Tag: Alden Global Capital

The rise and fall of Digital First; or, how to get rich plundering newspapers

Previously published at WGBHNews.org.

The Nation recently published a splendid takedown of Randall Smith, a little-known Wall Street tycoon whose avarice has hollowed out daily newspapers from coast to coast. By “gutting” his papers, Julie Reynolds reports, Smith was able to amass the $57 million he needed to buy 16 mansions in Palm Beach, Florida. “Don’t just blame the Internet for journalism’s decline,” she writes. “Old-fashioned capitalist greed also strangles newspapers.”

The name of Smith’s newspaper empire is Digital First Media, an ironic moniker for an enterprise dedicated to the proposition that every last penny should be squeezed out of the shrinking print business. But the name isn’t just ironic — it’s also iconic. Although Reynolds doesn’t mention it in her story, it wasn’t that long ago that Digital First was created by a charismatic, foul-mouthed executive who was hailed as a possible savior of the news business.

If you’re a newspaper junkie, you’ll remember him: John Paton, celebrated by The New York Times and the Columbia Journalism Review, a man given to florid pronouncements about the need for newspapers to adapt to digital as rapidly as possible lest they die of irrelevance. As the CJR put it in 2011: “To those who complained that digital ad prices were so low compared to print ads that it was like ‘trading dollars for dimes,’ he retorted with his catchphrase, ‘Start stacking dimes.’”

Paton was put in charge of two moribund newspaper chains: the Journal Register Co., whose flagship was the New Haven Register, and MediaNews Group, whose largest paper was The Denver Post. He called the amalgamation Digital First, and he vowed either to save the business or to go down trying.

My first encounter with the Digital First aura came in the summer of 2011, when I interviewed Matt DeRienzo, then the young new editor of the Register, who’d already made his mark at a smaller Journal Register paper by opening a café and inviting the public to attend news meetings. “‘Digital First’ to me means putting journalism first, and it means putting community first, or readers first,” DeRienzo told me. “Readers don’t need to come to us as this exclusive voice on high, like the nightly news. There are 8 million sources of information out there for us, and our job is to sift through that for them and curate and aggregate and do original reporting as well, and to work with them at every step of the process to connect them with that. And we’re the better for it, I think.”

Paton’s most ambitious initiative was something called Project Thunderdome, whose mission was to create common content and production platforms for Digital First’s papers, allowing local journalists to focus on covering their communities. But the Paton era proved to be shockingly brief. That’s because Alden Global Capital, the hedge fund that was headed by Randall Smith, began bleeding Digital First dry before Paton’s vision could be fully implemented. Project Thunderdome was shut down. Costs were cut. The company’s newspapers didn’t even have decent websites. (So much for “digital first.”) DeRienzo quit in 2014, and Paton left the following year.

Jim Brady, a former washingtonpost.com editor who had run Project Thunderdome as Digital First’s top editor, spoke favorably of Paton when we talked in early 2016. “He was maybe a little more aggressive and beat his chest a little bit more than I would,” said Brady, who subsequently launched a company that operates the mobile-first local news sites Billy Penn in Philadelphia and The Incline in Pittsburgh. “On the other hand, it got him a lot of attention and probably allowed us to hire some people, get some people interested in us that wouldn’t have been interested otherwise.”

As Julie Reynolds notes in her article in The Nation, Digital First is now one of the country’s largest newspaper chains. The company bought the Orange County Register out of bankruptcy in 2016 following Boston businessman Aaron Kushner’s failed attempt to restore the Register’s fortunes. In Massachusetts, Digital First owns the Sentinel & Enterprise of Fitchburg and The Sun of Lowell. With luck, perhaps Digital First will someday sell them to local buyers, as it did with the Berkshire Eagle of Pittsfield, a transaction that has revived the Eagle and its affiliated papers in southern Vermont.

“Unlike large corporate owners in the past,” Reynolds writes, “the stated goal of the investment firms is not to keep struggling newspapers alive; it is to siphon off the assets and profits, then dispose of what little remains.”

The Digital First story might have had a different ending if Paton had been able to implement his ideas. To this day many smaller papers without debt and with little competition are making money and serving their communities, even if they’re not exactly thriving. Long-term, their demise may be inevitable. Short-term, they’re being hustled along to the boneyard by the likes of Digital First.

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A New Haven-centric view of Digital First’s latest woes

The Register in June 2013, shortly after a redesign.
The Register in June 2013, shortly after a redesign.

This article was published earlier at The Huffington Post.

The end may be near for one of the most widely watched experiments in local journalism.

