The Wall Street Journal takes on the local news crisis

Wall Street Journal reporters Keach Hagey, Lukas I. Alpert and Yaryna Serkez weigh in today with a comprehensive overview of the crisis threatening local newspapers — a crisis that contrasts with the relative good health of the three national papers, The New York Times, The Washington Post and the Journal.

It’s well worth reading, even if there’s nothing especially new. Two quick observations:

1. Although the story pays lip service to the harmful effects of chain ownership, it doesn’t quite get at the fundamental problems: the debt amassed to build the chain, the lack of investment in technology, and the drain created by having to export a good chunk of revenues to some distant corporate headquarters.

2. The Journal also calls The Boston Globe a “notable outlier” among regional papers for its relative success in building digital subscriptions and maintaining a decent-size newsroom. The obvious if unmade argument is that other papers could do the same with committed local owners.

Globe owner John Henry is not perfect, but MediaNews Group (the new name for Digital First Media), Gannett or GateHouse would likely have cut the newsroom of roughly 220 people by another 100 or so.

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Flipping the deal: Alden hedge fund may be looking to sell Digital First to Gannett

Recently we learned that the worst of the bottom-feeding newspaper chains, Digital First Media, was seeking to acquire Gannett Co., which owns USA Today and about 100 other publications. Now the New York Post is reporting that the deal could flip the other way: Alden Global Capital, the hedge fund that owns Digital First, might sell to Gannett instead.

On a 1-10 scale of whether this is good news or bad news, I’d give it a 5.1. As I argued in a recent column for WGBHNews.org, anything is better than Digital First. No doubt Gannett ownership would be a marginal improvement for Gannett’s three Massachusetts papers — the Boston Herald, The Sun of Lowell and the Sentinel & Enterprise of Fitchburg.

But Gannett virtually invented the business model for chain newspapers of cutting journalism to the bone while driving up profit margins for the benefit of Wall Street. Just last week Gannett tore through another round of cuts at its newsrooms across the country. So let’s not get too excited.

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There are no good guys in the battle between Gannett and Digital First Media

Ben Bagdikian had Gannett’s number (1976 photo via Wikipedia)

Previously published at WGBHNews.org.

In late 2015 I paid a visit to Burlington, Vermont, to survey the damage wrought by Gannett Co., the newspaper chain that owns the Burlington Free Press. Paid weekday print circulation at the state’s largest daily had fallen from about 50,000 to 16,000. The editorial staff, which at one time was close to 60 journalists, had shrunk to around 25.

“Obviously it’s a little tougher and you do have to pick your spots,” the legendary Free Press reporter Michael Donoghue, who had just retired, told me. “We were always thought of as the newspaper of record because everything would be in there. I’m not sure there’s a newspaper of record technically in Vermont anymore.”

To be fair, what happened to the Free Press was not much different from what has happened to newspaper after newspaper across the country. Fortunately other media organizations in Vermont arose to fill the gap — Seven Days, a vibrant alt-weekly; VT Digger, a well-funded statewide nonprofit investigative project; and Vermont Public Radio, which had boosted its local coverage. Still, the Free Press and its corporate overlords at Gannett had failed at their mission of holding government and other institutions to account.

I offer this story because now we are being asked to save Gannett from the ravages of something much worse. And we should. The Wall Street Journal’s Cara Lombardo reported on Sunday that Digital First Media, the Death Star of newspaper chains, is seeking to acquire Gannett, which owns USA Today as well as about 100 other publications. Digital First owns about 50 dailies, including three in Massachusetts: the Boston Herald, The Sun of Lowell, and the Sentinel & Enterprise of Fitchburg.

Why should we care when Gannett has been doing such a poor job? Because things can always be worse. Gannett ownership has been awful in the usual way. Digital First, controlled by the hedge fund Alden Global Capital, is uniquely awful. Its decimation of the papers it owns sparked what proved to be a futile insurrection last year at its flagship, The Denver Post. Newsrooms have literally been closed, with journalists forced to fend for themselves, from the Fitchburg paper to, most recently, The Record of Troy in upstate New York.

