I just skimmed the transcript of Kara Swisher’s interview with Los Angeles Times owner Patrick Soon-Shiong. It gets off to a slow start — but eventually she lets him have it in the chops over his pathetic rationalizations for not stopping the hedge fund Alden Global Capital from buying Tribune Publishing earlier this year.
The short version, for those who aren’t sure what I’m talking about: Soon-Shiong, a billionaire surgeon and medical entrepreneur, owned 24% of Tribune, which publishes nine major-market daily newspapers. He could have blocked Alden by voting no or by voting to abstain, thus giving Baltimore hotel magnate Stewart Bainum more time to put a deal together — or to see if another buyer might emerge.
Instead, Soon-Shiong declined to vote at all, which allowed the deal to go through. Here’s the heart of what Swisher told him:
So essentially you’re saying I couldn’t save them. And I’m — I don’t quite know what to say. There’s some point where you do make a stand and say, you can’t do this. And especially with Alden Global Capital having a reputation it does, you might have stood up for it. You might have said no. But you felt the current owners weren’t going to really do anything with your money. As you said, they had an agenda. It seems like you have a theory of their agenda. But they weren’t going to make it better. And so any port in the storm, is that what you’re saying?
Soon-Shiong’s hedging is pretty much in line with his recent interview with Brian Stelter of CNN. But this response screams out:
Well, it’s a little more than that, right? I think there should be enough civic responsibility in Chicago, enough civic responsibility in Florida, civic responsibility wherever these — Baltimore. And obviously, as you knew, there were certain billionaires and multimillionaires. So to be fair, it should be really the responsibility of people living in their community. I live in California. So I can’t personally be responsible for Florida or Baltimore and Chicago.
Baltimore? Baltimore? Is the good doctor kidding? Bainum originally had an agreement to acquire The Baltimore Sun from Alden after Tribune was sold and then donate the Sun to a nonprofit. After he concluded that Alden was jerking him around, he tried to put together a group that would buy the entire chain. (Bainum is now launching a nonprofit news project in Baltimore.)
Look, it’s great that Soon-Shiong seemed to be committed to the Times and his other paper, The San Diego Union-Tribune. But if you look up the word “disingenuous” in the dictionary, you just might find his photo.
Among the worst outcomes of Stewart Bainum’s failed bid to purchase Tribune Publishing is that he lost out on an earlier deal to buy The Baltimore Sun and donate it to a nonprofit organization.
The hedge fund Alden Global Capital had originally agreed to spin off the Sun to Bainum after buying Tribune’s nine major-market dailies. That deal fell through when Bainum, a Baltimore hotel magnate, balked at Alden’s terms and tried to buy the entire chain.
So it’s very good news that Bainum appears to be moving ahead with a nonprofit venture that would compete with the Sun. Rick Edmonds of Poynter reported earlier this week that Bainum is advertising for a chief product officer who’ll work for a “well-funded startup” aimed at becoming “a new paradigm for digital first, cross-channel local media.”
The project will include the web, mobile, terrestrial and satellite radio and video, both on television and online, according to the ad, which adds that the “vision is to be the leading provider of news and lifestyle content in the Baltimore area.”
Bainum was originally willing to pay $65 million for the Sun. Assuming that money is still on the table, this should be a well-funded regional news product. Bloomberg and the Lenfest Institute are involved, too, though Edmonds suggests their role will be minimal.
One aspect I find interesting is the cross-platform nature of the project. The biggest challenge facing online-only media is getting the word out that they exist. As a former newspaper executive once told me, the problem with dumping the print edition in favor of digital is that print is essentially a billboard for digital. If print goes away, you disappear to non-subscribers. Bainum might avoid that problem by moving into radio and television as well as digital.
I also wonder whether there’s an underlying strategy to wrest the Sun away from Alden. Given the way the hedge fund is already decimating its holdings, which include the Chicago Tribune, New York’s Daily News and the Hartford Courant, there is little doubt that the Bainum project will be a better, more comprehensive news organization than the Sun on the day that it debuts.
If the Sun’s audience and advertisers (yes, nonprofits can accept ads) move en masse to Bainum’s venture, Alden might prove willing to walk away.
The Connecticut Statehouse in Hartford. Photo (cc) 2009 by Dan Kennedy.
Chain ownership is almost never a good thing. But some chains are better than others — and Hearst is among the very best. No doubt its status as a privately owned company whose family is involved in management has a lot to do with that. The legendary mogul William Randolph Hearst would be proud.
