BOB GARFIELD: On June 17th, The Washington Post reported on the front page of its financial section, quote: "The recent breakup of the Knight Ridder newspaper chain has helped spark interest around the country in returning papers to local or private ownership after decades of expansion by corporate media conglomerates." Of course, this sentiment has been simmering for years, amid layoffs and cutbacks, that Wall Street cared more about earnings than good journalism. But less than three weeks after that Washington Post piece ran, six senior staff members of the Santa Barbara News-Press walked out when that paper's local and private owner took a sledgehammer to the wall that traditionally separates the editorial page from the newsroom. Two more have since resigned, and the whole affair, says Fortune Magazine editor-at-large Justin Fox, is a reminder to be careful of what we wish for. He joins us now to explain. Justin, welcome to On the Media.

JUSTIN FOX: Thanks for having me.

BOB GARFIELD: Now, in defense of the publicly-held model, you speak of what, if I'm not mistaken, is the efficient market theory - that Wall Street, in the aggregate of all the information that it amasses every day, simply knows better than any single owner. Can you give me any evidence that it's true?

JUSTIN FOX: Evidence schmevidence! All I can say is it's pretty clear that publicly-held corporations are just as or even more likely to invest for the long run, to put money into R&D, to find ways to grow than privately-held companies. And so, yeah, over industries in general, I would say there's pretty good evidence that the market does a pretty good of looking into the future and saying, hey, this is a good place to steer money and this isn't.

BOB GARFIELD: Then there's the Knight Ridder organization. For many years, Knight Ridder was deemed the gold standard in newspaper chains because it ran some great papers under corporate ownership – The San Jose Mercury, The Miami Herald, The Philadelphia Inquirer – but those papers have become shadows of their former selves. So which are we to credit, the Knight Ridder of 20 years ago or the Knight Ridder that just withered on the vine?

JUSTIN FOX: Well, yeah, the pressure from Wall Street maybe accelerated things, but the initial problem is that regional daily newspapers are in really deep trouble. There's a place for national media, there's a place for sort of hyper-local media, but it's just not clear what the market is for the kind of papers like The Philadelphia Inquirer or The Boston Globe, or maybe even The L.A. Times, that aren't really national papers, that don't appeal to a national audience but yet have national aspirations. It's just not clear to me that there's a way to support that if you don't have this monopoly stranglehold on classified advertising and readers in your region any more because of the Internet. And so to say that these papers wouldn't be facing a struggle if they were all owned by nutty local billionaires – and I think eventually they would.

BOB GARFIELD: Well, I don't know the last time that The Philadelphia Inquirer had national aspirations. It strikes that it's probably about 20 years ago.

JUSTIN FOX: Right.

BOB GARFIELD: Let's talk about them for a moment, because they have just been acquired by a local ownership group headed by a guy who's an advertising man. That group has actually pledged to keep their hands off the editorial product – not only the editorial [LAUGHS] product but the editorial page itself. What do you make of that situation?

JUSTIN FOX: I would guess one of the issues would that group is it's a relatively diverse group of people who've put money into it. And the one thing that brought them all together is that they wanted to bring the Inquirer's ownership back to Philadelphia, and they may not agree on anything else. So it may, to a certain extent, just be a way of preventing them from all wringing each other's necks. I hope it works out in Philadelphia. And one thing I will say is that I think there should be [LAUGHS] different ways of running newspapers. But I do think that just thinking that, okay, having David Geffen buy The L.A. Times and having these locals buy The Inquirer and having Wendy McCaw buy the Santa Barbara paper, that that's going to automatically make them better, I think that's a little bit delusional.

BOB GARFIELD: Now, without going into a whole lot of the particulars of the Santa Barbara case, in which the private owner, Wendy McCaw, basically put a battering ram to the division between the executive suite and the newsroom in protecting a movie star friend of hers and someone within the organization who had been arrested on drunk driving charges, in some sense, isn't the publisher's intervention like that just sort of a return to the bad old days?

JUSTIN FOX: Yeah, and the question is just how bad it gets. I mean, that wall is, at least in papers I've worked at, there's always been a little bit of porousness there and there's definitely some influence from the publisher. In McCaw's case, it's because her demands were so absurd that people fought back.

BOB GARFIELD: Okay, yes, maybe Wendy McCaw has acted obnoxiously in Santa Barbara, and, you know, maybe we should be a little bit fearful that Brian Tierney, the head of the ownership group in Philadelphia, has talked about bringing an ad agency in to redesign the paper as opposed to people with a sort of journalistic ethos. Putting that aside for a second, can we draw really any conclusions about private ownership from these two fairly anomalous stories?

JUSTIN FOX: Well, you can draw a lot of conclusions about private ownership of newspapers by just looking back half a century and seeing what American newspapers were like. The Chicago Tribune, when it was privately owned, was a national disgrace. It was this reactionary, incredibly biased joke of a newspaper in a lot of ways. It was very successful financially, but it was really hard to take seriously. Since Tribune Company became a publicly-held company, it's been a pretty good paper. It's not the best paper in the world, but it's significantly better than it was under private ownership. So I would just say private ownership is a mishmash. Sometimes it's great. Sometimes it's horrible. It doesn't solve all the problems that newspapers are facing.

BOB GARFIELD: Okay. Well, Justin, thank you very much.

JUSTIN FOX: Thanks for having me.

BOB GARFIELD: Justin Fox is an editor-at-large for Fortune Magazine. [MUSIC UP AND UNDER]

BROOKE GLADSTONE: Coming up, the scandalous father of civil liberties.

BOB GARFIELD: This is On the Media from NPR.