Executives at chains such as Gannett and GateHouse Media, hardly beloved at the local level, nevertheless seem to be trying to figure out a long-term plan. Gannett has remained committed to investigative reporting. GateHouse has set up a business-services and marketing division known as ThriveHive, which, if nothing else, suggests that the company is committed to staying in business. Digital First, by contrast, appears to be engaged in what economists refer to as “harvesting” — that is, taking as much money out of the shrinking newspaper business as possible before closing the doors and turning off the lights.

“The dirty little secret that DFM [Digital First Media] learned is that — at least for now — it can sell longtime readers an inferior (or, to use the technical term, crappier) newspaper and only 10 percent each year will cancel,” writes Philly.com columnist Will Bunch. “Do the math, though, and it’s clear that much of America outside the biggest cities will become news deserts by the early 2020s.”

And to think that at one time Gannett was considered the poster child for greedy corporate newspaper chains. In his classic series of books dating back to the 1980s called “The Media Monopoly,” the late media critic Ben Bagdikian labeled Gannett as “the largest and most aggressive newspaper chain in the United States,” noting that the profit margin at some of its local papers was an “astonishing” 30 percent to 50 percent. Bagdikian also described Gannett as “an outstanding contemporary performer of the ancient rite of creating self-serving myths, of committing acts of greed and exploitation but describing them through its own machinery as heroic epics.”

So here we go again. Gannett, as bad as it has been for the communities it serves, is being held up as an exemplar of local journalism that must be saved. Talk about defining deviancy down. The newspaper analyst Ken Doctor, writing at the Nieman Journalism Lab, reports that Gannett executives may seek to wriggle out of Digital First’s hostile takeover attempt by delivering themselves into the arms of Tribune Publishing, the company formerly known as tronc. Tribune, like Gannett, is known more for its cost-cutting than for its journalism. But anything is better than Digital First.

There is a certain irony in the dilemma now facing Gannett. The company’s model of downsizing newsrooms and driving up profits helped create the crisis that faces the newspaper business today. As newspapers became less comprehensive and less interesting, they lost readers, thus prompting repeated rounds of cuts to keep those profit margins up. Not to push this theory too far — the decimation of advertising-funded news at the hands of digital media is a much larger factor. Still, Gannett-style slash-and-burn management played a role.

Now Gannett is reaping what it sowed. We should all hope that Gannett’s board is successful in fighting off Digital First. But we should also understand that this is strictly a choice between the lesser of two evils. Democracy deserves better.

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Digital First wants to buy Gannett, endangering local newspapers across the U.S.

It’s hard to imagine worse news for the beleaguered business of local journalism. The Wall Street Journal reported (sub. req.) on Sunday that Digital First Media, the hedge-fund-owned chain notorious for squeezing out the last drop of blood from its newspapers, is trying to buy Gannett. Brian Stelter has posted an update at CNN.com.

Gannett is best known for publishing USA Today — which, though it’s a perfectly fine paper, it’s mainly something to look at when you’re in a hotel. The real story is its vast chain of local newspapers, which are listed here. New England is a nearly Gannett-free zone, with the Burlington Free Press of Vermont being its only holding. By contrast, New Jersey, with eight Gannett local news properties, would be devastated. Digital First owns three papers in Massachusetts: the Boston Herald, The Sun of Lowell and the Sentinel & Enterprise of Fitchburg.

According to USA Today, Gannett had not received an offer from Digital First as of Sunday night. But it’s for real, as Jeff Sonderman of the American Press Institute tweeted:

Not to praise Gannett too much. Back when the newspaper business was considerably healthier than it is today, media critics like the late Ben Badgikian reported that Gannett insisted on profit margins of 30 percent, 40 percent or more, cutting considerably into their public service mission. In recent years, Gannett has cut the Burlington Free Press to the bone. In “The Return of the Moguls,” I wrote about an alternative media ecosystem in Burlington that had grown in response to the decline of the Free Press. It’s only gotten worse at the Free Press since I did my reporting in late 2015.

