Wall Street is savaging local journalism

Newspapers burning

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A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or perhaps both. … And a people who mean to be their own Governors, must arm themselves with the power which knowledge gives. — James Madison, 1822

You know it’s not good news for journalism in your city when local newspaper execs take out a full-page ad in their own paper to tell you what a superb job they’re doing. “This is YOUR Statesman,” exclaimed the recent ad in my hometown daily, the Austin American-Statesman, making “daily history,” providing “insightful coverage,” and continuing “to triumph and serve.”

Excellent! But if that were true, wouldn’t we know?

The cold fact is that today’s Statesman is an ever-thinner, ever-pricier paper that doesn’t live up even to its middling journalistic standards of a decade ago, much less to the ad’s hype. No longer printed locally, this morning paper doesn’t include basic news–election results, city council decisions, weather events, legislative actions, and sports scores–that happens after about 5 p.m. the previous day. Instead, the daily is filled with chopped-up wire copy and extraneous features from faraway.

The Statesman routinely:

  • Misses big state and local stories.
  • Shamelessly acts as a PR agent for local Big Tech and other corporate powers.
  • Contains multiple editorial errors.
  • Doesn’t run local editorial cartoonists.
  • Regurgitates corporate press releases as “news.”
  • And… well, is a sorry example of what the public needs from the newspaper of the big, culturally significant capital city of Texas. Driven by the corporate conglomeration and Wall Street financialization of “local” papers, this sad saga is being repeated all across America–quite likely including where you live. Far from being “yours” the Statesman is now the property and organ of … whom?

Let’s play “Follow the Bouncing Ball”:

  • Last April, the Atlanta-based Cox newspaper chain, which had owned the Statesman for 41 years, sold it to GateHouse Media, the nation’s largest owner of US newspapers, controlling hundreds of dailies and weeklies in 44 states.
  • GateHouse, however, is just the brand name of a conglomerate that is owned by a New York financial outfit: New Media Investment Group.

Wait–it gets trickier.

  • New Media’s cluster of papers was conglomeratized, financed, and is managed by a Wall Street hedge fund, Fortress Investment Group. In turn, Fortress is owned by Wes Edens, a billionaire fossil-fuel baron who also owns New Fortress Energy, a major fracking and gas exporting outfit.

But the bouncing ball doesn’t stop with Wes.

  • While the hedge fund continues to manage New Media, it was taken over in December 2017 by $83-billion-a-year tech giant SoftBank Group, one of Japan’s largest corporations, which also owns telecom conglomerate Sprint.
  • The New Media/Fortress/SoftBank empire got even more byzantine last November when it bought Gannett, Inc. This acquisition merged GateHouse publications (144 dailies, 684 community publications, and over 569 local-market websites in 38 states) with Gannett’s nationwide daily USA Today, plus over 100 daily and nearly 1,000 weekly newspapers. Now operating under the Gannett moniker, this colossus includes once-independent regional news sources such as the Des Moines Register, The Indianapolis Star, Detroit Free Press, The Cincinnati Enquirer, The Oklahoman, The Providence Journal, The Tennessean, Burlington Free Press (VT), Milwaukee Journal Sentinel … and don’t forget Guam’s Pacific Daily News. One in five daily US newspapers now has the same owner: Gannett.

One more important factor:

  • New Media’s takeover of Gannett was financed by a $1.8-billion loan from Apollo Global Management. The Wall Street private equity firm extracted an unusual and usurious interest rate of 11.5% and a role on Gannett’s reconstituted board of directors.

So, let’s not kid ourselves about who’s in charge. With this one merger, more than 1,000 US newspapers belong–and must respond– to a monopolistic fusion of three Wall Street conglomerators, a fracking tycoon, and a global loan shark. Notice who’s not in the decision-making room: journalists.

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The priority is profit

Big boss man

Even as the stock price of conglomerate-owned newspapers plummets, and journalists’ wages and jobs are mercilessly slashed, the top execs are rallying the troops with cries of We’re all in this together! (except for us).

For instance, while the giant Gannett chain was stumbling into the financial ditch in 2018, CEO Bob Dickey soothed his wounded ego by reaping $5.26 million. Worse, the GateHouse empire, which offed hundreds of journalists in 2018, declined even to report CEO Mike Reed’s pay, coyly claiming it was immune from disclosure because the hedge fund, not the newspapers paid him.

Such sneaky executive-suite maneuvers separate the good fortunes of the chiefs from the bad fortunes of workers and shareholders. In addition to fat salaries, the top dogs are assigned a half dozen or so “individual goals” that garner hundreds of thousands of dollars in extra pay. The scam is that the goals, written in corporate gobbledygook, are simply tasks the CEO is supposed to do anyway, such as “achieving the budgeted operating cash flow”–i.e., not busting the budget. It amounts to rewarding the big bosses with a bonanza just for showing up, even if the businesses they’re supposed to be steering are crashing.

