Not too many years ago, New England was home to a number of medium-size and smaller daily newspapers that did an excellent job of covering their communities. There are a dozen or so that come to mind. But among the largest and the best were The Providence Journal and the Hartford Courant.
The Journal, as we all know, has been decimated by its corporate-chain owner, Gannett, the successor to GateHouse Media. The Hartford Courant, which bills itself as the oldest continuously published paper in the country, has been battered for years under the ownership of a chain now known as Tribune Publishing. The Courant’s printing has been outsourced, and the newsroom was shuttered recently as well. There is no indication that reporters and editors will have a place to work other than their homes even after the COVID pandemic is behind us.
As I’ve written several times recently, the hedge fund Alden Global Capital, whose MediaNews Group is widely regarded as the worst newspaper owner in operation, controls 32% of Tribune — and is seeking a majority share.
The Financial Times recently published a lengthy article on the plight of local news focused on the Courant. There is nothing new in the story — we hear about the widespread closure of community newspapers, the rise of hedge-fund ownership and other familiar themes. Nevertheless, it’s a strong overview for anyone who’s unfamiliar with the tale of what happened to a key part of democratic life.
There are also a few points that deserve to be emphasized. At a time when profits in local news are elusive at best, Alden is living high:
The cost cutting is certainly working. MediaNews Group achieved about 20-25 per cent operating margins in 2019, according to people familiar with the matter, more than double that of peers such as Gannett or even The New York Times. In 2020, although the pandemic shattered advertising and MNG’s revenues fell by 20 per cent, the company was still on track to make a profit.
The Courant itself is doing well from a bottom-line perspective as well, earning a profit of $2 million a year, according to the FT’s reporting.
What this shows is that there is still an inflow of cash into even the most moribund newspapers. Readers buy them despite their ever-decreasing value. Businesses advertise in them. If you’re willing to gut the newspapers you own to keep expenses well below income, and to keep cutting as income continues to fall, well, yes, you can earn a profit. At some point, needless to say, you’ll reach the point at which you can no longer cut. And that’s when you shut your doors. (Oops. Bad analogy. They already have.)
Heath Freeman and other officials at Alden rarely speak for the record. When Freeman cooperated with a Washington Post reporter last year, it, uh, did not go well. So I was interested to see that the FT did manage to get a comment out of a company spokesperson named Chrissy Carvalho. It was a classic:
It’s a lot easier to make snippy anonymous comments than actually undertake the difficult task of making sure news organisations across America are able to serve their communities during a prolonged period of declining revenues.
As the FT notes, there are efforts to try to get Tribune to sell the Courant to local interests. But that’s going to be hard to do given the paper’s continued profitability. The tragedy is that the crisis afflicting local news is only partly related to external factors such as technology, the decline of advertising and the rise of Google and Facebook. Corporate greed is at least as responsible.
Previous coverage:
- Can the union representing Tribune’s workers stop Alden Global Capital? (Jan. 5)
- Could Patrick Soon-Shiong save Tribune’s newspapers from Alden’s clutches? (Jan. 2)
- Alden Global Capital wants to take another big bite out of Tribune Publishing (Dec. 31, 2020)
- How Alden Global Capital is strangling Connecticut’s Hartford Courant (March 10, 2020)