Among other things, the Hearst-owned Times Union of Albany, New York, did some of the crucial early reporting about sexual assault allegations against Gov. Andrew Cuomo — accusations that have brought him to the brink of resignation or removal.
Hearst has been making some interesting moves in Connecticut for quite some time. Now, with the hedge fund Alden Global Capital tearing apart what’s left of the Hartford Courant, Hearst is positioning itself as a digital rival for statewide coverage. Rick Edmonds of Poynter reports that the company has launched a new website, CTInsider.com, that features coverage from its 160 journalists at eight dailies and 14 weeklies and websites in the state.
CTInsider.com offers a combination of free and paid content. Subscribers pay $3.99 a week after an initial discount.
The Hearst paper I’m most familiar with is the New Haven Register, a daily paper that figured heavily in my 2013 book about hyperlocal news projects, “The Wired City.” The project I was profiling, the New Haven Independent, a digital nonprofit founded in 2005, was providing deep coverage of the city, filling a gap left by the dramatic downsizing of the Register.
It was an interesting time for the Register. Under the ownership of the reviled Journal Register chain, the Register had lurched into bankruptcy. Journal Register then morphed into Digital First Media, headed by a visionary chief executive named John Paton who, about a dozen years ago, provided a jolt of optimism. Soon, though, Alden moved in, merging Digital First with its Denver-based chain, MediaNews Group, and, well, you know the rest. But then Hearst bought the New Haven Register a few years ago, and the paper has since undergone something of a revival.
The Hartford Courant had thrived for many decades as Connecticut’s sole statewide paper. But under Tribune Publishing’s chaotic ownership, it had been shrinking for many years. During the years that I was reporting “The Wired City,” a pair of vibrant websites devoted to covering state politics and policy had popped up — the for-profit CTNewsJunkie.com and the nonprofit Connecticut Mirror, both of which are still going strong.
Things went from bad to worse at the Courant earlier this year when Alden added Tribune to its holdings despite efforts by the staff to find a local buyer.
It’s great to see Hearst now upping its game in Connecticut as well.
Nantucket, where The Inquirer & Mirror is once again locally owned. Photo (cc) 2007 by Michael Galvin.
From time to time I’ve taken note of rare instances when Gannett has sold some of its 1,000 or so papers to local ownership. In Massachusetts, for example, The Inquirer & Mirror of Nantucket was acquired last fall by a group headed by the editor and a local businessman.
Kristen Hare of Poynter asked Gannett for some numbers, it turns out that the chain has sold 24 papers to community interests. (Be sure not to miss the correction. As you’ll see, Gannett can’t even keep track of how many papers it owns.)
Not that there’s any benevolent motive at work here. Gannett is going to do what’s best for its bottom line, and a few isolated weeklies don’t fit with its strategy of regional groups, dailies and stories shared across papers regardless of whether they have any local interest.
Just recently, Gannett shut down two weeklies west of Boston — the Marlborough Enterprise and the Hudson Sun. Maybe there weren’t any local buyers available. But those towns are also covered by Gannett’s MetroWest Daily News, so there was an incentive not to empower any possible competitors.
Writing for the Local News Initiative at Northwestern University, Mark Jacob speculates that the hedge fund Alden Global Initiative might sell off some of the nine major-market dailies it acquired when it gobbled up Tribune Publishing earlier this year. I suppose anything is possible, but that seemed to fly out the window when Baltimore hotel magnate Stewart Bainum’s efforts to buy Tribune fell short. Bainum planned to break up the chain, starting with The Baltimore Sun, which he wanted to donate to a nonprofit. In the end, though, Alden’s offer prevailed, even though it was loaded with undisclosed debt.
Jacob also profiles The Berkshire Eagle of Pittsfield, a rare instance of a newspaper that Alden was willing to sell to local interests, and The New Bedford Light, launched despite Gannett’s refusal to sell The Standard-Times.
And then there is this odd observation by Jacob:
In some ways, large chains can be beneficial for local news consumers. They often bring website expertise, technical support and consistent business practices. And they may have a greater ability to recruit talent.
No. Some chains are better than others, but all of them are dedicated to the proposition that newspapers exist mainly so that the owners can squeeze out profits that could otherwise be invested in news and technology. Even in terms of digital publishing, I have rarely encountered an independent news website that is as clunky and intrusive as a typical chain site.
