Stop Opportunistic News Consolidation During COVID-19: Protect Local News

Local newspapers are the bedrock for original newsgathering in communities, but roughly 36,000 news workers have endured lost jobs, cut salaries or furloughs because of the COVID-19 pandemic, which has accelerated the decline of local advertising revenue already disrupted by Google and Facebook.

Newspaper economics are grim, but newspapers make for opportunistic investing, with hedge funds and newspaper chains heading toward a level of unprecedented consolidation that threatens to further erode local journalism.

That opportunism is heating up. Unless policymakers act by June 30, hedge fund Alden Global Capital is poised to seize control over what would become the nation’s second largest newspaper chain, including the Chicago Tribune.

The newspaper industry’s wave of consolidation is an antitrust issue that threatens U.S. democracy, with American newspaper chains growing increasingly concentrated. In this case, Alden, a company with little regard for journalism, would be empowered to further bleed dry an even larger swath of local newspapers.

Policymakers would do well to consider a pause in any further news industry consolidation and in M&A activity in the media sector, especially given the economic fallout of COVID-19. Newspaper industry consolidation stands to undermine media independence and weakens corporations’ incentives to invest in local journalism.

Alden has been dubbed “destroyer of newspapers” for its reputation of taking over newspapers, cutting staff, restructuring debt and squeezing whatever profits remain to be wrung from print advertising.

The standstill agreement filed with the SEC that limits Alden’s stake in Tribune Publishing to 32% is set to expire today. Alden, now Tribune’s largest shareholder, stands to not only control Tribune Publishing, but it will also have ownership over its own privately held chain, MNG Enterprises, which boasts 97 daily and weekly newspapers. A formal merger between the two is likely.

Journalists focused on a geographically specific area provide unique coverage that cannot be scaled, even though these big corporations historically cut the very journalism jobs that make a local newspaper valuable to its citizens.

We have already seen what can happen: In November, the Gannett and Gatehouse chains merged to form a 260-newspaper behemoth, the largest newspaper chain in the United States. Six months later, Gannett admits that many of its properties have fewer than 10 journalists, with most having fewer than five. The new Gannett, like Alden’s MNG, has sought to build efficiencies by eliminating journalists and centralizing resources.

According to the Poynter Institute, which broke the story of Gannett’s depleted newspaper properties, the chain puts most of its scarce resources into bigger metropolitan regions — better to maximize revenue.

Policymakers should consider something else: Return to the bipartisan legacy of supporting local news media ownership and media diversity by making it easier for local civic leaders and community members to purchase news outlets from giant companies.

Distressed newspapers aside, some local civic leaders and would-be investors want to return some dailies to their communities. Local billionaires have their own entanglements (John Henry, owner of The Boston Globe, also owns the Red Sox), and commercial newspapers are not philanthropies, but local owners have a vested interest in ensuring journalism thrives in their hometowns, providing a safety net that distant “vulture capital” hedge funds do not.

Tribune Publishing owns nine big-city dailies, plus many suburban papers, and previously rebuffed deep-pocketed local investors willing to save their community’s journalism.

Civic leaders want to return The Baltimore Sun to local owners. Florida investor Mason Slaine, who owns 7% of Tribune Publishing, wants to do the same, but Tribune snubbed his previous effort to buy the South Florida Sun-Sentinel.

Before Patrick Soon-Shiong purchased The Los Angeles Times along with The San Diego Union-Tribune in 2018, Tribune thrice turned down L.A. philanthropist Eli Broad. Soon-Shiong now owns both, but he also retains a 24% stake in Tribune Publishing — and until today he too is bound by a standstill that requires him to vote with the majority of the board. But his move could be key.

In January, two Chicago Tribune investigative journalists, Gary Marx and David Jackson, took to the pages of The New York Times to rail against Alden and beg for “a civic-minded local owner or group of owners.” The pair warned that without local ownership, the Chicago Tribune, winner of 27 Pulitzer Prizes, was likely to become a “ghost version” of itself.

We know that newspapers retrenching from communities causes a host of problematic consequences for democracy: Elections are less competitive, municipal borrowing rates increase, voter turnout declines, and local institutions lose the independent monitoring provided by professional journalists.

Substantial investment in nonprofit journalism is not enough to make up for these losses, especially because newspapers produce far more content, even in their depleted state, and nonprofits have yet to garner significant audience attention. These large chains deserve to be broken up, and there should be a compelling government and civic interest in returning newspapers to local ownership.

What is clear is that the wave of newspaper consolidation is deeply concerning, especially given a handful of engaged local leaders want to reinvest in their communities’ journalism. No structures yet exist for would-be local ownership, given the current chokehold of these newspaper mega-chains. They see newsrooms as piggy banks to empty, as assets to strip and sell, rather than as investments in civic life.

Policymakers could begin by preventing Alden’s takeover of Tribune Publishing and facilitating the efforts of would-be local owners to buy back their news providers from profit-hungry, monopolistic newspaper chains.

University of Illinois journalism professor Nikki Usher is a fellow with the Center for Journalism and Liberty, part of the Open Markets Institute