irish Times is in some trouble. In a very short time, the company has gone from unprecedented success to an almost unprecedented threat to its survival. The scale of the crisis is in fact partly a result of the previous accomplishments. In the past, when The Irish Times ran into difficulties, it was a small, intimate organisation that could change course with relative ease. Steady growth over the last 15 years has made it a much larger, more complex operation. A big ship is much harder to turn around than a small one.
That the crisis has come after a long advertising boom and at a time when the paper's circulation is twice what it was in the 1970s, moreover, inevitably raises questions about the governance of the company. Unlike the Irish Press which was in a long, slow decline before its eventual demise, The Irish Times is thriving in the media marketplace. If the paper is not the problem, what is?
The most obvious answer, and the one which tends to come from rival newspapers, is the fact that the paper is owned by a charitable trust, and therefore has no shareholders. Private media barons find this principle rather offensive, and believe that only the pursuit of private profit can lead to commercial efficiency. The present crisis seems to provide support for this view.
It is, however, demonstrably wrong. The circulation of The Irish Times has more than doubled since it went out of private ownership in April 1974. Under the trust, the paper has massively increased both the number of jobs it provides for its staff and the coverage it offers its readers. It made a successful transition to new technology and led the way, not just for Irish newspapers, but for the global print media on the Internet.
Newspaper trusts also operate well in other countries, most notably in the UK where, as Hugo Young showed in this series on Monday, the Scott Trust's stewardship of the Guardian group has been marked by stability, commercial efficiency and well-judged expansion. One of the most successful niche publications in the Irish market, the Farmers Journal, is also owned by a trust.
Trusts may not be the only way to sustain a quality newspaper, as Elaine Lafferty's piece on the New York Times in this series has shown, but they are certainly not incompatible with viability and efficiency.
At the same time, the principle of ownership by a trust has immense advantages for both readers and journalists.
Private owners use their newspapers to make money, to exert political influence and to support their other business interests. A trust like The Irish Times Trust makes money to survive, not the other way around. The newspaper's editorial line is independent, not just of political parties, but also of private advantage. Successive editors of The Irish Times since the establishment of the trust have testified to the absolute editorial independence which it has afforded them.
Given the immensely important role of the media in contemporary society, these are real blessings. The Irish Times may be, as its critics assert, prissy, arrogant, self-important and wrong-headed. But at least its mistakes and prejudices are honest ones. There is no hidden agenda.
The Irish Times Trust can take credit for the successes and for protecting the independence of a newspaper committed to social justice, non-violence and tolerance.
Conversely, however, it has to take at least some of the blame for the current crisis. Weaknesses that have been quietly inherent in the governing structures of The Irish Times for a quarter of a century have now become obvious. Arguably, The Irish Times Trust now faces its biggest challenge: the radical reform of its own structures.
It is worth noting that The Irish Times Trust differs in an important respect from the two other comparable media trusts on these islands in an important respect. In the case of both the Scott Trust and of the Agricultural Trust which owns the Farmers Journal, the original owners did not benefit financially from their establishment.
In 1936, John Scott handed over the Guardian and assets worth the then enormous sum of £1 million to the Scott Trust. In 1963, John Mooney, who owned the Farmers Journal, turned down a lucrative offer from the Thompson Group and handed the paper over to a registered charity, the Agricultural Trust. Neither man was paid for his shares.
In 1974, however, the directors of The Irish Times sold their shares to the newly-established Irish Times Trust for a total of just over £2 million, which the trust borrowed from the banks. This was probably somewhat less than the shares would have fetched on the stock market, but it was nonetheless a very large sum in 1974 prices.
As well as getting much more money for their shares than John Scott or John Mooney did, the leading Irish Times trustees also retained far more power. Both John Mooney and the Scott family kept a guaranteed place on the trusts they established. Neither, however, had a strong role in the day-to-day management of the companies.
As a relatively small and intimate operation, the Farmers Journal is run by its editor and chief executive, currently Matt Dempsey, with the unpaid trustees playing a broad watchdog role. In the case of the Scott Trust, the trustees are quite separate from the commercial board of the company. Some executives are members of the trust, but it does not work the other way around: trustees do not join the company board.
