Hedge fund owner, its feelings apparently hurt, cuts ties with Report for America

Report for America photojournalist Olivia Sun on assignment with The Colorado Sun. Photo (cc) 2021 by Dan Kennedy.

By Dan Kennedy

In April 2020, I questioned whether Report for America should be placing journalists at newspapers owned by cost-cutting corporate chains.

RFA is a program that enables news organizations to hire young journalists for about two years at a fraction of the cost, with a grant from RFA and additional fundraising covering 75%. The dilemma is that though these news organizations clearly need help, and the communities they cover benefit from that help, there is at least a theoretical chance that their chain owners will take it as an incentive not to hire someone at full cost.

At the time, RFA co-founder Steven Waldman defended those placements, saying in part that “half of our placements are in nonprofit, and others are in locally owned commercial entities. But we do indeed have some placements in newspapers that are owned by chains. Our primary standard is: Will this help the community?” (His full answer, as well as comments from the other co-founder, Charles Sennott, are here.)

Now Report for America has encountered an unexpected hazard to doing business with chain owners. McClatchy, owned by Chatham Asset Management, a hedge fund, has decided not to apply for any RFA journalists next year. The apparent reason, according to Feven Merid at the Columbia Journalism Review: Waldman hurt their feelings in an op-ed piece he wrote for the Los Angeles Times earlier this year. Merid writes:

Sources tell CJR that McClatchy’s decision came in response to Waldman’s hedge-fund criticism. Kristin Roberts, McClatchy’s senior vice president of news, would not confirm the company’s plans, and did not respond to questions concerning the company’s reaction to Waldman’s hedge-fund critiques.

McClatchy owns several dozen papers in 14 states, including important outlets like the Miami Herald, The Sacramento Bee and The News & Observer of Raleigh, North Carolina. The chain staggered under piles of debt for many years before finally collapsing into bankruptcy a few years ago. Chatham bailed them out and has thus far proved to be a more benevolent owner than, say, Alden Global Capital, the most notorious of the hedge-fund owners. Indeed, Waldman’s op-ed specifically mentioned Alden.

But if Merid’s sources are correct, then it seems that Chatham executives have a bad case of rabbit ears.

Waldman’s op-ed, headlined “How to Stop Hedge Funds from Wrecking Local News,” calls on Washington to take steps that would encourage chain-owned newspapers to divest their holdings and make it easier for independent local owners to step up. He wrote:

It could offer incentives for owners to sell these papers to local interests by waiving capital gains taxes if the acquirer is a local nonprofit organization or public benefit corporation. It could give a time-limited payroll tax break to the acquiring organizations. Congress could also, through the Small Business Administration or Commerce Department, provide loan guarantees for low-interest financing for such transitions or special tax credits, similar to those available to businesses operating in enterprise zones.

Antitrust action to break up the chains could be in order as well, according to Waldman.

At the moment, 31 RFA journalists work at 21 McClatchy news outlets. The chain’s decision to spurn future RFA journalists won’t hurt the prospects of young reporters and photographers, since there will no doubt be plenty of other newsrooms that participate. But it will hurt the communities that those papers serve unless the chain suddenly decides to go on a hiring spree.

It’s an absurd situation, and I hope the folks at Chatham and McClatchy come to their senses.

A federal bill to help local news organizations may fall victim to D.C. dysfunction

The U.S. Capitol. Photo (cc) 2013 by Mark Fischer.

By Dan Kennedy

Update: And it’s back.

Original item: You can never take anything for granted. Until recently, though, it seemed like a reasonably good bet that Congress would pass the Local Journalism Sustainability Act, which would provide tax credits for subscribers, publishers and advertisers for five years. The idea was to bolster the bottom line of community newspapers, radio stations and television outlets while giving them some time to figure out a path to financial sustainability.

Last week, though, the House dropped the $1 billion measure from its version of the reconciliation bill. So now it’s up to the Senate to restore it to the $1.75 trillion Build Back Better legislation, meaning that the fate of local journalism rests in the unsteady hands of Sens. Joe Manchin and Kyrsten Sinema.