But Gannett, a publicly traded company, and GateHouse Media, another hedge-fund-owned chain, at least seem to be in the business of trying to chart a path to the future. Digital First and its owner, Alden Global Capital, by contrast, appear to be in what economists refer to as “harvesting” mode, taking the last few dollars out of their shrinking newspapers before shutting them down or selling them off.

I’ve written about Digital First several times. Most recently, I wrote for WGBHNews.org about a report from the University of North Carolina called “The Expanding News Desert,” which was highly critical of Digital First and GateHouse. In 2014, I tracked the history of Digital First in New Haven for The Huffington Post — from bankruptcy to a fascinating experiment under the visionary leadership of John Paton and then back to bottom-line-oriented cost-cutting.

Let’s just hope the Gannett board decides to fight rather than give in.

Update: Ken Doctor writes at the Nieman Journalism Lab that Gannett may try to escape Digital First’s clutches by running into the arms of Tribune Publishing, known until recently as tronc.

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More on the Lens ploy by a miffed GateHouse customer

I received this on Saturday from a friend who lives on the North Shore. Read the whole thing, but I think he’s put his finger on exactly what GateHouse is up to: most customers pay for their local GateHouse paper by credit card, and it renews automatically. Unless they are unusually sharp observers, they don’t notice when their subscription is renewed earlier than it ought to be because they are receiving unsolicited “premium” content such as Lens.

Note: As I wrote in my previous post, I’ve learned from commenters on Facebook that GateHouse is not alone. Digital First Media and Gannett are among the other newspaper chains alleged to have done this. The full text of my friend’s email follows.

I noticed your post this morning about GateHouse and its Lens magazine, and wanted to let you know what I’ve picked up. But since I’m not a Facebook member and never will be, I don’t appear to be able to post there. Hence this email.

Coincidentally, I’ve been going back and forth with GateHouse over the last month and a half about this. I got a renewal notice for the Tri-Town Transcript back at about the end of January. It said my subscription would expire on Feb. 19. I’ve subscribed ever since we moved to Topsfield more than 20 years ago (of course the paper has gone through several owners in that time) and I was certainly willing to resubscribe—I’d even written the check out.

As I was about to put it in the envelope, I couldn’t shake the feeling that February was awfully early for my sub to expire. So I went back through my records and found that last year I wrote the check to GateHouse in April, and the year before in May. (Prior to that the calendar date on the checks was stable from year to year.)

So I called GateHouse and was told my subscription renewal date had creeped back to February (from April) in the past year because I had received two issues of something called Lens magazine. I was docked three weeks of Tri-Town each for two issues of Lens—six weeks. I looked it up on the Internet and found a couple of past covers, neither of which I recalled every receiving. I can’t say that I didn’t, but if I did it went right into recycling; it’s nothing I’m interested in and certainly nothing I would pay for. GateHouse directed me to the “fine print” on the back of my bill, which is similar to what is in the image you posted. There are differences—much of the language on the back of my Tri-Town bill refers to “TV Times,” which I assume is in the daily GateHouse papers. There’s no mention of Lens. The key passage is “Due to the size and value of premium editions thee will be up to a $2.00 surcharge on each date of premium. However, rather than assess an extra charge for premium editions we will adjust the length of your subscription, which accelerates the expiration of your subscription, when you receive these premium editions. There will be no more than 12 premium editions per calendar year.”

So I suppose I should feel lucky that I was only docked 6 weeks, as according to GateHouse it could have been 36 (out of 52).

I pointed out to the GateHouse customer service person I was talking to that none of this is on the front of the subscription renewal form, where it specifically says I’m paying $35.58 for 52 weeks of the Tri-Town Transcript, and even specifies the calendar dates of the subscription term. This made no impression on the customer service person.

They finally said they would allow me to opt out of future “premium editions.” It took a few more calls over the next few weeks to get to a manager, who said they could restore the lost 6 weeks to my subscription. Flushed with success on that point, I pressed ahead as I’d evidently lost 6 weeks in the previous year’s subscription as well. When they wouldn’t give on that, I canceled my subscription (I’m sure I’ll still get some bill for a cancellation fee or whatever papers they have sent since February—we’ll see how that goes, as they’re not getting another cent out of me).

