In an era of disinvestment, how should local news push back?

Sign up for The Media Today, CJR’s daily newsletter.

Legacy news outlets have a unique mission to serve the public good. Their very names offer up a litany of place and purpose: the Cleveland Plain Dealer, the Charlotte Observer, the Philadelphia Inquirer, the Detroit Free Press, the Elkhart Truth. That makes the recent news of layoffs, cuts, buyouts, and closures not just sad, but dangerous.

This isn’t a new pattern. Eight years ago, David Carr wrote an indictment of how high-flying executives essentially drove the Sam Zell-owned Tribune Company (now known as tronc) into bankruptcy. And a 2016 report from the University of North Carolina’s Center for Innovation and Sustainability in Local Media showed how private equity funds, hedge funds, and investment groups had been scooping up newspapers for more than a decade, with devastating consequences for journalism.

ICYMI: “The internet, with its irreverence and short attention span, is a perfect vehicle for crassly delightful send-up humor”

But there’s newfound urgency this spring as newsrooms are forced into still more cuts: a third of the staff eliminated at the Denver Post, another wave of layoffs at the Chicago Tribune, double-digit job losses at the San Jose Mercury News. Those cuts often seem out of sync with extraordinary corporate profits and executive compensation. The Bay Area News Group, a collection of newsrooms overseen by Digital First Media, has “shed about 220 newsroom staffers” since 2011, according to a recent story by news industry analyst Ken Doctor. In that same time, Alden Global Capital—the hedge fund that owns Digital First—“doubled its Bay Area News Group profit from $20 million to $40 million.”

Strategic disinvestment in local news takes other forms, too, like never filling the positions of employees who leave of their own accord. These sacrifices leave behind news deserts and what Penelope Muse Abernathy, author of the UNC report, calls “ghost newspapers—they still exist but mostly in name only.”The Gannett-owned Battle Creek Enquirer in Michigan serves a city of about 51,000 people, but it has only eight people listed on its staff directory. A decade ago, it had 105 people.* Support for the Enquirer’s newsroom stands in stark juxtaposition with what Gannett pays its top executives. In 2016, the same year the Enquirer lost its executive editor during a round of cross-company cutbacks, CEO Robert Dickey made more than $6.5 million. Joanne Lipman, the chief content officer who has since left her position, was paid $1.5 million in 2016.

 

The Gannett-owned Battle Creek Enquirer in Michigan serves a city of about 51,000 people, but it has only eight people listed on its staff directory. A decade ago, it had 105 people. Support for the Enquirer’s newsroom stands in stark juxtaposition with what Gannett pays its top executives.

 

Meanwhile, as David Uberti detailed, reporters at tronc papers like the Baltimore Sun start at $30,000 and hit a ceiling at $62,000, compared to, say, Ross Levinsohn, a top executive who was suspended for harassing staffers and ultimately reinstated. He made $6.9 million in 2017. (That same year, the CEO of The Washington Post made less than a quarter of that total.) And over at The Sacramento Bee, 15 people were recently laid off, even though its parent company, McClatchy, raised executive compensation several years in a row.

“Paying yourself a lot of money as an executive while cutting the newsroom—how does that work?” asks Carolina Miranda, a Los Angeles Times reporter and co-chair of the new LATimes Guild. “How does that turn things around? How does that create a new model?”

Moreover: What is the model we should be advocating for? And what are journalists and their audiences supposed to do about it? While answers to those questions aren’t clear, many staffers and audiences are no longer going to silently watch as journalism is “strip-mined.” Those pushing back have a variety of tactics, but they collectively demonstrate that the fate of local news isn’t sealed. We have choices.

 

Report on your own news business: The same skills that journalists use every day are powerful when applied to their own companies. That was evident in the Las Vegas Review-Journal’s epic reporting that revealed the identity of its secretive new owner (Sheldon Adelson), as well as in the work of the woman who tracks the hedge fund that controls Digital First Media, the second-largest news chain in America. SEC filings are there for the perusing. When reporters aren’t in a position to safely report on their own companies—see the recent firing at the Boulder Daily Camera—they’ve been known to support to those who can. A revealing December feature in The American Prospect about the role of private equity in journalism was co-written by Robert Kuttner and Hildy Zenger—the latter being a pseudonym for someone “who works at a small-city paper owned by GateHouse,” which “has been pillaged in classic private equity fashion.”

