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Rutten on Directors’ Duties and the LA Times
I like LA Times' columnist Tim Rutten's media columns, even though I frequently disagree with his political spin. So I've been following with great interest his recent series of columns on the troubles at the Tribune media conglomerate, which owns the Times. In his latest column, Rutten writes:
No one can argue that Tribune or anyone who owns The Times is obliged to lose money. On the other hand, no one should argue that a newspaper's proprietor has no obligation except to make as much money as it can. Somewhere between those two extremes is a fulcrum called responsibility on which a balance must be struck. Doing so requires the recognition that, although stockholders certainly are stakeholders in this process, so — and just as surely — are a paper's readers.
Sorry, but I just don't buy it. The Tribune company is a corporation. Like all other corporations, its board of directors has very clear legal duties:
Making a corporation’s mission flexible is a recipe for corruption and abuse of power. I am suspicious even of “community development” schemes, because it seems to me that it would be very good to have a friend in charge of one of them. More here.
Even if you believe that this argument means that the corporation’s sole obligation is to make as much money as it can, the brief specifically says that the corporation requires “discretion to be exercised in good faith [re] the infinite details of business, including the wages..etc.”
It’s easy to say corporations should make as much money as they can. The “infinite details” of how best to do this are not as clear, especially re: an asset that is still pulling in $200 million a year.
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I’ll buy it for a garden-variety publicly traded corporation, but is there no legally binding method of mandating a corporate “mission statement” in addition to generating profits? Can’t a corporate entity have whatever priorities its owners want it to have?