Early today, Ken Doctor reported at the Nieman Journalism Lab that Digital First Media was pulling the plug on Project Thunderdome, an initiative to provide national and international content to the company’s 75 daily newspapers and other publications and websites. Soon, Doctor added, Digital First’s papers are likely to be sold.

Judging from the reaction on Twitter, the news came as a shock, with many offering their condolences and best wishes to the top-notch digital news innovators who are leaving — including Jim Brady, Robyn Tomlin and Steve Buttry. But for someone who has been watching the Digital First story play out in New Haven for the past five years, what happened today was more a disappointment than a surprise.

I first visited the New Haven Register, a regional daily, in 2009. I was interviewing people for what would become “The Wired City,” a book centered on the New Haven Independent, a nonprofit online-only news site that represents an alternative to the broken advertising-based model that has traditionally supported local journalism. The Register’s corporate chain owner, the Journal Register Co., was in bankruptcy. The paper itself seemed listless and without direction.

Two years later, everything had changed. Journal Register had emerged from bankruptcy and hired a colorful, hard-driving chief executive, John Paton, whose oft-stated philosophy for turning around the newspaper business — “digital first” — became the name of his blog and, eventually, of his expanded empire, formed by the union of Journal Register and MediaNews, the latter best known for its ownership of the Denver Post.

Just before Labor Day in 2011, Matt DeRienzo — then a 35-year-old rising star who had just been put in charge of all of Journal Register’s Connecticut publications, including the New Haven Register — sat down with me and outlined his plans. His predecessor had refused my requests for an interview; DeRienzo, by contrast, had tracked me down because he’d heard I was writing a book. It seemed that a new era of openness and progress had begun.

The openness was for real. The progress, though, proved elusive. For a while, John Paton was the most celebrated newspaper executive in the country, the subject of flattering profiles in the The New York Times, the Columbia Journalism Review and elsewhere. Media reporters were charmed by his blunt profanity, as when he described a presentation he gave to Journal Register managerial employees. “They were like, ‘Who’s the fat guy in the front telling us that we’re broken? Who the fuck is he?'” Paton told the CJR.

In 2012, though, Journal Register declared bankruptcy again — a necessary step, Paton said, as it was the only way he could get costs such as long-term building leases and pension obligations under control. After Journal Register emerged from bankruptcy in 2013, Paton’s moment in the national spotlight seemed to have passed, as media observers turned their attention to a new breed of media moguls like Amazon.com founder Jeff Bezos (who bought The Washington Post), Red Sox principal owner John Henry (who bought The Boston Globe), greeting-card executive Aaron Kushner (who acquired the Orange County Register) and eBay founder Pierre Omidyar (who launched a new venture called First Look Media).

Although Digital First’s deepening woes may have escaped national attention, there were signs in New Haven that not all was well. Some positive steps were taken. The print edition was redesigned. The Register website was the beneficiary of a chain-wide refurbishing. Nasty, racist online comments were brought under control, and the newsroom embraced social media. But larger improvements were harder to accomplish.

Among the goals Matt DeRienzo had talked about was moving the paper out of its headquarters, a hulking former shirt factory near Interstate 95, and opening a smaller office in the downtown. In 2012, the Register shut down its printing presses and outsourced the work to the Hartford Courant. The second part of that process never came, though. Just last week, the New Haven Independent reported that the Register had backed away from moving to a former downtown mall facing New Haven Green. Two months earlier, according to the Independent, the Register and Digital First’s other Connecticut publications laid off 10 people.

Neither development should be described as a death knell. The downtown move is reportedly still in the works. And the 10 layoffs were at least partly offset by the creation of six new digitally focused positions. But rather than boldly moving forward, the paper appears to be spinning its wheels. And now — or soon — it may be for sale.

One of the biggest problems Digital First faces is its corporate structure. Can for-profit local journalism truly be reinvented by a national chain whose majority owner — Alden Global Capital — is a hedge fund? People who invest in hedge funds are not generally known for their deep and abiding affection for the idea that quality journalism is essential to democratic self-goverance. Rather, they want their money back — and then some. Preferably as quickly as possible.

No matter how smart, hard-working and well-intentioned John Paton, Jim Brady, Matt DeRienzo et al. may be, the Digital First experiment was probably destined to end this way, as chain ownership generally does. I wish for a good outcome, especially in New Haven. Maybe some civic-minded business leaders will buy the paper and keep DeRienzo as editor. And maybe we’ll all come to understand that the best way to reinvent local journalism is at the local level, by people who are rooted in and care about their community.