Tag: Rebuild Local News

Alden buys four papers in Pennsylvania. You’ll have no trouble believing what happened next.

The historic Scranton Times building. Photo (cc) 2022 by Jeffrey Hayes.

Last summer came horrifying news from Scranton, Pennsylvania: the notorious hedge fund Alden Global Capital was buying the Scranton Times-Tribune and three sister papers from the Lynett family, the local publishers going back to 1895. The sale was taking place even though those members of the family who actually ran the papers opposed it. They were outvoted by other members of the family who simply wanted to cash out and get on with their lives. Ellen Clegg and I talked about it at the time on the “What Works” podcast.

What happened next was predictable and depressing. Washington Post media columnist Erik Wemple traveled to the Scranton area recently and filed a long, sad report about what he found (free link). The lowlights:

  • The news staff, already down to 40, a steep decline from 90 in the late 1990s, was immediately cut by another 10, with employees offered voluntary buyouts if they would just go away.
  • Newsrooms in Wilkes-Barre, Hazleton and Pottsfield were put up for sale. The Scranton Times’ headquarters was abandoned in late November, with journalists being told that most of them would be expected to work at home.
  • Some customer service calls were outsourced to the Philippines.

Almost immediately, Wemple writes, editorials about local and state issues were replaced with generic national content, which is exactly the opposite approach that researchers Joshua Darr, Matthew Hitt and Johanna Dunaway found is helpful in reducing political polarization. As Darr told Ellen in 2021:

It’s important for people to be able to express their opinions on national politics, and there are myriad ways to do that. But I don’t think there’s necessarily a good reason for local newspapers to devote some of their precious op-ed page space to things that aren’t local. I think they should be maximizing their comparative advantage in the marketplace by giving people things that they can’t get anywhere else.

There’s no question that the Pennsylvania papers were facing real challenges. As Wemple reports, paid circulation and advertising were both in a tailspin, and the Lynett family understandably was tired of subsidizing losses. But it didn’t have to end like this. Perhaps the best solution would have been for a local nonprofit institution to purchase the papers, as is the case at another Pennsylvania paper — The Philadelphia Inquirer, a for-profit entity owned by the nonprofit Lenfest Institute.

Steven Waldman, the president of Rebuild Local News, has proposed tax incentives and other measures to prevent newspapers from falling into the hands of cost-slashing chains. Unfortunately, such steps would not have come in time to save the Lynett papers.

Sadly, based on Wemple’s story, it doesn’t sound like much of an effort was made to find a buyer that would have operated the papers for the benefit of the public rather than for Alden’s wealthy investors. I just hope that some of the journalists who have lost their jobs will fight back by starting their own venture, as is happening in community after community across the country.

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Journalism, public goods and the free rider problem

Watchdog journalism at its finest. Photo via Needpix.

One of the arguments that often comes up in discussions about how to pay for news is that journalism is a “public good.” I was thinking about this last night when I read Rebuild Local News president Steve Waldman’s latest piece in The Atlantic, in which he observes that journalism often saves more money than it costs. He cites some notable examples, including a ProPublica investigation that led to $435 million in fines and reporting by MLK50 in Memphis, Tennessee, that resulted in the cancellation of about $12 million in debt owed by hospital patients.

This is the very definition of a “public good.” When economists talk about a public good, they mean something similar, but not identical, to what we lay people mean. You and I might simply mean that a public good is good for the public, as tough, ethical journalism surely is. But what economists mean is that it’s also something that benefits the public whether they pay for it or not. Here’s how Investopedia puts it: “The two main criteria that distinguish a public good are that it must be non-rivalrous and non-excludable. Non-rivalrous means that the goods do not dwindle in supply as more people consume them; non-excludability means that the good is available to all citizens.” Thus, a public good carries with it a free rider problem.

This is what I wrote about public goods in my 2013 book “The Wired City”:

In economic terms, a public good is something that benefits everyone, whether each of us pays for it or not — which, perversely, creates incentives for us not to pay. That is why we must pay taxes rather than make voluntary contributions to fund national defense. “Public good” is a phrase that also comes up a lot in discussions of why it is so difficult to fix the news business. For example, the local newspaper reports that members of the school committee are taking bribes from a bus company with a record of safety violations. As a result of that reporting, those committee members are removed and prosecuted. Schoolchildren are safer. Yet people who don’t buy or even read the paper benefit just as much as those who do. Thus, there needs to be a way to pay or such journalism outside the for-profit, advertiser-based context that worked reasonably well until a few years ago. Seen in this light, community journalism is a public good that deserves funding beyond what the market is willing to pay.

The problem is that when tax money is used to fund journalism, it can create a conflict that interferes with the independence needed for a news organization to fulfill its role as a monitor of power. Watchdog reporting is difficult when the institutions you’re holding to account are also providing you with the money you need to operate. That makes journalism very different from the fire department, schools or public works, all of which may accept public money without any such conflicts.

In his Atlantic piece, Waldman advocates for tax credits for local publishers and advertisers, a variation of an idea that he’s been promoting for several years that was recently revived in the form of the Community News and Small Business Support Act, which I wrote about a few weeks ago. Now, tax credits are sufficiently arm’s-length that they don’t present much of a threat to journalistic independence. But the very fact that such indirect government assistance is being talked about helps illustrate why news isn’t just good for the public — it’s also a public good in every sense of the term.

At one time there was so much advertising money supporting journalism that we didn’t need to think about such things. These days, news has morphed from a highly profitable enterprise into a classic public good. It makes sense for us to find ways to fund that public good as long as we can do so without undermining the very qualities that make it a public good in the first place.