Original item: You can never take anything for granted. Until recently, though, it seemed like a reasonably good bet that Congress would pass the Local Journalism Sustainability Act, which would provide tax credits for subscribers, publishers and advertisers for five years. The idea was to bolster the bottom line of community newspapers, radio stations and television outlets while giving them some time to figure out a path to financial sustainability.
Last week, though, the House dropped the $1 billion measure from its version of the reconciliation bill. So now it’s up to the Senate to restore it to the $1.75 trillion Build Back Better legislation, meaning that the fate of local journalism rests in the unsteady hands of Sens. Joe Manchin and Kyrsten Sinema.
Rick Edmonds of Poynter, who has all the details, wrote that the bill now “faces a giant hurdle” — and that was on Tuesday, before the election returns from Virginia panicked the already-jumpy Democrats. You’d like to think that the Republican resurgence would focus the Democrats’ minds on the need to get something done, but it will probably have the opposite effect. And with Manchin and Sinema, who knows?
I’m what you might call a skeptical supporter of the legislation. Although the assistance would be indirect enough not to threaten journalistic integrity, I’m troubled by the prospect of corporate chain owners lining up at the trough. Ideally, federal help should foster independent local news organizations while letting the very owners who helped create this mess figure things out for themselves.
Still, it’s worth giving it a try on a temporary basis. As Steven Waldman, chair of the Rebuild Local News Coalition, puts it, “The cost is miniscule compared to the rest of the Build Back Better package — less than 0.1% of its total. But this provision is the only thing in the bill that would help save democracy.”
Don Seiffert of the Boston Business Journal has some details on the proposed contract settlement between the Boston Newspaper Guild and Boston Globe management, news that I broke here on Friday afternoon. This is a huge step forward for the Globe, as three years of talks had become increasingly contentious.
As Seiffert notes, the two big takeaways are that management won on seniority and the union won on a clause that keeps the contract in effect in case the owners, John and Linda Henry, sell — although I think he’s on target in observing that management “may have used the threat of taking away that provision mostly in order to obtain other concessions from the union.”
On our latest “What Works” podcast, Ellen Clegg and I interview the investigative reporter Julie Reynolds, the scourge of Alden Global Capital. Reynolds gives us the lowdown on Tribune Publishing’s legally dubious vote to sell its nine major-market newspapers to the hedge fund as well as Alden’s relationship with Cerberus Capital Management, the “shadow bank” that helped finance that acquisition.
Other topics include Rocky, Bullwinkle and pink slime. You’ll find more details — and information on how to subscribe to the podcast — right here.
The Boston Newspaper Guild’s seemingly endless negotiations with Boston Globe management may finally be coming to a conclusion. According to an email I received from a trusted source, the two sides have reached a “full, comprehensive tentative agreement” that will most likely be put to a vote in mid-November. Union members have worked without a contract since the end of 2018; the proposed agreement would be for three years.
“This has been a long and difficult struggle,” according to an email sent to the membership. “Thanks in part to the vocal and active support we received from many of you, we have succeeded in holding onto some of the most important rights and protections the company sought to remove.”
I am not going to quote any further from the email. It’s a confidential document, and it’s newsworthy only to Guild members. Besides, it presents only one side’s assessment of the pros and cons of the agreement.
Nevertheless, this represents a huge step forward for Globe staff members and for the news organization itself.
Patrick Soon-Shiong. Photo (cc) 2018 by Steve Devol.
The New Yorker has published a long profile of Patrick Soon-Shiong, the celebrity surgeon who moonlights as the problematic owner of the Los Angeles Times. Most of Stephen DeWitt’s article focuses on how Soon-Shiong became a billionaire — which appears to be based on a combination of brilliance and shady business practices. DeWitt writes:
Few figures in modern medicine have inspired as much controversy as Soon-Shiong. “He gets very enthusiastic, and sometimes he might exaggerate,” Hentz said. “He can embellish a little.” [Kate Hentz is the daughter of Lee Iacocca, whose first wife died of Type 1 diabetes and who was an important backer of Soon-Shiong’s work.] Outcomes for his diabetes treatment were disappointing, and one case ended tragically. While pursuing this therapy, he also began researching chemotherapy. At the center of his fortune is a cancer treatment that costs more than a hundred times as much as another drug, available as a generic, that is prescribed for some of the same conditions. Soon-Shiong has been repeatedly accused of financial misrepresentation, self-dealing, price gouging, and fraud. He has been sued by former investors and business partners; he has been sued by other doctors; he has been sued by his own brother, twice; he has been sued by Cher.
