Can Gannett and McClatchy’s joint venture reinvigorate national advertising?

At root, the debate over whether Google and Facebook should pay for news is about how their duopoly destroyed the value of digital advertising and then kept most of the revenues for themselves.

News, which is expensive, can’t survive on the pennies brought in by Google’s programmatic ads. That’s why there’s been so much emphasis in recent years on reader revenue — an emphasis that, at least in a few places, is starting to pay off.

Still, it would surely be a positive if news organizations could develop a revenue stream other than digital subscriptions. When readers are empowered, they expect their preferences and prejudices to be catered to. You need a balance. That’s why it’s interesting to see Axios’ recent report that Gannett and McClatchy will combine forces to sell national advertising for their hundreds of local and regional papers.

Can Gannett and McClatchy’s efforts drive up the price of digital ads? That’s the real issue, and without that their effort is not going to have much of an effect. Of course, it also does nothing to boost ad sales at the local level, which have been on the decline for years. Yes, local businesses have gravitated to Facebook just like everyone else. But local newspapers aren’t exactly known for being aggressive and creative about selling to the local hair salons, pizza restaurants and funeral homes, either. It can be done. Just ask Howard Owens, publisher of The Batavian in western New York state.

The partnership shows why I differentiate between Gannett and Alden Global Capital, even though their nuke-the-newsroom approach to the bottom line looks very much the same on the ground. Alden, by all appearances, is trying to squeeze as much money as it can out of the newspapers it’s killing and then get out. Gannett, on the other hand, is hoping to build a community news chain that can be sustainable in the long run.

Gannett’s biggest mistake, carried over from its predecessor company, GateHouse Media, is that its executives think they can build for the future while failing to provide enough journalism to retain readers. No matter how smart your business model, it’s not going to work if all you’re offering your audience is a shell.

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The FT offers a close-up look at how Alden is destroying the Hartford Courant

The state capitol in Hartford, Connecticut. Photo (cc) 2009 by Dan Kennedy.

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:

You can now ask the Globe to remove an embarrassing story about you from Google search

There’s a difference between rewriting history and making some of it more difficult to find. Which is why I think The Boston Globe is doing the right thing with its “Fresh Start” initiative, more commonly known as the right to be forgotten. The proposal was announced by Globe editor Brian McGrory last July, and is being formally put into effect today. In a Globe story, McGrory says:

It was never our intent to have a short and relatively inconsequential Globe story affect the futures of the ordinary people who might be the subjects. Our sense, given the criminal justice system, is that this has had a disproportionate impact on people of color. The idea behind the program is to start addressing it.

The idea is that the Globe might have reported on some past embarrassment about you — a minor arrest, or an arrest that led to a conviction that was not reported. You can appeal to the Globe to have the story updated or removed from Google search. The story would still exist. It couldn’t be removed from the print edition, obviously, and many libraries still carry newspaper microfilm archives. It wouldn’t even be removed from the Globe’s servers. But no longer would one of your less stellar moments rise to the top of a Google search about you, interfering with employment prospects and other aspects of your life.

In some ways, Fresh Start is similar to Gannett’s move in 2018 to take down mugshot galleries from its newspaper websites, which it extended to the former GateHouse Media sites in 2020 after that chain was merged with Gannett. “Mugshot galleries presented without context may feed into negative stereotypes and, in our editorial judgment, are of limited news value,” the company said in explaining its reasoning.

The Globe’s Fresh Start is a good step because it solves a problem without going too far. It merely restores the situation that prevailed before the internet, when you had to put some work into finding information that had been published about someone. That tended to separate those with a legitimate interest from the voyeurs.

It’s also a better solution than the mandatory right-to-be-forgotten laws in effect in Western Europe, where Google under some circumstances can be ordered to remove information about certain people. The First Amendment would make that impossible in the United States.

Thus it’s up to the media to take voluntary steps. As the Society of Professional Journalists Code of Ethics puts it, “Ethical journalism treats sources, subjects, colleagues and members of the public as human beings deserving of respect.”

More: Arun Rath of GBH Radio (89.7 FM) and I kicked it around on Friday.

Here are three new reasons to be optimistic about local news

Note: Make that four reasons. See update below.

The crisis in local news won’t be solved all at once. Rather, it will be solved community by community as entrepreneurial-minded journalists seek to fill the gaps left behind by corporate-owned chain newspapers. Here are three new reasons to be optimistic.

In Maine, the Portland Phoenix, the last of the great Phoenix alternative weeklies, is scheduled to relaunch this coming Wednesday under new ownership after ceasing publication earlier this year. The free paper and website are part of New Portland Publishing Co., headed by Marian McCue and Karen Wood.

The relaunch was announced Oct. 22 by Marian McCue and Karen Wood, principals of New Portland Publishing Co. McCue will serve as the editor and Mo Mehlsak, most recently executive editor of The Forecaster, American Journal and Lakes Region Weekly newspapers, will be managing editor.

“While we always admired the energy of the Phoenix, and the strong entertainment coverage, our focus will be more on news and analysis, and in-depth investigative stories that explore the challenges facing this area,” McCue said in a press release announcing the new venture.

Added Wood: “We’ve had a very positive response from early conversations with advertisers and people in the community. We are convinced that a free distribution newspaper will be successful, and provide an effective forum for our advertisers.”

The new Portland Phoenix has a stiff challenge ahead of it in the form of the daily Portland Press Herald, the flagship of a Maine-based chain. The Press Herald is considerably more robust than papers owned by the national chains, and the publisher — Lisa DeSisto — is an alumnus of The Boston Phoenix who knows how to put out a paper oriented toward arts and entertainment. (Note: I worked with Lisa at the Phoenix for several years.)

