Media Nation

By Dan Kennedy • The press, politics, technology, culture and other passions

Tag: Philadelphia Inquirer

Can nonprofit ownership be an answer to the crisis facing local newspapers?

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On May 15, 2019

In Media

Photo (cc) 2004 by Cool Hand Luke.

Previously published at WGBHNews.org.

A little gallows humor seems like an appropriate way to greet the news that The Salt Lake Tribune — the largest daily newspaper in Utah — will seek permission from the IRS to become a nonprofit entity. So cue the snare drum:

Q: What’s the difference between a for-profit newspaper and a nonprofit newspaper?

A: A nonprofit newspaper might actually be able to figure out a way to make money.

Hiyo!

But hold the snark. Because even though nonprofit status would not relieve the Tribune of the obligation to figure out a way to pay for the journalism it provides, this might be the most hopeful step in newspaper ownership since The Philadelphia Inquirer and its sister properties were donated to a nonprofit foundation in 2016.

The Salt Lake plan would actually take the Philadelphia model one giant step further. The Inquirer remains a for-profit paper even though its owner, the Lenfest Institute for Journalism, is a nonprofit organization. What the owners in Salt Lake hope to do is reorganize the Tribune itself as a nonprofit, enabling it to raise money in the form of tax-exempt contributions from large foundations as well as from (to borrow a phrase) readers like you.

“The Tribune is a vital community asset and should be owned by the community,” said publisher Paul Huntsman, the brother of former ambassador and presidential candidate Jon Huntsman.

The slide at daily newspapers everywhere has been precipitous, but it’s been especially acute at the Tribune. The newsroom has plunged from 148 full-time employees in 2011 to about 60 today. (Huntsman bought the paper in 2016 and eliminated more than 30 positions a year ago.) Print circulation, according to the Nieman Lab, fell from 85,000 in 2014 to just 31,000 in 2018.

The situation in Salt Lake City is complicated by the Tribune’s joint operating agreement with a second daily, the Deseret News, which is owned by the Church of Jesus Christ of Latter-day Saints. That agreement expires in a year. So it will take a while for the dust to settle.

Despite the success of our three national papers, The New York Times, The Washington Post, and The Wall Street Journal, in charging for digital subscriptions, the outlook remains dire at the regional level. Although Boston Globe owner John Henry surprised everyone last December when he said his paper had achieved profitability, the Globe’s financial situation is still murky. Elsewhere it’s Armageddon. As The Wall Street Journal put it in a recent examination of local newspapers: “A stark divide has emerged between a handful of national players that have managed to stabilize their businesses and local outlets for which time is running out.”

As the advertising revenues that traditionally subsidized journalism have dwindled, newspapers are looking more and more like what economists refer to as a “public good” — that is, a service that benefits all of us whether we pay for it or not. The fire department is a classic example of a public good because we all need it, yet few of us would pay for it voluntarily. That’s what taxes are for. But what do we do about a newspaper whose exposé of corruption in city hall, for example, benefits “free riders” who don’t pay as well as those who do?

That’s where the nonprofit model comes in. At its best, nonprofit ownership can break the reliance on revenue from advertisers and readers by getting others to pay for it.

Take, for instance, the New Haven Independent, a nonprofit, online-only news service that has received considerable support from the Community Foundation for Greater New Haven since the Independent’s founding in 2005.

“My view is that one of the things that connects people is a common base of information about what’s going on in this place. That it’s actually a very powerful connector,” the foundation’s president and chief executive officer, Will Ginsberg, said in an interview for my 2013 book “The Wired City.” “And it’s therefore a very powerful ingredient in creating a sense of community.”

From the moment that the internet began undermining the economics of journalism, the paramount question for newspapers has been: Who will pay? If The Salt Lake Tribune is successful in winning IRS approval, we’ll have a chance to see if civic-minded foundation leaders and philanthropists might be one answer. It’s already working at smaller projects such as the New Haven Independent and at public broadcasting operations. It’s worth finding out if it might work for large regional newspapers as well.

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The shrinking Globe pursues funding alternatives for accountability journalism

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On November 5, 2018

In Media

For local and regional news organizations, nothing is more expensive — or more important — than investigative journalism aimed at holding government and other large institutions to account. Despite the economic challenges that continue to shrink the newspaper business, The Boston Globe continues to provide a steady stream of such stories. And over the past few days, the paper demonstrated the results of two innovative ways to fund such reporting.