There’s a little bit on Soon-Shiong’s ownership of the Times and The San Diego Union-Tribune. I love this quote from Norman Pearlstine, the editor Soon-Shiong brought on board to right the ship after years of bad ownership: “He made the acquisition with very little due diligence, because he thought that it had to be easier than curing cancer. I’m not sure whether he still believes that.”
To Soon-Shiong’s credit, he has made some investments in his papers, although his interest seems to have wavered from time to time. His choice of Kevin Merida, late of ESPN and The Washington Post, as Pearlstine’s successor was a good one. Soon-Shiong also enabled Alden Global Capital to acquire Tribune Publishing earlier this year, which is unforgivable. But he saved the L.A. Times — at least for now — and that’s an important legacy.
There are few local news start-ups that have received the kind of attention bestowed upon The New Bedford Light, which has been the subject of stories by The New York Times, “On the Media,”The Boston Globe and other outlets. With high-profile founders like publisher Stephen Taylor, of the Taylor family that used to own the Globe, and board member Walter Robinson of “Spotlight” fame, the Light is being watched closely across the country.
The nonprofit digital project also has a high-profile editor — Barbara Roessner, the retired editor of top Connecticut outlets such as the Hartford Courant and the state’s Hearst papers. Recently I had a chance to speak with Roessner as guest cohost the local cable television show “SouthCoast Matters” with Paul Letendre.
We interviewed Roessner for an hour. Her insights into the future of community journalism and what she hopes to accomplish at the Light were pretty interesting, and I hope you’ll agree.
The Boston Globe’s Jeff Jacoby devoted his Sunday column to laying out his case against the Local Journalism Sustainability Act, which is aimed at easing the community news crisis through a series of federal tax credits. Jacoby’s opposition was no surprise, but I think it’s worth taking a look at his two major objections. One of them ought to be taken seriously; the other is grounded solely in his own boutique political philosophy.
The act would become law if it is included in the final reconciliation bill now being considered by Congress, assuming that Sens. Joe Manchin and Kyrsten Sinema will allow it be dragged at long last across the finish line. Here is a good overview of the bill by Steve Waldman, a founder of the Rebuild Local News Coalition. It would provide three tax credits for a five-year period, giving local news organizations some runway as they figure out how to transition to the confounding economic realities of the digital era:
News consumers would be able to write off $250 a year that they spend on subscriptions or on donations to nonprofit news organizations.
News organizations would receive tax benefits for hiring or retaining journalists.
Local small businesses would receive tax credits for advertising in local newspapers and news websites and on television and radio stations.
Jacoby’s argument is that tax credits amount to government subsidies, and even though these would be indirect, they could still be wielded by government officials to reward their friends and punish their enemies. “Government subsidies, almost by definition, are antithetical to the spirit of an independent press and the First Amendment,” Jacoby writes. “A newspaper that takes money from the government is apt to pull its punches when it covers that government — especially if it grows addicted to tax breaks that will have to be renewed every few years.”
There’s no question that could be a problem. The optimistic view is that the tax subsidies will end after five years, so there’s not much incentive for news organizations to soft-pedal their coverage. But I can easily envision a lobbying effort to extend those tax breaks, and then you end up in exactly the situation that Jacoby warns against.
There’s also the possibility that news organizations, especially those owned by corporate chains and hedge funds, will not use the five years wisely by making the kinds of investments that might move them toward financial sustainability, like customer-focused digital products, seamless payment systems and newsrooms robust enough to be produce journalism that people will be willing to pay for. (All steps, by the way, that Jacoby’s employer has taken to good effect.) Instead, they’ll just pocket the savings and ask for more. These are real concerns.