Rick Edmonds of Poynter, who has all the details, wrote that the bill now “faces a giant hurdle” — and that was on Tuesday, before the election returns from Virginia panicked the already-jumpy Democrats. You’d like to think that the Republican resurgence would focus the Democrats’ minds on the need to get something done, but it will probably have the opposite effect. And with Manchin and Sinema, who knows?

I’m what you might call a skeptical supporter of the legislation. Although the assistance would be indirect enough not to threaten journalistic integrity, I’m troubled by the prospect of corporate chain owners lining up at the trough. Ideally, federal help should foster independent local news organizations while letting the very owners who helped create this mess figure things out for themselves.

Still, it’s worth giving it a try on a temporary basis. As Steven Waldman, chair of the Rebuild Local News Coalition, puts it, “The cost is miniscule compared to the rest of the Build Back Better package — less than 0.1% of its total. But this provision is the only thing in the bill that would help save democracy.”

Our latest podcast: Julie Reynolds talks about Alden and the botched vote that gave it control of Tribune

In Episode 2 of the “What Works” podcast, we interview the investigative reporter Julie Reynolds, who has established a reputation as the scourge of Alden Global Capital. Among our topics: Tribune Publishing’s legally dubious vote to sell off its newspapers to the hedge fund as well as Alden’s ties to a shady “shadow bank.” Plus: Rocky, Bullwinkle and pink slime. Details — including how to subscribe — on our podcast page.

A conversation with Barbara Roessner, editor of the fledgling New Bedford Light

Barbara Roessner on “SouthCoast Matters”

By Dan Kennedy

There are few local news start-ups that have received the kind of attention bestowed upon The New Bedford Light, which has been the subject of stories by The New York Times, “On the Media,” The Boston Globe and other outlets. With high-profile founders like publisher Stephen Taylor, of the Taylor family that used to own the Globe, and board member Walter Robinson of “Spotlight” fame, the Light is being watched closely across the country.

The nonprofit digital project also has a high-profile editor — Barbara Roessner, the retired editor of top Connecticut outlets such as the Hartford Courant and the state’s Hearst papers. Recently I had a chance to speak with Roessner as guest cohost the local cable television show “SouthCoast Matters” with Paul Letendre.

We interviewed Roessner for an hour. Her insights into the future of community journalism and what she hopes to accomplish at the Light were pretty interesting, and I hope you’ll agree.

Northern light in Frostbite Falls

Rocky and Bullwinkle lunch box by Wired Rocky and Bullwinkle, licensed under CC BY-NC 2.0

By Ellen Clegg

At first glance, the northern Minnesota town of International Falls doesn’t seem like the place for a cutting-edge experiment in sustaining local journalism. Known mostly for its frigid winters and for inspiring “Frostbite Falls, Minnesota,” the fictional home of Rocky and Bullwinkle, the town was in danger of being scorched by the hot winds of the expanding “news desert.” That story is all too familiar, but let’s fill in some blanks. Alden Global Capital, now the second-largest owner of U.S. newspapers (after Gannett), bought the weekly in 2020. In June 2021, the Journal published the final issue in its 110-year history, Burl Gilyard of MinnPost reported.

U.S. Senator Amy Klobuchar, the Minnesota Democrat whose father was a newspaper columnist, had this to say: “… the International Falls Journal is a reminder of the value of local journalism,” she told Gilyard. “For more than a century, it has empowered its readers by providing them with accurate, relevant information about their communities. It has captured moments big and small that together tell a beautiful story of the region that will live on.” (In March, Klobuchar and a bipartisan coalition introduced the Journalism Competition and Preservation Act, which would give publishers a “safe harbor” to negotiate collectively with digital platforms.)

