Google Won't Buy Ailing Newspapers, Could 'Merge Without Merging'

This story was written by Robert Andrews.
Their fortunes are poles apart and yet inseparable - one is reeling in buckets of from advertising, the other losing it at an alarming rate. Google (NSDQ: GOOG) sympathizes with the newspaper business' predicament and continues to say it can help, but, sadly for NYT-Google acquisition speculators, CEO Eric Schmidt says he isn't about to buy or bail out any news publishers.

Schmidt tells Fortune: "The good news is we could purchase them (newspapers). We have the cash. But I don't think our purchasing a newspaper would solve the business problems. I think the solution is tighter integration. In other words, we can do this without making an acquisition. The term I've been using is 'merge without merging'. The web allows you to do that, where you can get the web systems of both organizations fairly well integrated, and you don't have to do it on exclusive basis."

Schmidt also rules out investing in newspapers and, though he's concerned enough about "companies that are in a terrible business situation who support an important public good" to advocate models like Sandler Foundation-funded ProPublica, there'll be no parachute payments through anything like the benevolent Google.org fund: "We didn't want to co-mingle philanthropy with business. We are in the advertising business."

Google is tip-toeing on precarious ground. Having built a successful business of its own, it has no real obligation to help out ailing newspapers, but the chasm between their contrasting fortunes, and the suggestion that Google is making some of its money from the very content news publishers generate, is prompting some to wonder if Google doesn't have some kind of moral duty to help. Schmidt, though, is advocating the same kind of relationship that Google has operated to date ("We'd like to help them better monetize their customer base, we have tools that make that easier"). But Belgian newspapers have already taken Google to court and won over indexing of their stories. If the gulf between the two widens further in lieu of additional support from Google, some publishers may yet wonder if they're really getting sufficient upside.


By Robert Andrews
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