Can government help solve the local news crisis? The notion sounds absurd, even dangerous. You get what you pay for, and if government officials are funneling money to media outlets, then it’s not unreasonable to expect that they’ll demand sticky-sweet favorable coverage in return.
Yet the situation is so dire that once-unthinkable ideas need to be on the table. Since 2004, some 2,100 newspapers have closed, leaving about 1,800 communities across the country bereft of coverage. About 30,000 newsroom jobs disappeared between 2008 and 2020. The consequences range from the potential for increased corruption to a decline in voter turnout for local elections.
Now federal legislation long in the making may finally be ready to move ahead. Believe it or not, the bill is bipartisan. It also manages to avoid the entangling alliances that would endanger journalistic independence. That’s because the Local Journalism Sustainability Act, introduced in the Senate last week and in the House a month earlier, relies on tax credits rather than direct government assistance.
“This clever, bipartisan bill would provide more help for local news than any time in about a century, yet it’s done in a very First-Amendment-friendly way,” writes Steven Waldman, the co-founder of the Rebuild Local News Coalition as well as the co-founder and president of Report for America. (Disclosure: Report for America, which places young reporters at news organizations around the country, is part of the GroundTruth Project, affiliated with GBH in Boston.)
So how would the bill work? Essentially, it would provide three tax credits that would expire after five years, giving media outlets some runway to move toward long-term sustainability. I am oversimplying, but here is the rough outline:
• 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.
The benefits would be restricted to small news organizations, defined as those with 750 employees or fewer in the House bill or fewer than 1,000 in the Senate bill.
At a time when Congress seems incapable of doing anything, some version of the bill appears to stand a good chance of passing. After all, elected officials, regardless of party or ideology, like to be covered by the hometown press, and the bill would help ensure that there will continue to bea press. As of Tuesday, there were 32 co-sponsors in the House — 25 Democrats and 7 Republicans. Because the Senate version was just introduced, the only co-sponsors so far are the three Democrats who introduced it — Maria Cantwell of Washington state, Ron Wyden of Oregon and Mark Kelly of Arizona.
Among the all-Democratic Massachusetts delegation, Sen. Ed Markey will support the bill and has asked to be a co-sponsor, says Markey spokeswoman Giselle Barry. Sen. Elizabeth Warren is studying the legislation and has not yet stated a position, according to Warren spokeswoman Nora Keefe. On the House side, Reps. Jim McGovern and Seth Moulton are co-sponsors, and Mary Rose Tarpey, a spokeswoman for Rep. Stephen Lynch, says that Lynch will also be a co-sponsor, as he was during the previous session.
Government assistance for news is not new. During the early days of the republic, postal subsidies were the foundation upon which the distribution system for newspapers and magazines was built. Today, nonprofit news organizations ranging from hyperlocal websites to public broadcasters benefit from tax incentives that allow their donors to write off the money they give and that exempts the media outlets themselves from having to pay taxes.
Given the catastrophic state in which journalism finds itself, some activists and scholars are calling for more direct funding of news. For instance, Victor Pickard, a scholar at Penn’s Annenberg School, advocates much higher government spending on public media. Longtime media reformer Robert McChesney has talked about giving as much as $35 billion over five years to elected citizens councils that would fund local news and underwrite startups.
But there are dangers in such approaches. In Pennsylvania, for instance, the Republican-dominated legislature cut off $750,000 to the state’s seven public radio and television stations after one of them, WITF Radio of Harrisburg, began calling out any elected official who continued to challenge the validity of President Joe Biden’s electoral victory.
Philadelphia Inquirer columnist Will Bunch, while conceding there was no evidence of a direct cause-and-effect over what was admittedly a small amount of funding, wrote in his weekly newsletter that the action “shows the enormous peril of government dollars for journalism, even as a partial solution. In an era when a growing number of elected officials are waging war on the truth, from election results to coronavirus vaccines, would journalists be forced to choose between an important story or their survival?”
By contrast, the federal bill under consideration avoids those problems by putting as much distance as possible between elected officials and the aid that news organizations would receive.
My one reservation about the bill is that chain-owned newspapers would benefit along with independent projects. That said, the Rebuild Local News Coalition, whose members represent more than 3,000 newsrooms, includes some of the most public-spirited organizations that are working on these problems, such as LION (Local Independent Online News) Publishers, the Lenfest Institute and the Solutions Journalism Network.