The International Falls Journal was out, but not down. In a lively piece on October 20 in the Columbia Journalism Review, Lauren Harris has the details of what happened next. A cloud computing company based in New Jersey called CherryRoad had already purchased a nearby newspaper in Minnesota called the Cook County News-Herald from local owners, with plans to expand. As Harris reports, CherryRoad CEO Jeremy Gulban worked with the editor of the News-Herald, Brian Larsen, to relaunch a newspaper in International Falls after Alden closed it down rather than sell. CherryRoad has since acquired 26 small-market newspapers, according to Harris.

“People want to walk in every day and buy a paper, tell you about their grandmother’s 90th birthday, about a trip they just took,” Gulban tells Harris. “And that’s not going to go away, in my opinion, even as these communities become more digitally advanced, because that’s what small town life is all about.” Ultimately, that may mean that the discussion about what strategies work best to save local news needs to take on more of a local accent, whether it’s a Fargo twang or a Texas drawl. Newsroom experiments in urban (or urban-ish) regions with easy access to digital pipelines and a ready pool of Gen Z talent might not necessarily translate to small-town Minnesota or Iowa. Those newsrooms might not have the resources to launch digital newsletters, podcasts or big-tent events. Yet their connection to their subscribers, and the larger community, runs just as deep and is just as worthy of a sustainable future. The CherryRoad experiment certainly points the way.

A pioneering cooperatively owned media outlet in Ohio turns off the lights

Update: Laura Hazard Owen has more — a lot more — at Nieman Lab. Pretty ugly stuff.

***

By Dan Kennedy

The Devil Strip, a pioneering cooperatively owned magazine in Akron, Ohio, has closed its doors. More of an arts and culture outlet than a news organization, the operation has nevertheless stood as a successful example of an independent project owned by its employees and the community.

WKYC reports that the end came over the weekend — staff members were told on Friday that the money had run out, and on Monday they received layoff notices. The station adds:

Founded in 2014, The Devil Strip was a community-owned magazine that focused on music, arts, news, and culture in Akron. For as little as a dollar a month, readers had the opportunity to become members of the co-op. An investment of $330 allowed you to become a co-owner.

More from The Devil Strip’s Twitter account:

In March 2020, I spent a week in Northern California reporting on The Mendocino Voice, a for-profit news site that was converting to cooperative ownership. At that time the founders, publisher Kate Maxwell and editor Adrian Fernandez Baumann, told me that The Devil Strip was one of the projects they had studied.

I hope The Devil Strip might be able to reorganize and come back, though the tweet makes it sound like they’ve hit the end of the road. Founder Chris Horne has not tweeted about it except for a cryptic reference to a “sabbatical.” I’m sure he’ll have more to say soon.

Does better news coverage lead to greater voter engagement? The answer: It depends.

By Dan Kennedy

Meaningful participation in civic life isn’t possible without access to high-quality news and information. Consider the most fundamental aspect of community engagement: voting in local elections. If prospective voters lack the means to inform themselves about candidates for the select board, the city council, the school committee and the like, then it follows that they will be less likely to vote.

But is the reverse also true? Does the presence of a reliable news source result in a higher level of voter participation? To find out, I compared two towns, Bedford and Burlington, both northwest of Boston.

Read the rest at Storybench, a website about media innovation published by Northeastern University’s School of Journalism.

A for-profit newspaper asks its readers for donations in the name of its journalists

By Dan Kennedy

Several readers called this Washington Post piece to my attention over the weekend. It’s about a fundraising drive recently held by the Tampa Bay Times to offset some of the advertising revenue it lost during the COVID-19 pandemic.

Post reporter Elahe Izadi observes that the idea isn’t entirely new. The Seattle Times has engaged in community fundraising drives, and The Times-Picayune and The New Orleans Advocate (one entity) received $1 million over the summer from the Ford Foundation. For that matter, The Boston Globe pays for some of its education reporting with a $600,000 grant from the Barr Foundation.

What makes the Tampa Bay project unusual is that the paper asked for people to donate in support of individual journalists, by name. That makes me a little uncomfortable, and I hope the next time they do this they abandon that particular wrinkle.