Here Jacoby has identified what many of us would regard as the flaw in his argument, because the tax credits envisioned in the Local Journalism Sustainability Act are not materially different from those granted to nonprofit news organizations in general. From PBS to nonprofit hyperlocal websites, nonprofit status enables donations to be tax-deductible and enables the news organizations themselves to avoid paying taxes.
Jacoby appears to be taking a more extreme position now than he has in the past. In his current column, he writes that he opposes tax credits for public broadcasting, which seems to go a step beyond his previous position: In 2011 he called for an end to direct government payments to public broadcasting, arguing that the system would do fine without such payments. There is nothing in that column to suggest he opposes the indirect government benefits that public media receive as a consequence of their nonprofit status.
As I’ve written before, I think it’s worth taking a chance on the Local Journalism Sustainability Act. Although there are some hazards, a few of which Jacoby has identified, overall it strikes me as a worthwhile response to the decline of community journalism.
Last week I received some very good news — Jim Haggerty, the editor of The Daily Times Chronicle in Woburn, had been selected to receive the Bob Wallack Community Journalism Award from the New England Newspaper and Press Association. I worked for Jim from 1979-’89, and I was delighted that I was asked to say a few words. Here’s the text of my remarks:
Congratulations to Jim Haggerty for winning the Bob Wallack Community Journalism Award. The award “recognizes an individual who has an exceptional record of commitment to community journalism.” Through his work at The Daily Times Chronicle and through his years of mentoring young journalists, Jim, along with the entire Haggerty family, have shown that they are committed to the highest ideals of local news.
I first met Jim in 1979, when I began working as a part-time reporter covering the town of Winchester. A few months later, after I graduated from Northeastern, Jim hired me. I learned from him and his family what community journalism was about — telling tough stories when they need to be told, but doing it with compassion and with an understanding that holding local government officials, business people and others accountable is not incompatible with treating them like human beings. It’s a lesson I’ve tried to carry with me throughout my own career.
During my 10 years at The Daily Times Chronicle, the paper covered the years-long story of Woburn’s toxic waste tragedy comprehensively and courageously. Families in East Woburn claimed that contaminated drinking water had resulted in their children contracting leukemia and other illnesses. Several of them died. The pressure on Jim and his family from city officials to tone down the coverage must have been overwhelming. But that never trickled down to those of us who were covering the story. Jim’s dedication to journalism and truth-telling during those years was inspiring.
These days, local news is in crisis, as the internet has undermined advertising revenues while corporate chains and hedge funds are slashing the newspapers that they own. The residents of Woburn and the surrounding communities are lucky that The Daily Times Chronicle is still family-owned, still doing good work and still dedicated to the principles that have sustained it for the past hundred years. Best wishes to you, Jim — and good luck to you and your family as you embark on the next hundred.
The Devil Strip, a pioneering cooperatively owned magazine in Akron, Ohio, has closed its doors. More of an arts and culture outlet than a news organization, the operation has nevertheless stood as a successful example of an independent project owned by its employees and the community.
WKYC reports that the end came over the weekend — staff members were told on Friday that the money had run out, and on Monday they received layoff notices. The station adds:
Founded in 2014, The Devil Strip was a community-owned magazine that focused on music, arts, news, and culture in Akron. For as little as a dollar a month, readers had the opportunity to become members of the co-op. An investment of $330 allowed you to become a co-owner.
In March 2020, I spent a week in Northern California reporting on The Mendocino Voice, a for-profit news site that was converting to cooperative ownership. At that time the founders, publisher Kate Maxwell and editor Adrian Fernandez Baumann, told me that The Devil Strip was one of the projects they had studied.
I hope The Devil Strip might be able to reorganize and come back, though the tweet makes it sound like they’ve hit the end of the road. Founder Chris Horne has not tweeted about it except for a cryptic reference to a “sabbatical.” I’m sure he’ll have more to say soon.
Among those of us who have obsessively followed Alden Global Capital’s destruction of newspapers over the years, there was very little that was new in McKay Coppins’ 7,000-word magnum opus that The Atlantic published this week. Still, Coppins is a gifted writer, and he’s pulled together the full story in a manner that is both elegant and comprehensive.