Perhaps the problem of chain ownership could be addressed, as Waldman proposes, by giving tax breaks to the likes of Gannett and Alden Global Capital if they sell their papers to local nonprofits and public benefit corporations. I would also suggest tax penalties if they decline to do so. Corporate ownership is killing local news just as surely as technological change and the aftermath of the COVID pandemic, and we need to get the publicly traded corporations and hedge funds out.
At a time when political and cultural polarization at the national level is tearing us apart, local news can help encourage the kind of civic engagement we need to rebuild community. But that can’t happen if the newspaper has gone out of business or is on life support, and if nothing else has come along to take its place.
Fundamentally, what’s at issue is that the advertising model that paid for journalism until recent years has collapsed. Publishers need to find a way forward, whether through reader revenue, nonprofit funding, paid events or even starting a bar and wedding venue next to the newsroom, as The Big Bend Sentinel in West Texas did.
The Local Journalism Sustainability Act will help sustain local news while we search for a workable model that doesn’t rely on advertising. After 15 years of declining revenues and dying newspapers, it may be our last chance to get it right.
Axios has a story on “journalism’s two Americas” — the thriving national media and struggling local news outlets, mainly newspapers. “The disparate fortunes skew what gets covered,” write Sara Fischer and Nicholas Johnston, “elevating big national political stories at the expense of local, community-focused news.”
The data they present isn’t new, but it’s striking nevertheless. Local reporters earn an average annual salary of $49,000, compared to more than $65,000 for national reporters. Of course, many of those national jobs are in the ultra-high-cost New York era, which means the disparity may not be quite as great as those two numbers suggest. Still, the national media are growing and hiring, while local newspapers — most of them owned by corporate chains and hedge funds — continue to eliminate jobs.
Fischer and Johnston note that CNN is hiring 450 people for its new CNN+ streaming service. And Fischer reported just a little while ago that NBC is “adding hundreds of jobs to its digital organization,” mainly for news-oriented positions.
Not all news on the community journalism front is bad, though. The apocalyptic stories about what’s taking place at the grassroots invariably focus on chains owned by the likes of Gannett and Alden Global Capital. By contrast, entrepreneurs are launching for-profit and nonprofit digital startups at a dizzying rate. Chris Krewson, the executive director of LION (Local Independent Online News) Publishers writes:
Research shows new newsrooms are launching fast, 50 a year for the last five years. They’re for-profit, non-profit, public-benefit corporations, and LLCs; they’re a husband-and-wife team covering a small town; they’re a staff of dozens holding politicians to account at the statewide level….
They’re not replacing the newspaper. They don’t need to. This nascent industry has the potential to grow beyond the limitations of newspapers, to truly reflect and serve communities large and small, rural, urban, Black, Brown, Indigenous, queer… and on and on. We just have to stop thinking about saving the unsaveable and build businesses that serve the needs of communities first. In fact, what these publications are starting to offer is just as good, if not better, than the legacies they’re increasingly supplanting.
I’ve been tracking such projects since the late ’00s. From New Haven to San Diego, from Burlington, Vermont, to Batavia, New York, community journalists step up when there’s a market failure on the part of the local legacy newspaper. Ellen Clegg and I are following similar projects across the country.
There’s no question that these are tough times for local news. But there are plenty of reasons to be optimistic as well.
More downsizing at The Sun of Lowell, part of Alden Global Capital’s MediaNews Group chain. Kris arrived at The Sun 42 years ago as a Northeastern co-op student. People like him are the heart and backbone of local journalism.
Robert’s departure follows the layoff of @kplowellsun, the Sun’s managing editor/nights. Alden Global Capital continues with its destruction of a quirky, vital newspaper. Kris’ farewell column: https://t.co/pJgdxMLCuChttps://t.co/qpsH04CtoV
— Dan Kennedy is on Threads (@dankennedy_nu) July 17, 2021
The public radio show “On the Media” offered a terrific special hour-long broadcast over the weekend — a deeply reported piece on the Capital Gazette in Annapolis, Maryland, where five journalists were killed in a mass shooting three years ago today.
The story follows the newsroom through the shock of the shooting and the newspaper’s halting recovery. Sadly, as the last part of the hour unfolds, we learn that the journalists overcame the worst horror imaginable only to be done in by their corporate owner, Tribune Publishing. In the closing minutes, things go from bad to worse, as the hedge fund Alden Global Capital purchases Tribune.