With some notable exceptions, the business of hedge funds and private equity outfits is corporate plunder: They amass a pile of money from big investors and banks and use it to buy foundering businesses on the cheap; slash workforces; degrade quality; jack up prices; strip productive assets and sell them at a premium; and extract outlandish managerial fees for all the above, eventually selling off the hollowed-out carcasses as scrap or just shutting them down.

It’s on this altar of avarice that local journalism is being sacrificed. Of course, the predators always insist with a straight face that they are noble protectors of the public good. As the CEO of the new, bulked-up Gannett declared, our mission “is to connect, protect, and celebrate local communities. And the core of that is great local journalism. That’s the engine that has gotten us to the place we are today.”

Uh … no, no, and no.

  1. The mission of Gannett, GateHouse, and other Wall Street consolidators of news sources–as proven by their track records–is to maximize profits for their investors.
  2. Rather than practicing great local journalism, they’ve lowered the standard to mediocrity or less.
  3. They’ve gotten where they are today by flexing the brute muscle of Wall Street’s slash-and-burn tactics.

Actually, having a fracker involved in a Wall Street takeover of newspapers sort of makes sense, for both efforts are based on the forced extraction of resources. Fracking blasts loose tons of underground rock so profiteers can extract natural gas. Newspaper fracking blasts apart newsrooms, editing desks, capitol and city hall bureaus, design and layout shops, and other publishing essentials so profiteers can extract the cash that once sustained those functions. The money sucked out of reporting local news is piped right into the pockets of the new corporate hierarchy: the top executives, big shareholders, money management groups, consultants, and of course those lenders who yoked the newspapers to the steady drain of exorbitant interest payments. Rule Number One of private equity outfits: “Pay Us First,” no matter who or what else has to be sacrificed.

Invariably, when newsroom money is removed, so are the people who dig out and report news. Corporate extractors don’t like to say “layoffs,” so they speak instead of “synergies” and “efficiencies” achieved by merging your town’s paper into their distant financial webs. And they dehumanize the inevitable loss of journalists–through firings, forced retirements, drastic pay cuts, and buyouts–as “headcount reduction.”

And heads certainly do roll. Last May, the CEO of GateHouse’s welter of papers glossed over a one-day mass dumping of some 200 reporters, photographers, and editors by calling it “a small restructuring.” Journalists in the GateHouse network called it devastating. The vibrant 100-person staff of the Lakeland (FL) Ledger, for example, saw its numbers whacked again and again after the conglomerate took over. A May cutback left this important city paper with only 16 journalists. At the Worcester (MA) Telegram & Gazette, so many journos were severed that the mayor lamented that New England’s second largest city had “no more real newspaper.” Or consider the GateHouse massacres at the dailies in Amarillo, TX, and Columbia, MO: By 2018, the corporate bean-counters had reduced them to one reporter each!

In the decade ending in 2018, US newsroom jobs nearly halved (from 71,000 to 38,000) as news corporations “streamlined” or simply shut local papers. (Since 2004 some 1,800 dailies and weeklies have been shuttered or consolidated into what journalists call “ghost papers,” with no local reporters covering individual cities.)

And now the Gannett/GateHouse wedlock looms over America’s journalistic future like an angel of death. As usual, the corporate partners insist that newsroom jobs will be sacrosanct and local coverage greatly enhanced.

Do they think we have sucker wrappers around our heads? Both outfits routinely slashed jobs and quality at papers they acquired, so why would this time be different? Especially when they’ve promised investors to shore up the financial prospects of their dicey mega-merger by immediately cutting $300-million a year from their papers’ operating costs.

Commodifying news

You could feel the chill in the 600 newly merged newsrooms in November when a top Gannett executive announced that layoff decisions would be based on tracking each reporters’ output–apparently intending to measure reportorial value by column-inches produced. Old country saying: You can put a sack of flour in the oven, but that doesn’t make it biscuits. New country saying: You can fill a corporate newspaper with word-counts, but that doesn’t make it journalism.

A newspaper plays many roles, but serving as a community’s eyes and ears–and ideally, its public conscience–is fundamental. It must be not merely in the community, but of it. It must be committed for the long haul and willing to make a sustained investment in the people of journalism. Voila!–therein lies the fatal flaw of the Gannett model, which is based on disinvesting in people, converting news gathering and production to a centralized, tech-driven, cookie-cutter process.

Plainly put, a paper’s most vital asset is its journalists. Yet the rise of conglomerate control shifts the bulk of newspaper capital from them to computer technologies, debt payments to bankers, and outrageous payouts to corporate insiders. As Bernie Lunzer, then president of journalists’ union NewsGuild-CWA, said of the November Gannett deal: “It’s hard to see how anyone can see this as anything more than a callous piece of financialization meant to create short-term profit at the expense of the newspapers.”