First, on Saturday, the Globe published a major update on how Catholic bishops have failed in their response to the sexual-abuse crisis. The story, which appeared in print on Sunday, was reported and written by a team of journalists from the Globe and The Philadelphia Inquirer, with funding from the Lenfest Institute for Journalism. The institute, a nonprofit organization, owns the Inquirer and two sister media properties, the result of a gift from the late Gerry Lenfest in 2016. (I wrote about Lenfest’s legacy for the Globe after his death in August.) Here is how the Globe describes the partnership:

Boston and Philadelphia have been ground zero for the Catholic clergy sex abuse scandal — both cities have endured years of church investigations, allegations, prosecutions, and lasting scars. Now, amid a rising tide of revelations about misconduct by US bishops, the Inquirer and Globe pooled their resources for a deeper look at the crisis. Reporters from the two newsrooms visited nine states, conducted scores of interviews, and reviewed thousands of pages of court and church records to produce this report. Funding for the effort came from the Lenfest Institute for Journalism.

Then, today, the Globe published a story by Jana Winter on attempts by hackers to penetrate voting systems across the United States. Fortunately, her reporting shows that officials are well aware of those attempts and that they appear to be on top of it. Equally interesting, though, is that Winter is the Globe’s Spotlight Fellow — a program funded by Participant Media, which produced the movie “Spotlight.” The fellowship, according to the online description, provides “awards up to $100,000 for one or more individuals or teams of journalists to work on in-depth research and reporting projects.”

As if to underscore the need for alternative funding for accountability journalism, the Globe unveiled a shrunken business section on Sunday, moving innovation columnist Scott Kirsner to Monday.

Kirsner’s column was usually the main event in the Sunday business section. Given that it will continue, this isn’t too much of a loss. But it does show that the Globe’s finances remain precarious, as publisher John Henry admitted when I interviewed him during the summer for WGBH News:

The Globe cannot ever seem to meet budgets — on either the revenue side or the expense side and I am not going to continue that. This has always been about sustainability rather than sizable, endless, annual losses. That is frustrating and due to a combination of mismanagement and a tough industry.

In such an economic environment, it’s essential that the Globe find new ways to pay for what really matters.

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How Gerry Lenfest morphed from reluctant publisher into a savior of journalism

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On August 12, 2018

In Media, The Return of the Moguls

Gerry Lenfest, second from left, in 2009. Photo by the Library Company of Philadelphia.

Previously published by the Boston Globe.

H.F. “Gerry” Lenfest didn’t want to run a newspaper. In 2014 the Philadelphia billionaire, who died last week at the age of 88, unexpectedly won an auction to buy the city’s paper of record, the Inquirer, and its sister properties, the Daily News and Philly.com, media outlets that he already owned in part and was hoping to unload. “He did not expect to have to write a check that day,” Joel Mathis, a former reporter for Philadelphia magazine, told me. “He thought he was going to be getting a check that day.”

Just a few weeks later, Lenfest’s business partner, Lewis Katz, was killed in a plane crash along with six others, leaving Lenfest as the sole, unhappy proprietor. Lenfest’s solution to his dilemma was an act of generosity that continues to reverberate, and that could serve as a possible blueprint for saving the shrinking newspaper business. In early 2016 he donated the properties to a nonprofit organization, the Philadelphia Foundation. And he endowed the institute that the foundation set up to run the properties — now known as the Lenfest Institute for Journalism — with an initial $20 million from his fortune.

“Of all the things I’ve done, this is the most important. Because of the journalism,” Lenfest said when the complicated transaction was announced.

As it happened, I had already scheduled interviews with a number of Philadelphia journalists for a book project. I arrived on the Amtrak in the aftermath of a monumental snowstorm. What I encountered was a warm sense of (to invoke a cliché) cautious optimism.

Bill Marimow, the respected editor who had been fired or demoted twice through years of musical-chairs ownership, was particularly enthusiastic about the structure Lenfest had set up. Though the three properties would be owned by a nonprofit, they would be run as a for-profit “public-benefit corporation,” which meant that they would not be legally required to serve the financial interests of shareholders or investors.

“There’s parity between the mandate to do great journalism and the mandate to have an economically viable business,” Marimow said. “But the priority is no longer maximizing profits. It’s having sufficient profits to keep producing good journalism.”

These days, of course, there’s no guarantee that newspapers will have the resources to cover the communities they serve even without the pressure to turn a profit. Newspaper advertising, both in print and online, plunged from a high of $49.4 billion in 2005 to an estimated $16.5 billion in 2017, according to the Pew Research Center. Full-time newsroom employment fell by nearly half during roughly the same period.