By the way, what “On the Media” ran was a compressed version of a two-hour series that was part of the NPR podcast “Embedded,” which had not been on my radar until now. Outstanding and important work.
Patrick Soon-Shiong. Photo (cc) 2019 by the World Economic Forum.
Billionaire Los Angeles Times owner Patrick Soon-Shiong evaded the question when CNN’s Brian Stelter asked him on the new “Reliable Sources” podcast why he didn’t intervene to prevent Alden Global Media from acquiring Tribune Publishing.
Here’s the exchange:
Stelter: Patrick, there are people who want to know why, with the Alden deal, you didn’t step in. This is the deal where Tribune was being taken over by the hedge fund Alden Global Capital. You are the biggest outside shareholder. You could have stepped in. There’s questions about why you decided to abstain, why you decided not to stop that from happening. Can you share with us why?
Soon-Shiong: Well, look, you know, I was a passive shareholder, and it was really important for the board to do what it has to do with regard to the rest of the Tribune holdings. I’ve got my hands full and frankly, really committed to the LA Times and San Diego Union-Tribune.
A quick recap: Alden, the worst newspaper owner on the planet, paid $633 million last month to boost its share of Tribune’s nine major-market dailies from 32% to 100%. Soon-Shiong, who held 25% of Tribune’s shares, could have just said no and given Baltimore hotel magnate and philanthropist Stewart Bainum more time to pull together his own deal.
Instead, Soon-Shiong abstained, and he did it in such a way that the deal was allowed to go through. That is, if he had formally abstained, the sale would have been stopped.
And now Alden is decimating Tribune’s newspapers, just as it has with its 100-paper MediaNews Group chain.
Could Alden Global Capital’s acquisition of Tribune Publishing be headed for a do-over? Julie Reynolds, who’s been reporting on the hedge fund’s evisceration of newspapers for years, has written a fascinating story for the Nieman Journalism Lab suggesting that the $633 million deal may have been illegal.
Alden, which already owned 32% of Tribune’s papers, pledged to pay $375 million in cash in order to bring its share up to 100%. But Reynolds reports that Alden didn’t actually have the cash, a fact that may have been known only to the three members of Tribune’s board who were affiliated with the hedge fund.
As soon as the transaction was consummated, Alden forced the papers to borrow about $300 million. That included $60 million from Alden’s other newspaper chain, MediaNews Group, at an eye-popping interest rate of 13%. As everyone predicted, Alden has gone on a cost-cutting rampage, offering buyouts throughout the chain.
Nieman Foundation curator Ann Marie Lipinski, a former editor of Tribune’s largest paper, the Chicago Tribune, tweeted, “The scale of talent leaving the Chicago Tribune is staggering.”
The scale of talent leaving the Chicago Tribune is staggering. Combined with January buyouts, a hedge fund’s takeover is driving out irreplaceable experience, Pulitzer winners among them. Incalculable loss for Chicago. If you live in a city with a local paper, take care of it. https://t.co/C47durRnbY
Reynolds also reports that the full Tribune board may have been left in the dark about a private meeting that Tribune board member and Alden founder Randall Smith had with Baltimore hotel magnate Stewart Bainum last year.
You may recall that Bainum had initially worked out an agreement under which Alden would buy Tribune’s nine major-market dailies and then sell one of them, The Baltimore Sun, to Bainum, who planned to donate it to a nonprofit organization. After Bainum concluded that Alden was trying to gouge him, he tried to put together a bid for the entire chain. Most if not all of the papers would have been spun off to local buyers. But he was never able to put together a firm offer, and the board went with Alden instead. Alden is keeping all nine papers, including the Sun.
As Reynolds notes, the Tribune board spurned Bainum’s higher offer because the financing was not in place — and ignored the reality that Alden’s wasn’t in place, either. She writes:
Given the healthy profits Tribune has generated over the last several quarters, the cuts are there for just one reason: to achieve higher margins for Alden. Randall Smith will get richer while communities served by Tribune are starved of the information they need.
If Reynolds is correct in asserting that laws were broken in order to pave the way for Alden’s acquisition of Tribune, then the punishment ought to be more than a fine and a slap on the wrist. The sale should be voided and the Tribune board should be forced to vote again.
Maybe this time Patrick Soon-Shiong, the billionaire owner of the Los Angeles Times, can be persuaded to stop Alden. As a 25% owner of Tribune before the sale, Soon-Shiong could have said no. Instead, he abstained, and did it in a manner that allowed the transaction to go through.