Still, it’s fantastic news that someone is going to try to revive the Phoenix in Portland, which is the sort of smaller city that ought to be able to support an alt-weekly.

***

Bill Wasserman is one of Eastern Massachusetts’ legendary local newspaper owners. Founder of the Ipswich Chronicle, he built that into a chain of about a dozen North Shore papers and sold them in 1986. Those papers eventually were acquired by GateHouse Media, and Wasserman has been grousing about what happened to them ever since. Earlier this year, GateHouse got rid of the Ipswich Chronicle as a standalone title, merging it with two other papers.

In an interview for CommonWealth Magazine in 2008, Wasserman told me the main problem with corporate ownership was a failure to understand that, even in the best of times, community journalism is little more than a break-even proposition. “I was paid a salary, which was modest,” said Wasserman. “The reward was not in the profit. The reward was having a lot of fun putting out a community paper.”

Now Wasserman has gone back to the future, lending his expertise as a consultant and ad salesman to a start-up called Ipswich Local News — a free paper and website that is seeking nonprofit status. The editor and publisher is John Muldoon.

***

Jenn Lord Paluzzi holds the distinction of being laid off by two national chains — GateHouse (at The MetroWest Daily News) and MediaNews Group (at The Sun of Lowell). Now she’s launched a community news site in her hometown of Grafton called Grafton Common that is loaded with local news.

Some years back, Lord Paluzzi was involved in a startup called Greater Grafton. But that venture ended up getting sold to a chain of local websites that ended up going out of business. Best of luck to her as she goes off on her own once again.

Update: And a fourth — how could I forget the recently launched Provincetown Independent?

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Proposed state commission would study the local news crisis and what to do about it

Photo (cc) 2019 by Dan Kennedy

Previously published at WGBHNews.org.

Can government play a role in helping to solve the local news crisis? Not directly, perhaps. But indirectly, government can shine a light on the issue, call attention to worthy projects that might inspire others, and offer some policy recommendations.

That’s the goal of House Bill 181, which would create a special commission to study local journalism in underserved Massachusetts communities. Sponsored by Rep. Lori Ehrlich, D-Marblehead, and Sen. Brendan Crighton, D-Lynn, the bill was the subject of a public hearing Tuesday before the Joint Committee on Community Development and Small Businesses. I was among those who testified; here are my prepared remarks.

The idea came about during an exchange I had with Ehrlich last fall. She was lamenting the shrinkage of local news coverage, which has been caused by a combination of factors. The internet, of course, has inflicted immense damage on newspaper advertising, which once accounted for 80 percent of a typical paper’s revenues. But corporate chain ownership has led to cuts even deeper than they otherwise would have been, since shareholders and hedge funds demand unrealistically high profits even as the underlying business model continues to deteriorate.

The commission would comprise 17 people — journalists, academics, and elected officials, as well as members of organizations representing African American, Hispanic, and Asian journalists. The proposal has not been without controversy. After complaints on Monday that the hearing had been scheduled with little advance notice, officials agreed to hold a second hearing sometime within the next few weeks. Questions have been raised about the composition of the commission as well. In her testimony, Ehrlich said that she and Crighton are open to suggestions as to who would ultimately be named to the panel. (As the legislation is currently written, I would be one of the members.)

Government hearings into the state of journalism are not new. Back in 2009, a U.S. Senate committee chaired by John Kerry held a hearing on the topic at which former Baltimore Sun reporter David Simon, creator of the HBO series “The Wire,” blasted the news business, saying that “raw unencumbered capitalism is never the answer when a public trust or public mission is at issue.”

Government action isn’t new, either. Earlier this month, legislation was filed in Congress to allow newspapers to negotiate collectively with social media platforms in the hopes of extracting some revenues for the use of their content. A second bill, which I had a small role in drafting, would make it easier for news organizations to claim nonprofit status. I should note, too, that public media organizations, including WGBH, benefit from government support in the form of tax-exempt status as well as grants from the Corporation for Public Broadcasting.

In 2018, New Jersey lawmakers created a 15-member Civic Information Consortium charged with allocating $5 million in public funds to pay for various local reporting projects. That strikes me as more ambitious and controversial than anything that is likely to be attempted in Massachusetts. Among other things, the shrinkage of local news outlets has been more severe in New Jersey than it has been here. Still, it serves as a precedent for state government playing some role in the future of local journalism.

According to a report by the University of North Carolina, about 1,800 newspapers have ceased publishing since 2004. Residents of many parts of the country live in what UNC describes as “news deserts” — that is, communities where there is no local source of news at all. A number of studies have demonstrated that such lack of coverage leads to social ills such as declining voter participation, an increase in political corruption, and even a rise in the cost of government borrowing because of, as the authors put it, “the lack of scrutiny over local deals.”

Things are not quite so bad in Massachusetts. There are no true news deserts here, according to the UNC report. But rather than uncovered communities, we have many undercovered communities. Cities and towns that may have been served by three or four reporters a generation ago are now lucky to have one. In some cases, a harried reporter has the impossible task of covering two or three towns. MediaNews Group (formerly Digital First), which owns the Boston Herald, The Sun of Lowell, and the Sentinel & Enterprise of Fitchburg, and GateHouse Media, which owns dozens of papers in Greater Boston and beyond, have been assiduously eliminating newsroom jobs and merging papers.

A news commission could provide a modest but crucial service. The commission could study the situation on the ground to determine where the gaps in coverage are. It could identify examples of good-quality local journalism that might be emulated elsewhere. It could recommend policy initiatives to encourage for-profit and nonprofit local news projects. One thing I would especially like to see is a plan to help local-access cable TV, an important informational resource that is facing its own financial challenges.

Local journalism is crucial to providing us with the information we need to govern ourselves. The one thing we can’t afford to do is nothing.

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