The arc of Coppins’ narrative is familiar. Alden, a hedge fund, got into the newspaper business about a decade ago. At first, Alden indulged the chief executive it inherited from one of the chains it acquired, John Paton, and then turned on him when he wasn’t willing to go along with the drastic cost-cutting they insisted on. I imagine Alden co-founder Heath Freeman was initially impressed with the blunt, profane Paton, who was not averse to slashing expenses to align them with revenues. The problem was that Paton actually cared about journalism and was not on board with Freeman’s insistence on endless rounds of cuts in order to enrich himself and the other co-founder, Randall Smith.
One fact I hadn’t known previously is that Randall Smith, secretive and a generation or so older than Freeman, is the brother of Russ Smith, founder of the now-defunct New York Press. Russ also founded the Baltimore City Paper, the Washington City Paper and now runs the website Splice Today.
The New York Press was a big deal in the 1990s, as Coppins notes, publishing 10,000-word columns by Smith that attacked the elite media establishment. Smith also once published a lengthy takedown of The Boston Phoenix by another writer that infuriated all of us. I wish I still had a copy. No complaints by me about Smith, though — he wrote a favorable review of my first book for The Wall Street Journal, and I enjoy bantering with him on Twitter about music and baseball.
But back to our story. Coppins’ description of Freeman, the more active and public of the two partners in running Alden’s newspapers, is priceless:
People who know him described Freeman — with his shellacked curls, perma-stubble, and omnipresent smirk — as the archetypal Wall Street frat boy. “If you went into a lab to create the perfect bro, Heath would be that creation,” says one former executive at an Alden-owned company, who, like others in this story, requested anonymity to speak candidly. Freeman would show up at business meetings straight from the gym, clad in athleisure, the executive recalled, and would find excuses to invoke his college-football heroics, saying things like “When I played football at Duke, I learned some lessons about leadership.” (Freeman was a walk-on placekicker on a team that won no games the year he played.)
And Coppins’ description of Alden’s business model is right on target:
What threatens local newspapers now is not just digital disruption or abstract market forces. They’re being targeted by investors who have figured out how to get rich by strip-mining local-news outfits. The model is simple: Gut the staff, sell the real estate, jack up subscription prices, and wring as much cash as possible out of the enterprise until eventually enough readers cancel their subscriptions that the paper folds, or is reduced to a desiccated husk of its former self….
Alden’s calculus was simple. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. For Freeman and his investors to come out ahead, they didn’t need to worry about the long-term health of the assets—they just needed to maximize profits as quickly as possible.
Where I have a bit of a problem with Coppins is that though he credits some of the earlier reporting he relies on, he’s haphazard about it. I winced at his sole reference to Julie Reynolds, whom he quotes indirectly a single time and identifies only as a former reporter for the Monterey Herald in California. In fact, since leaving the paper Reynolds has been indefatigable in reporting on Alden. It was because of her 2017 cover story for The Nation, for instance, that we know Randall Smith used his ill-gotten newspaper gains to buy 16 mansions in Palm Beach, Florida. Just recently she reported for Nieman Lab that Alden’s acquisition of Tribune Publishing was tainted by dubious gamesmanship of the sort that should have prompted a do-over.
Then there’s the Baltimore hotel magnate Stewart Bainum, whose bid to buy Tribune fell short this past spring. In August, Rick Edmonds of Poynter reported that Bainum was launching a well-funded digital news nonprofit in order to compete with Alden’s Baltimore Sun. Coppins writes about that without giving any credit, and it’s being repeated in media circles as though it was his scoop.
But these are quibbles. Coppins is a gifted writer and has done a prodigious amount of reporting of his own.
Recently The Atlantic published an essay by Elaine Godfrey about the damage done to her hometown newspaper in Iowa by Gannett, the country’s largest newspaper chain. (Alden’s holdings come in second.)
The Atlantic deserves credit for using its prestige to focus on the local news crisis, and on the Wall Street greed that has transformed it into a catastrophe.