The poor customer service rep said she had to have a reason for my cancellation.  I told her it was because of the company’s business practices.

GateHouse will allow you to opt out if you call them, but why should the onus be on the subscriber? And why is that not stated up front with the annual subscription rate? And why is that option not on the renewal form itself? And if the magazines are so “premium” and so desirable, why isn’t there an option to subscribe to them rather than having them forced on subscribers until they opt out?

Over the weeks I’ve raised all these questions and others with several consumer advocacy agencies. So far the only response I’ve received is to the complaint I filed with the attorney general, which was a form letter saying they have limited resources and would not investigate because there is no “widespread and significant harm to multiple consumers” and there is no “pattern of complaints involving multiple consumers.” 

I’ve written a follow-up letter pointing out that there is indeed widespread harm because this is affecting thousands of subscribers, many of who are on automatic renewal because of the company’s policy of collecting credit card numbers (as oppose to those of us who still pay by check) and renewing them year to year without ever sending out a notice. And I suggested the reason there is no “pattern of complaints” is because it is a deception—they’re ripping people off without most people knowing it. I think this is exactly the type of thing the attorney general’s office should protect people against, but apparently Maura Healey and I differ.

I’ve also got complaints on file with the Better Business Bureau, the Federal Trade Commission, and Call for Action. Haven’t heard back yet. But I’m not expecting much. I’m mostly venting. All I can do is cancel.

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With GateHouse’s Lens, you’ll pay whether you want to or not

IMG_0464
Click on image for a larger view.

I was alerted to this by an Arlington Advocate subscriber a few weeks ago, and now it has shown up in the Medford Transcript: Lens, a 36-page “premium” magazine that is apparently intended as an advertising vehicle, published by the weeklies’ parent company, GateHouse Media.

Nothing wrong with developing a new source of ad revenue—although the only two non-house ads I could find were quarter-pagers for a livery company and a liquor store. Even though Lens was included with our Transcript for free—or, rather, for “free”—it carries a cover price of $3.95.

If you look at the fine print on page 3, though, you’ll see that you’re being charged for Lens whether you like it or not in the form of a truncated subscription to your community paper. With 12 premium editions a year, does that mean our subscription to the Transcript will be shortened by 12 weeks?

Has anyone else seen this? Have you tried to do anything about it?

We are already having a lively discussion about this at Facebook, where I learned from commenters that Digital First Media and Gannett have pulled similar stunts. If you’d like to weigh in, I suggest you do so there.

How public should public gun records be?

Screen Shot 2012-12-27 at 10.54.07 AMThere is public information, and there is public information.

If someone makes publicly available data about sex offenders more readily accessible, that might help protect children. But it could also make it more difficult for offenders who have finished paying their debt to society to get on with their lives — theoretically increasing the risk that they will reoffend.

If the names and addresses of people who signed a petition in opposition to same-sex marriage are posted online, it may expose the tactics of anti-marriage activists who fooled people into thinking they were signing something else. But it could also expose sincere gay-marriage opponents to ridicule or worse for simply exercising their democratic rights.

It’s a discussion I’ve had with my students on several occasions, and now the dilemma has spread to guns. The Journal News, a Gannett paper that covers the affluent suburbs of Westchester County, N.Y., and beyond, has put together a map showing the names and addresses of people who hold permits for handguns, which it obtained through a Freedom of Information Act request.

“About 44,000 people in Westchester, Rockland and Putnam — one out of every 23 adults — are licensed to own a handgun,” writes Dwight R. Worley of The Journal News.

As with the examples I cited up top, this is public information. The Journal News has every legal right to do this. But it has prompted an outcry from gun owners and others who say the information ought to be private. One critic has responded by posting the names, home addresses and personal information of every Journal News employee he can find, reports Patrick Clark of The New York Observer.

Greg Mitchell has a detailed report at The Nation, and J. David Goodman recaps the story at The New York Times.