During the LA Times’s unionization drive, Carolina Miranda says calls for reinvestment were initially met with skepticism—“Where does that money come from? We’re broke.” But the tune changed when reporters used an independent blog to show how much more money their CEO and other executives made than their counterparts at The New York Times and The Wall Street Journal—plus, they were playing with a private jet, $250,000 in sports tickets (purchased from the CEO’s company), and multimillion-dollar golden parachutes. As CJR reported, executive compensation at tronc shot up 80 percent between 2015 and 2016, even as journalists like Miranda were using computers so old they didn’t even have USB drives. (She reverted to using her personal laptop.)

“There is money,” Miranda says. “It was just not being invested in journalism.”

Showing disinvestment in creative ways can help galvanize both newsrooms and news consumers. Tronc abruptly sold the Times to a private owner in February. And the Denver Post’s recent package of scorching editorials and columns that confronted its owners has not only become a rallying point nationwide, but it might yet inspire a sale; some Colorado investors have since formed an exploratory committee for potentially purchasing the paper, with at least $10 million pledged so far.

Such reporting can also inspire others to consider how to communicate what’s going on to their audiences. The Detroit News, another Digital First paper, likely would not ordinarily publish coverage about the Denver media. But it made an exception for an Associated Press wire story: “Denver Post asks hedge fund to sell newspaper.” In Minnesota, a public radio station spoke up on behalf of the Digital First paper in St. Paul, noting that The Pioneer Press “cleared $10 million in profit, a 13 percent operating margin after the company slashed the workforce down to 60 people.” In a short Twitter thread, a Post reporter set those profits against how the staff had “consistently been told by management that the buyouts and layoffs were an economic necessity brought on by industry-wide demands.”

Unionize: Newsrooms seeking a way to interrupt the trend of disinvestment are exploring unionization, including The Southern Illinoisian, the Casper Star-Tribune in Wyoming, the Missoula Independent in Montana, all owned by Lee Enterprises, and also, in a resounding vote, tronc’s Chicago Tribune. Ken Doctor, the news industry analyst, says news about the tronc CEO’s $15 million consulting contract solidified the LA Times’s 5-1 union vote. “It’s quite clear that unionization can turn things around,” Doctor says, noting that it likely instigated the Times’s sale to a private buyer.

Carolina Miranda says the new LA Times union is taking a holistic view of what it’ll take to make the Times a better place to work. It wants minimum salaries for certain positions (though not maximums) in recognition of wage disparities, which hit women and racial minorities the hardest. “It’s not just equity between journalists and management, it’s between journalists, period,” she says. The union also wants to protect benefits from unilateral changes. One such change under tronc’s management was when unused vacation days could no longer be cashed out when employees left the company. Those who had negotiated extra vacation as part of their compensation package found that it was suddenly worth nothing.

Take it to court: The union has given the LA Times some muscle. The guild has prepared a class-action lawsuit challenging pay disparities that it says are illegal, should its owners not engage with its bargaining efforts, prompting a memo in response from the editor in chief. Elsewhere, minority shareholders in Digital First filed a lawsuit that accuses Alden of pouring millions into irresponsible investments, including a shaky pharmacy chain and Greek debt, which has been destructive for local news outlets. It’s too early to predict how the case will play out, but it’s a bold effort that explicitly calls for responsible management of the company’s “core business of print and digital media.” And the proceedings themselves are forcing greater transparency: Alden admitted in court filings that it siphoned money out of its papers for its own investments.

ICYMI: The Washington Post’s secret weapon

Accept more modest profit margins: This isn’t the kind of thing that seems likely to change just with the asking. But it’s worth re-setting the norms. Before the 2008–2009 recession, newspaper CEOs were not generally known for being highly paid. Their salaries were in the hundreds of thousands, rather than the millions, though those who were at public companies might also benefit from lucrative stock options. But altogether, there was a narrower spread between the company’s highest- and lowest-paid employees, making journalism well-known as a middle-class trade—“a stable job, and for some, almost a civil-service job,” Doctor says. Yes, the companies wanted to make money and maximize profits, but the democratic mission of the industry was “well-understood” even by top leaders, according to Doctor. But the recession resulted in restructuring and bankruptcies that led to “an influx of new people in the trade,” he added, including those who simply bought distressed debt for cheap.

Ten years later, even profitable newsrooms are being cut, which suggests that many owners have a short-term vision: to collect as much money as they can, while they can. But ownership with a long-term vision for local news would accept a smaller profit.

 

Yes, the companies wanted to make money and maximize profits, but the democratic mission of the industry was ‘well-understood’ even by top leaders, according to Doctor. But the recession resulted in restructuring and bankruptcies that led to ‘an influx of new people in the trade,’ he added, including those who simply bought distressed debt for cheap.

