The newspaper industry has a problem, but it’s not what most people think.
More than anything else, the newspaper industry in North America has an ownership problem. Long known by those in the industry, the public watched this story explode a little over a week ago. The spark? A series of editorials in the Denver Post blasting their owners, a hedge-fund called Alden Global Capital.
What most readers forget, or don’t know, is that many of the papers they read are owned by hedge funds or investment companies. It could be outright, like the Denver Post, or by extension, like Postmedia, which has borrowed so much to fuel its expansion, it is effectively beholden to its lenders. This ownership structure favours profitability at any cost— they are investors looking to make money through newspaper ownership, not newspaper owners looking to make money.
The Denver Post editorial was accompanied by a photo of the paper’s staff in 2013, with the people who have been lost to cutbacks blacked out. Only about a third of the people remain. These cuts are deeper than those faced by other papers in similar markets and come even as the company reported profits within its newspaper division.
Denver isn’t the only place where the staff is fighting back. Last month, journalists at two other Alden papers, the San Jose Mercury News and East Bay Times, held a public rally at which they distributed fact sheets about the “pillaging” of their papers; this month, staff at the Gannett-owned Knoxville News Sentinel sent a letter to all of their subscribers outlining the cuts their owners have taken since purchasing the paper in 2015.
Emmy award-winning former CBS news anchor Dan Rather recently posted a video about how Wall Street is killing newspapers. We haven’t seen this kind of pushback in Canada yet, but there is no shortage of journalists who feel their papers are being bled to death by their return-focused owners. This week, you’d be hard-pressed to find a major media outlet that isn’t covering this story.
Not surprisingly, these cuts severely impact the quality of the product and ultimately, readers and advertisers have been driven away, until the paper is forced to close. If the paper closes, the owners don’t really care, as long as they’ve extracted the maximum profit from their investment. The problem is that the closures, which are a result of mismanagement, help drive that narrative that the newspaper industry is dying.
The media industry has changed and the days of newspapers being a license to print money have gone, probably never to return, but that doesn’t mean that the industry isn’t still viable or valuable. The reality is that the industry is starkly divided in two. On the other side of the corporate behemoths are the numerous papers that are independently owned, like ours.
Across Canada and the US, a recent survey found that 50 per cent of papers were independently owned and another 13.5 per cent is part of less than five paper group, with most of the work being done locally. These papers are making a living for their owners and reinvesting in both the business and the community. The story of the large corporately-owned papers isn’t our story.
Without a doubt, the media landscape has changed in the last decade and while many papers have adapted, some haven’t even tried and some have be enhampered by owners who really don’t care about their papers’ future. The general public doesn’t know about this and while reporters have long been trained to keep themselves out of the news they cover, as cuts deepen and more papers close, we owe the public an explanation of what’s really going on in our industry.