Personally, I’m not sure what to make of this. I’ve been trying to think of a journalistic or social good that has been accomplished by publishing this, and I’m having a hard time thinking of one. I guess if I had a neighbor who behaved erratically, I’d want to know if he might have a legally obtained gun. But that seems like a stretch.

Before The Journal News put together its map, the information fell into a gray area — public, yes, but not easily accessible. Is there a reason for some types of information to be public but also hard to get? Is there anything we can or should do about that in the age of the Internet?

Take two and call me in the morning

These two pieces really need to be read together. In today’s New York Times, media columnist David Carr takes a look at Gannett’s Journal News, in Westchester County, which has essentially fired the whole staff and invited everyone to reapply.

It sounds brutal — OK, it is brutal — but with the business model irretrievably broken, it makes perfect sense to blow everything up and start over. If it’s inevitable that the paper is going to end up with a much smaller staff, then it’s vital that the right people get to keep their jobs.

The second piece is a blog post by Howard Owens, the former GateHouse digital-publishing director who’s now publisher of the Batavian, a community news site covering the area between Buffalo and Rochester, N.Y.

Although much of Owens’ post is about why it makes sense for newspaper companies to separate print and online news operations, the heart of it is that since online advertising can only grow so much, the proper response is to cut expenses in order to reach break-even. He writes:

In a market where the newspaper newsroom might cost $10 million, I knew how to make $1 million online, or even $2 million, but I didn’t know — and still don’t — how to make $10 million.

So if I can make a million online, why do I need operate a $10 million newsroom, especially given the greater efficiencies of online publishing?

It’s possible to make money in online journalism. What may not be possible is for large, legacy news organizations — especially newspapers — to survive unless their executives are willing to rethink everything they do.

Good jobs at good wages

Context is everything. Yesterday, I wrote about the compensation packages of GateHouse Media’s top two officials, chief executive Michael Reed and the just-promoted president and chief operating officer, Kirk Davis.

What I wrote was accurate, but I failed to consider what top executives might be making at other newspaper companies. As it turns out, there’s nothing special about Reed’s salary ($925,000 in 2007) or Davis’ (about $461,000). Reed’s 2006 compensation, $6.4 million, included a lot of stock, the value of which has presumably all but disappeared.

With 2007 revenues of $589 million, GateHouse is on the smaller end of the publicly traded newspaper companies I looked at this morning. But its challenges are as great or greater than those of much larger companies — it’s staggering under a debt load of $1.2 billion, and its stock price has fallen so much that it was delisted this fall by the New York Stock Exchange.

Anyway, here’s a quick cruise around a few other newspaper companies and what they paid their top managers in 2007, ranked by 2007 revenues.

Gannett Co. ($7.4 billion)

  • Craig Dubow, chairman, president and chief executive officer: salary, $1.2 million; total compensation, $7,546,710
  • Gracia Martore, chief financial officer, executive vice president: salary, $700,000; total compensation, $3,026,985
  • Susan Clark-Johnson, chairwoman of U.S. community publishing: salary, $735,000; total compensation, $3,145,339
  • Not-so-fun fact: Employees have been told to take a one-week unpaid furlough during the first quarter of 2009
  • Financials from WSJ.com

New York Times Co. ($3.2 billion)

  • Arthur Sulzberger Jr., chairman: salary, $1,087,000; total compensation, $3,439,280
  • Janet Robinson, chief executive officer: salary, $1 million; total compensation, $4,142,410
  • Michael Golden, vice chairman: salary, $1 million; total compensation, $1,706,579
  • James Follo, chief financial officer and senior vice president: salary, $480,000; total compensation, $859,273
  • Not-so-fun fact: A recent, widely disputed essay in the Atlantic speculates that the flagshap New York Times could cease publishing as early as this May
  • Financials from WSJ.com

McClatchy Co. ($2.3 billion)

  • Gary Pruitt, chairman and CEO: salary, $1.1 million; total compensation, $4,635,355
  • Patrick Talamantes, chief financial officer and vice president for finance: salary, $500,000; total compensation, $938,970
  • Three vice presidents of operations are paid salaries in the range of $500,000 to $600,000; total compensation is around $1.1 million apiece
  • Not-so-fun fact: The debt-burdened chain is trying to sell the Miami Herald, but can’t find any takers
  • Financials from WSJ.com