Ultimately, Wall Street’s pillaging of local papers comes at the expense of our communities and democratic vitality. It’s not just that newsrooms are being cut to the bone, but that the most experienced diggers, writers, editors, photographers, and artists–the people with the deepest institutional knowledge of the economic, social, political, and cultural workings of their towns–are the ones being let go. Money managers see them not as assets, but as expenses whose elimination means bigger profits.


Let’s face it. We can’t leave the fate of local news up to absentee, conglomerate owners–their interest in milking newsrooms dry of cash and talent goes straight up against our need for community information. The good news: In the hollows left by these corporate takeovers, experiments in local journalism are blooming. There’s no single, proven formula for success, but many are nonprofits.

To find out what’s happening in your town, you can start with the Institute for Nonprofit News (inn.org/members). Each of INN’s 212 members–from the Alabama Initiative for Independent Journalism to Vermont Digger to Oklahoma Watch and WyoFile–is “a nonprofit, nonpartisan organization committed to editorial independence and transparency.” They deserve our attention and support.

Legendary radio host Scoop Nisker once challenged his listeners, “If you don’t like the news, go out and make some of your own.” Today, that might mean helping start your own local news outfit!

What’s left is fast-food journalism–a preponderance of syndicated material that can fill papers on the cheap. After decimating local reporting staffs, conglomerate owners turn to listicles and clickbait, as well as nationally written, generalized, homogenized, and abbreviated stories designed not to educate or expose, but to fit a news hole. The lack of local reporting on how corporate boardrooms and governmental backrooms affect cities and states inevitably results in more malfeasance, less civic participation, and more public cynicism. Unsurprisingly, it also results in fewer newspaper subscribers. After surveying some 400 publishers in 2018, media analyst Kevin Slimp reported that successful owners are those who recognize that “Job number one is to put out a good product.” Those shrinking or dying, he concluded, “should not have ignored their [print] products, and they should not have reduced their staffs. When you start getting rid of reporters, no one wants to read your paper.

News is not just another manufactured commodity to be sold by corporate hype. Newspapers readers can see in black and white the drastic drop in the quality of coverage that Gannett and other Wall Street syndicates are now producing. And–voila again!–while Gannett’s grand business plan is to convert print readers to cheaper web versions, mediocrity online is no more nourishing than it is in print. After all, what does a Wall Street hedge fund know or care about Peoria, Pocatello, or Poughkeepsie? Newly elected president of the NewsGuild, Jon Schleuss, has pledged that the Guild will work more closely with local communities to fight against newspaper take-overs by “hedge-fund owners intent on looting the place and destroying journalism.”

Prologue to …

Wall Street ownership is a critical factor in today’s imploding system of degraded local newspaper coverage. Sure, you might get free information through social media like Facebook and internet sources underwritten by Google ads. But that’s a dead end, too, since the ad money goes straight into the bottomless profit-pit of the tech giants, which don’t produce any local journalism. Indeed, to the extent there’s substantive local material online, much of it has been ripped-off from–hello–our vanishing local newspapers! This is a deadly whirlpool for the info and insight We The People need to be even quasi self-governing. So… what do we do?

Let’s begin by acknowledging that local journalism is a public good and a democratic necessity–not a fast-buck profit center for absentee investors. Indeed, for obvious conflict-of-interest reasons, newspapers ought not be owned and run by titans of Wall Street and Silicon Valley. To protect and foster the essential public good that is local reporting, consider several new and revived public policies:

  • Greatly expand public funding for local and regional reporting as well as national non-profit, public-interest journalism outfits such as the Center for Investigative Reporting and ProPublica.
  • Encourage a manifold increase in philanthropic funding for local news. How-to examples of this approach exist in several grassroots collaborations underway across the country, as well as in such large-scale endeavors as the American Journalism Project. AJP is trying to build a sustainable model of independent, public service media through social venture investments, including in innovative community newsrooms like Mississippi Today, City Bureau (Chicago), inewsource (San Diego), Noise (Omaha), and Centro de Periodismo Investigativo (Puerto Rico).
  • Literally free the press from monopolists by getting serious about enforcing antitrust laws. (The Gannett merger was rubber stamped before the public even knew it was happening.)
  • Require tech monopolists to fairly compensate local papers for the news content they now essentially steal. In addition, assess an “ad revenue tax” on the monopoly profits of internet giants to finance a journalist-directed, national endowment for local journalism.

If we are to be, in James Madison’s words, “our own Governors,” it is essential–and urgent–that we come up with new ways to sustain and expand local journalism, the medium that lights up our nation’s democratic possibilities.

I’m making moves!

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