 

Doctor points to the Minneapolis Star-Tribune as the best prototype of such a model. The Star-Tribune has a strong background in the community, a newsroom with more than 200 people, and what Doctor describes as “very smart management.” It’s under private ownership, which means “it doesn’t have the pressure of the public market, and it can take a lower profit margin and put it into modest reinvestment that works.” According to The American Prospect, that profit is in the low tens of millions, which, it says, is all Star-Tribune leadership expects. “We’ve continued to invest aggressively in print,” the publisher told Kuttner and Zenger, “maintaining the newsroom, and introducing new sections. We’ve not cut back our news well. That has helped us maintain readership while we increase digital income.” It also has about 50,000 digital-only subscribers, and print advertising revenue is at about 9 percent, which, according to Poynter, is holding fairly steady with half the typical decline for the big news chains. Its Sunday print edition is the fifth-most circulated in the United States.

Bolster alternative business models: In 2016, the Philadelphia Inquirer and the Philly Daily News transformed into for-profit subsidiaries of a new nonprofit: the Lenfest Institute for Journalism. It was a radical experiment that came with a $20 million endowment by their owner, Gerry Lenfest. The Inquirer’s editor called it “an incredibly public-spirited act. Gerry’s decision to go forward with this nonprofit reinforces my belief that his goal is to perpetuate the best traditions and practices of public-interest journalism for generations to come.” It’s too soon to draw broad conclusions from the transition, and it’s certainly not a quick fix—the company presented buyout offers last fall to cut the newsroom by 30–35 people. At the same time, it said it would hire 10 digital staffers, and in March, the company announced the inaugural class of six journalists of color who will have full-time, two-year positions in the newsroom. It’s also getting its first CMS upgrade in two decades.

 

WHAT ARE NEWS CONSUMERS SUPPOSED TO DO? Alden, the majority shareholder in Digital First, is who Doctor says is “most egregious” in how it is “bleeding the products and increasing prices.” He reports that the Santa Cruz Sentinel costs more than $500 a year for seven-day delivery, with “$100-plus going into the pockets of Alden Global Capital.” The Denver Post staff, in its editorial challenging its owners, observed that, in their state, “Alden has embarked on a cynical strategy of constantly increasing its subscription rates. In doing so, the hedge fund managers—often tellingly referred to as ‘vulture capitalists’—have hidden behind a narrative that adequately staffed newsrooms and newspapers can no longer survive in the digital marketplace.”

Some believe a boycott would be the most effective response, given that the owners appear to have no concern beyond profits. But subscribing can be a way for news consumers to maintain their standing as stakeholders, which can amplify their voices as they agitate for responsible stewardship of legacy news outlets. The LA Times Guild encouraged subscribers to show support for their unionization drive by posting their receipt and digital badges that read: “I Subscribe. Let Them Unionize.” One longtime news veteran I spoke with suggests that, if there is a local publisher, community members might lobby them directly to let them know what they expect from their newspaper. They could do the same with local stockholders. The recent rallies in Denver and at Alden’s headquarters in Manhattan offer a strong model for audiences who want to speak out. Potentially, subscribing also makes the paper more appealing to a new owner who is willing to reinvest in it.

But if news consumers can’t stomach it, and still want to invest in the local news infrastructure, there are other burgeoning for-profit outlets they can support by becoming members, like Billy Penn in Philadelphia and Richland Source in Ohio (both of which CJR has profiled), and Berkeleyside in California.

There are also many public broadcasting stations that invest in local reporting, and a growing network of young nonprofit sites with a strong journalism ethic—places like the Kentucky Center for Investigative Reporting, The Lens in New Orleans, Chalkbeat, and PublicSource in Pittsburgh, all of which rely on donations. For young outlets, with relatively small staffs and resources, “it’s not a replacement” for legacy institutions, Doctor says. “It’s a supplement.” But as the past few years have shown, every reporter is needed.

A previous version of this story inaccurately represented the amount of local content in the Battle Creek Enquirer. CJR regrets the error.

ICYMI: Donald and Melania Trump’s relationship through a lens

Has America ever needed a media defender more than now? Help us by joining CJR today.

Anna Clark is a journalist in Detroit. Her writing has appeared in ELLE Magazine, The New York Times, The Washington Post, Next City, and other publications. Anna edited A Detroit Anthology, a Michigan Notable Book, and she was a 2017 Knight-Wallace journalism fellow at the University of Michigan. She is the author of The Poisoned City: Flint’s Water and the American Urban Tragedy, published by Metropolitan Books, an imprint of Henry Holt. She is online at www.annaclark.net and on Twitter @annaleighclark.