Journal Register Co. ($463 million)

  • James Hall, chairman and chief executive officer: salary, $394,750; total compensation, 411,233
  • Scott Wright, president and chief operating officer: salary, $201,923; total compensation, $231,040
  • Julie Beck, executive vice president and chief financial officer: salary, $337,500; total compensation, $431,510
  • Robert Jelenic, former chairman and chief executive officer: salary, $945,396; total compensation, $6,318,394 (Jelenic died last month)
  • Not-so-fun fact: The deeply troubled company is closing some of its papers and selling off others
  • Financials from the company’s 2008 proxy statement (PDF)

What’s the takeaway? Top executives at newspaper companies, like top executives everywhere, make a lot of money. We tend not to notice when times are good. But with the newspaper business under siege, such lavish compensation packages seem out of sync, both symbolically and substantively.

On the other hand, if any of these well-paid folks can find a way out of the current morass, they will be worth every cent.

Conversation versus competition

One of the more interesting news-of-the-future experiments taking place right now is at the Gannett newspaper chain. As Wired reported last November, Gannett’s 90-plus papers, which include the ubiquitous but unloved USA Today, have embraced the conversational model of news, encouraging readers to become citizen journalists by contributing stories and by lending a hand in certain types of investigations.

Trouble is, Gannett, with its lust for high profit margins, is not necessarily the ideal avatar of journalistic innovation. A recent Washington Post article portrayed online mobile journalists — “mojos” — at Gannett’s News-Press of Fort Myers, Fla., as little more than cheap content providers working for an editor who gets antsy if no one has posted anything in the last 15 minutes.

Now comes Lisa Williams of Placeblogger, who reports that, in Muncie, Ind., Gannett wants to play the game but is refusing to abide by the rules.

Let me back up for a moment. Within the news media, as in many businesses, there are two ways of dealing with competition: you ignore it or you denigrate it. Thus the Herald does not recommend stories in the Globe, Channel 5 does not tell you to turn to Channel 4 for more details and WRKO Radio (AM 680) does not suggest that you switch to Paul Sullivan on WBZ (AM 1030) in order to get away from the loathsome Michael Savage.

In the news-is-a-conversation model, though, you’re supposed to link to anyone and everyone. The idea is that competition is an outmoded concept, and the more content you can bring together, the better it is for everyone: bigger audience, richer conversation and maybe, someday, more money. (Someone, after all, has to pay for all this stuff, even if finances are usually left out of the equation.)

Gannett, according to Williams, is trying to have it both ways — embracing the new conversational model while sticking with the old competition model. The citizen-journalism site of Gannett’s Star Press of Muncie does not allow linking to the Muncie Free Press, an independent Web site. The guy who runs the Free Press says he’s been told the only way his site will get a mention in the Star-Press is if he buys an ad.

Williams writes:

Refusing to link to local blogs that aren’t hosted by the paper cuts off a newspaper-based community from valuable sources of new readers — and it means that while the paper may stay the paper of record for their community, they’ll never be the website of record for their community.

One of the fundamental things to understand about the net is that it’s possible to grow the pie — linking to people doesn’t mean you have fewer readers; in the long run it may mean that you have more.

Now, I’m not going to pull a Jeff Jarvis and start ranting that the Star Press folks are a bunch of clueless slugs who don’t get it. I understand the instinct. To the Star Press, the Free Press is competition. Why help it out?

Still, I think that if Gannett is going to try the news-is-a-conversation model, it ought to go all the way. As it stands, Gannett is trying to open itself up and wall itself off at the same time. Company officials want readers to contribute content, yet they won’t allow anyone to call attention to other content. They want to take, but they won’t give back. That’s repugnant, in my view.

Granted, Gannett officials can’t lose sight of its dual missions, which are to report the news and to make money. But given that they’ve made a bet-the-company gamble on experimentation, they might as well see it through. If it’s not working, they can always adjust later on.