Here and there a few wealthy newspaper owners are trying to figure out ways to revive their struggling businesses. Jeff Bezos’s efforts at The Washington Post are the best-known, but he runs what he has repositioned as a national digital news organization. The economics of large regional papers like the Inquirer are very different — and much more difficult. For every paper like The Boston Globe, where billionaire owner John Henry has attempted to minimize newsroom cuts while figuring out a path to sustainability, there are dozens owned by hedge funds and corporate chains that have plundered their newspapers in order to squeeze out their last remaining profits.

The nonprofit/for-profit hybrid model that Lenfest set up in Philadelphia is not a panacea. Ultimately, the papers still have to break even, an enormous challenge in the current environment. Still, the Philadelphia experiment has brought stable ownership, community-minded oversight and a journalism-first mindset to the Inquirer and its sister properties after years of chaos. That is a commendable legacy — and one worth emulating elsewhere.

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Nonprofits will fund the Globe’s newest music critic

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On October 31, 2016

In Media

If newspapers are going to survive and thrive, then various types of nonprofit/for-profit partnerships will almost certainly be part of the mix.

At the extreme end is the Philadelphia Inquirer, which, along with its sister paper, the Daily News, and their joint website, Philly.com, were donated earlier this year to the nonprofit Philadelphia Foundation. The media properties still need to find a way to break even, but it does save them from the pressure of cutting their way to profits in order to satisfy a corporate owner.

image_galleryA more modest step was announced in today’s Boston Globe. Zoë Madonna, a young prize-winning critic, will be paid through a nonprofit grant to write about classical music for the next 10 months while Globe critic Jeremy Eichler is on leave at Harvard. The money will come from the Rubin Institute for Music Criticism, the San Francisco Conservatory of Music, and the Ann and Gordon Getty Foundation.

According to a press release from the Rubin Institute, which awarded her its 2014 prize in music criticism, the benefactors “will consider an ongoing strategy to support this endeavor on a national scale” once Madonna’s stint at the Globe has been completed. Globe editor Brian McGrory is quoted as saying:

We could not be more delighted to participate in this novel experiment with such worthy partners. We are excited about the benefit to our industry, to some of the great cultural institutions of Boston, and most especially to our readership, which will very much appreciate the proven talents of this young critic.

The Guardian struggles with its free digital model

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On February 3, 2016

In Media

Screen Shot 2016-02-03 at 11.03.43 AMMedia observer Michael Wolff writes in USA Today about the difficulties facing any news organization that seeks to make all or most of its money from digital advertising. His example is The Guardian, a left-leaning British newspaper to which he and I both used to contribute.

The Guardian is proudly, aggressively digital. Its print edition is little more than a vestigial limb (especially outside the UK), and its executives refuse to implement a paywall. The result, Wolff says, is that the trust set up to run The Guardian in perpetuity is running out of money. As I wrote last week for WGBHNews.org, relying on digital advertising is a dubious proposition because its very ubiquity is destroying its value. Wolff puts it this way:

The reality is that the Guardian’s future is almost entirely dependent on advertising revenue in a medium where the price of a view heads inexorably to an increment hardly above zero. But the hope remains that, in ways yet to be imagined, some innovation will make large profits suddenly possible.

Digital paywalls are helping to bolster the bottom line at papers like The New York Times, The Wall Street Journal, and The Boston Globe—but they are hardly a solution to the larger problems the newspaper business faces. Print advertising still brings in most of the revenue, but it’s on the wane.

Last week I visited The Philadelphia Inquirer, a major metro similar to the Globe that was recently donated to a nonprofit foundation. It’s a promising ownership model. The Inquirer still needs to break even, which is no sure thing. But local control, no pressure to meet the expectations of shareholders, and the possibility of some grant money being raised to pay for reporting projects may bring stability to the Inquirer after years of chaos. (The nonprofit New Haven Independent was the main focus of my 2013 book, The Wired City.)

One thing they’re not talking about at the Inquirer is free digital, even though the Inquirer and its sister paper, the tabloid Daily News, compete with a vibrant (though small) free digital-only project called Billy Penn, whose modest budget is paid primarily by sponsoring events. Though I remain skeptical about paywalls for reasons I laid out in my WGBH piece, the one thing I’m certain of is that the money has to come from somewhere.

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