Jan 21, 2020

Big city papers face headwinds

Illustration: Sarah Grillo/Axios

The local news crisis is hitting major cities across America, proving that big papers aren't immune from the financial pressures that are causing a near collapse of hundreds of local outlets across the country. In some case, their problems are harder to solve.

Driving the news: In a desperate plea for help, two investigative reporters at The Chicago Tribune penned a New York Times editorial Sunday, foreshadowing signs of major cuts at the 173-year-old paper, following its acquisition by Alden Global Capital, a hedge fund known for cutting journalists at local papers to maximize profits.

  • "In a signal of what may happen in Chicago, on Jan. 13, we and other newsroom staff members were offered buyouts," writes The Chicago Tribune's David Jackson and Gary Marx.
  • "Now, we are bracing for the sight of colleagues with decades of experience walking out with cardboard boxes in their arms and tears streaming down their faces."
  • Jackson and Marx are referencing steep cuts to the Denver Post, a paper that was also gobbled up by Alden Global Capital.

The trend is spreading across the country. Just two days before their colleagues at the Chicago Tribune penned that op-ed, a reporter at the Orlando Sentinel also detailed a similar experience of being offered a string of buyouts to encourage senior journalists to leave. The Orlando Sentinel, as part of the Tribune chain, is also owned by Alden Global Capital.

The big picture: Cuts to big-city papers around the country are happening parallel to an increase in ownership of newspapers by hedge funds and private equity firms that have absorbed the entities to find synergies and potentially make some cash.

  • A study released in 2018 by the University of North Carolina’s School of Media and Journalism found that newspaper sales and closures/mergers via the seven largest newspaper investment owners have increased over the past five years, as big hedge firms or private equity groups based in large cities take over.

Between the lines: Large city and regional papers often compete with national papers, like The New York Times or The Washington Post, for subscribers, because national outlets often cover topics that appeal to city populations or coastal elites.

  • The New York Times, which is publicly traded but family-controlled via a dual-stock structure, and The Washington Post, which is owned by Jeff Bezos, are considered two of the only big success stories in newspaper turnarounds in the country.
  • For example, The Times said last week that it surpassed its goal set in 2014 of doubling its annual digital revenue to $800 million by 2020, a full year ahead of schedule in 2019.

Be smart: Even some national titles owned by billionaires or well-off families, are struggling.

  • The Seattle Times, which is majority-owned by Frank Blethen and his family, is facing dozens of layoffs as the paper prepares to close its main printing plant this week.
  • The Los Angeles Times, which was purchased by billionaire Patrick Soon-Shiong in 2018, hasn't been able to turn its paper into a digital success. The L.A. Times missed its subscriber goals for the first half of this year and reported having 170,000 digital-only subscribers as of July 2019, a fraction of other national rivals, like The Washington Post, The Wall Street Journal and The New York Times.

Go deeper: Cities are turning into news deserts

Go deeper

National newspapers thrive while local outlets struggle to survive

Illustration: Sarah Grillo/Axios

While big national newspapers grow stronger, local newspaper chains that have for decades kept the vast majority of the country informed are combusting.

Why it matters: The inequity between giants like the New York Times and the Wall Street Journal and their local counterparts represents a growing problem in America as local communities no longer have the power to set the agenda for the news that most affects them.

Warren Buffett gives up on newspapers

Photo: Johannes Eisele/AFP via Getty Images

Berkshire Hathaway, the corporate holding company owned mostly by billionaire Warren Buffett, will sell its newspaper operations to publisher Lee Enterprises Inc. for $140 million, per a Wednesday announcement.

Why it matters: Buffett loves the newspaper business. His first job was a newspaper delivery boy for the Washington Post — and he has long been a vocal supporter of local news. The fact that he is finally giving up on the industry, which he has warned in recent years is "toast" due to terminal advertising decline, is significant and symbolic.

Go deeperArrowJan 29, 2020

Exclusive: Facebook awards $700,000 in local news grants

Photo: Drew Angerer/Getty Images

Facebook on Tuesday will announce a new round of investment worth $700,000 in various news organizations across the country, executives tell Axios. Many of the new commitments focus on newsrooms that cover diversity.

Why it matters: The investment is part of a greater than $300 million commitment from Facebook to invest in the news, especially local news.

Go deeperArrowJan 28, 2020