The Irish Times Trust, by contrast, was constructed in such a way as to give the trustees as a whole a dominant role in the management of the company, and to give one trustee in particular, Major Thomas Bleakley McDowell, a very special position within both the trust and the company.
The Irish Times Limited, like any company, is run by its board of directors. The board can have anything between six and 17 members, usually the latter. Two of these, the editor and the managing director, are automatic members. Other senior executives, as might be expected, are also on the board. The trust, however, has the power to nominate from within its own ranks, a majority of the board - up to nine members. (There are currently eight trustees on the board.)
Even this appearance of relative equality between the executive directors and the so-called nominated directors (the trustees on the board) is deceptive, however.
Voting at board meetings is massively weighted in favour of the nominated directors. While each executive director has one vote, each nominated director has five. In addition, the chairman has a casting vote if he or she is a nominated director, but doesn't if he or she is an executive director. The intention to give the trustees an almost complete hold of the governance of the company in the event of a vote could not be more clearer.
If the trustees are more equal than the executives, moreover, one trustee is very clearly the first among equals. The articles of association of both the trust and the company make it very clear that Major McDowell is in the special position of being "the A member".
This in itself is explicitly guaranteed by a provision which states that any change in the right to remain as a governor for life of the A member will be put to a vote in which the A member is entitled to "one vote plus such number of further votes as shall be equal to the total number of votes conferred on all other members of the company."
The articles of association also underwrote Major McDowell's position as chairman of the trustees for as long as he wishes or until the other trustees ask him to step down.
As chairman of the Irish Times Ltd, he had the power to appoint and remove other directors and to remain as chief executive until he resigned. These latter powers ceased when he stepped down as chairman of The Irish Times Ltd. But his position as the A member will remain in place until his death when the A share will revert to the trust.
While the position of Major McDowell is certainly unusual, however, the key issue for the future of The Irish Times is the role of the trust as a whole in the actual management of the company.
The extremely personalised nature of the original trust and company structures make it clear that they were intended to suit the talents and accomplishments of one man, Major McDowell and to cease when he ceased.
Whatever criticisms there might be of his extraordinary powers, no one doubted that Major McDowell was an extremely able manager with a track record of hands-on control within the newspaper industry in general and The Irish Times in particular.
His central role as the embodiment of the trust was thus not nearly as problematic as it might have been. Odd as the structures may have been, their oddness was a function of a single dominant personality, making them much more coherent in practice than they might have looked in theory.
With the major's retirement, however, the inherent structural flaws are increasingly obvious.
Put simply, while the management of the company is vested in the executive directors, reporting to the board, ultimate authority is vested in the nominated directors whose members are not necessarily chosen for their commercial management skills. Indeed, trust members are almost by definition people who are not involved in the newspaper business. Trustees cannot be current or former members of The Irish Times staff. They also, for obvious reasons, cannot have any connection with any other newspaper, magazine or broadcasting network.
Built into the structures of the paper's governance, therefore, is the stipulation that people with experience in journalism and media management can be massively outvoted on the board by people without it. That this is not a recipe for surviving and thriving in one of the most competitive media environments in the world should be obvious.
The proper function of the trustees, on the other hand, is that laid down elsewhere in the articles of association: to be broadly representative of the community throughout the whole of Ireland in ensuring that The Irish Times upholds the values of social justice, tolerance, fairness to minorities and serious journalism.
This clearly cannot be completely divorced from the actual business of producing the newspaper. Key decisions - the appointment of an editor and a managing director, new acquisitions, strategic investments - obviously affect the nature of the paper itself and need to have the approval of the trust.
But that overall monitoring role, like that of the Scott Trust, is very different from the ability to outvote the executive directors, if it comes to it, which The Irish Times Trust currently exerts.
If anything, the separation of executive management from the trust should lead to a strengthening, not a weakening of the trust itself. A much more open, broadly-based membership becomes possible when the immediate management role is removed.
A trust that actually does represent a cross-section of contemporary Irish life would not merely reflect successful practice elsewhere but would move beyond the notion of a clubbable, rather cosy feel that any self-perpetuating group tends to generate.
At a time when the possible demise of The Irish Times has reminded Irish society in general of the paper's values, a renewal of trust, in every sense of the word, is both an urgent necessity and an exciting possibility.
Fintan O'Toole is a columnist with The Irish Times and is also the paper's chief theatre critic.
Series concluded