As you may know, the Tampa Bay Times, a for-profit newspaper, is owned by the Poynter Institute, a nonprofit journalism education institute. Back when Nelson Poynter melded the Times and the institute together, the expectation was that the newspaper — rolling in cash — could use some of its revenues to support the institute.

Needless to say, that stopped a long time ago. The Times has struggled for the past few years, and has cut back its print edition to twice a week. It’s still a great ownership model, though, emulated several years ago when Philadelphia Inquirer owner Gerry Lenfest donated his paper to the nonprofit Philadelphia Foundation. After Lenfest’s death, the organization that was set up to own the Inquirer and make investments in journalism was renamed the Lenfest Institute.

By the way, I really like the front page of today’s Tampa Bay Times. Let’s just hope they’re not fundraising off a commemorative issue later this week. Go Sox!

A new study highlights the difficulties of working for small newspapers

Photo (cc) 2013 by zamo86

By Dan Kennedy

You’ll have to forgive me for not plowing through a massive new report from Columbia’s Tow Center for Digital Journalism on a survey of more than 300 newsroom employees at small (under 50,000 circulation) newspapers. The survey follows up a similar study conducted in 2016. I did look at the executive summary and the conclusion, which contain some interesting findings. Among them:

  • More than a third of those responding, or 37%, said they work between 50 and 60 hours a week, and 50% said they work 40 to 50 hours a week.

Recently the NewsGuild announced it was investigating unpaid overtime work at Gannett. But that would involve union papers, which tend to be larger. It’s no secret that small dailies and weeklies have been exploiting their employees pretty much forever. As the economics of the business become increasingly difficult, the situation may be getting worse.

  • COVID is taking a toll, with 43% saying they felt less secure in their employment than they did at the beginning of the pandemic.
  • “Participants were often highly critical of hedge-fund ownership and frequently cited nonprofit models as the way forward for the sector.”
  • Efforts to create more diverse newsrooms at small newspapers are inadequate at best.
  • Some 57% say they are more involved in digital work than they were three years ago; 49% said they are producing more stories per week than they were three years ago; and 62% said social media had become a more important tool in their work.

“Despite a challenging financial landscape, coupled with wider issues such as trust in journalism, our 2020 cohort — like their predecessors in 2016 — retained a sense of optimism about the future of their industry,” write the authors, Damian Radcliffe and Ryan Wallace. “In particular, they highlighted the importance of hyperlocal news, embracing digital and filing information gaps by covering stories not offered elsewhere.”

One fact that stands out from the survey is that the staffs at smaller newspapers are old and white, and that if there’s any hope of reaching younger, more diverse audiences, then new approaches are needed. I hope anyone working for these newspapers who’s under the age of 50 is making plans right now to start a new venture in their community.

There’s also an important unanswered question here. What would the findings look like if employees of independently owned newspapers could be separated out from those whose papers have been acquired by a corporate chain or hedge fund? Working conditions can be pretty tough at independents as well, but the journalists might have more of a sense of community service.

Finally: Laura Hazard Owen has written a good overview of the study at Nieman Lab.

In our first podcast, we interview the lead sponsor of the Mass. local news commission

By Ellen Clegg and Dan Kennedy

We are thrilled to announce the debut of our podcast, “What Works: The Future of Local News.” Every month — and soon, perhaps, every week — we will talk to journalists, policymakers and entrepreneurs about efforts they’re making to keep local news alive. (As you may have noticed, we’re working on a book with the same name.) Corporate chains and hedge funds are squeezing the life out of local news. There is a better way. We and our guests are telling that story.

In our first episode, Dan interviews Massachusetts state Rep. Lori Ehrlich, a Marblehead Democrat who co-sponsored legislation to launch a commission to study the future of local news in the Commonwealth. (Note: Dan will be a member of the commission.) Ehrlich lays out her vision and underscores the role that local journalism plays in a democracy. Dan and Ellen share a few quick takes on the news as well.

Also, many thanks to Alison Booth, who designed the graphic that accompanies our podcast, and to Promiser, whose song “WOW!” is our theme. Wow indeed.