In 2018, in an act of defiance that would become known as the Denver Rebellion, a group of current and former Denver Post staffers wrote and designed a six-page Sunday spread of op-ed pieces aimed at the paper’s owners, the New York–based hedge fund Alden Global Capital. The project, which led with the title, “As vultures circle, The Denver Post must be saved,” detailed how Alden’s ownership decimated the outlet.
As just one example, the Denver newsroom shrank from more than 250 employees to fewer than 100, even as management reported solid profits. Journalists no longer had enough manpower to report on all the hearings and local events that warranted coverage, even as subscription prices continued to rise.
The role of hedge funds and private equity is familiar fare for anyone following the economics of the news industry over the past decade. The extraordinary protest in Colorado led to front-page coverage in The New York Times and editorials from leading media writers, such as The Washington Post’s Margaret Sullivan—she called Alden “one of the most ruthless of the corporate strip-miners,” whose subsidiary Digital First is “wreaking similar havoc all over the country.” An American Prospect feature story, “Saving the Free Press From Private Equity,” detailed the rapacious role these financial entities have played in driving local media’s decline.
And yet what’s become clear is that this narrow focus on the “vultures” of Wall Street—the cartoonish capitalists singularly focused on profits with no loyalty to news production or the communities their outlets serve—is still not quite the full picture. Ending private equity’s grip on journalism would surely decelerate some of the massive cuts in reporting but wouldn’t be anywhere near sufficient to address the underlying challenges that capitalism ultimately poses to journalism. The problem is a lot bigger than these firms.
The importance of news access to functioning democracies has long been clear, so much so that the Founding Fathers actually viewed the Postal Service for its first few decades as primarily a way to deliver periodicals throughout the country. Federal lawmakers understood that this great democratic experiment could never work if voters were not informed on their communities and leaders. Today we have even more evidence to support the case that local journalism and democracy go hand in hand: Researchers have found the presence of newspapers can make elected officials more responsive and encourage more people to run for office. When newspapers close, studies have found government costs go up, driven by less scrutiny over local deals.
While media watchers have long grasped the threat private equity poses to this democratic mandate of news-gathering, the reality is that even alternative business models that are supposedly more sustainable, like pension-backed journalism and billionaire-sustained news, are proving far more unreliable than previously understood. Journalism is a public good, and it’s well past time we treat it that way.
The Community Newspaper Holdings Inc. is one of the largest chains of daily and weekly newspapers across the country. CNHI is fully owned by the Retirement Systems of Alabama, the state pension fund that manages more than $40 billion in investments and covers roughly 360,000 Alabama teachers, state employees, judges, and retirees. In addition to its venture in small local newspapers, the RSA has earned national headlines for some of its other unconventional investments, including golf courses, resorts, and even the largest commercial skyscraper in Manhattan.
Directed for decades by CEO David Bronner, the Alabama pension fund is considered by media industry experts to be a much more benevolent owner than, say, Alden Global Capital. Indeed it’s difficult to picture a more public-minded investment vehicle than a teachers’ pension fund, where the members are passionate about educating their communities. And Bronner himself has said he believes in the mission of local news. “There’s still a huge need throughout the country, and the more isolated the community, the greater the need for local news, because nobody knows about anything if you don’t have a local newspaper,” he said in 2018, when RSA increased its CNHI ownership stake from 87 percent to 100 percent.
The more than 100 CNHI papers nationwide are overseen day to day by Senior Vice President of News Bill Ketter, the former editor in chief at the Pulitzer Prize–winning Eagle Tribune in North Andover, Massachusetts, which CNHI purchased in 2005. Ketter says their charge is to produce “local journalism to the best of our ability” and credits RSA with being “very hands-off” editorially. With rightful pride, he pointed to one of its small papers, in Palestine, Texas, which won the Pulitzer Prize for editorial writing earlier this year. Its dailies have an average circulation of roughly 10,000; its weeklies, 7,500; and, as of 2016, nearly 60 percent of CNHI papers served rural areas.
CNHI merged with the television company Raycom in 2017, but a year later, when Raycom was acquired by the Southern outfit Gray Television, its new owner had no interest in newspapers, so CNHI was put up for sale. Soon after, RSA put in a bid to acquire the remainder of the company. “Everyone was relieved,” Ketter told me, “because they had been a longtime investor in the company and knew us.” CNHI had fended off what the newsrooms perceived as the more existential threat of private equity ownership.
Al Cross, director of the Institute for Rural Journalism and Community Issues at the University of Kentucky, shared Ketter’s assessment of the sale. “CNHI did many good things journalistically, and they did so under the Retirement System’s ownership,” he said.
Yet even with Bronner’s professed commitment to local news, the primary motive of the pension fund—to generate returns for workers and retirees—couldn’t and can’t be obscured. This was evident even before the Covid-19 crisis ravaged the news industry, for instance when CNHI began moving to a more regional model, which helped save costs but also meant a small group of editors would manage news across larger swathes of the country.
“It makes all kinds of business sense for CNHI to regionalize. The question is, does it make journalistic sense?” said Cross, who noted that some of the company’s newly merged papers were quite distant from one another.
While not as extreme as private equity, the pressures of CNHI’s pension-backed ownership have also placed strains on local coverage. Between 2004 and 2016, CNHI sold or closed at least two dozen papers, according to research compiled by Penny Abernathy, the Knight Chair in Journalism and Digital Media Economics at UNC Chapel Hill.
One example was the Leeds News, a local Alabama paper CNHI acquired in 1998 that had been serving its community for 70 years. In 2011, CNHI merged it with another paper. “The community of Leeds is today getting some coverage from The Trussville Tribune, but it’s not the same,” said Tom Arenberg, a journalism instructor at the University of Alabama. Aside from Leeds, The Trussville Tribune, which is a weekly paper, covers seven other cities across two counties. Despite valiant efforts of journalists at these outlets, that kind of consolidation often leads to a loss in local specificity: Entire beats can disappear, and it’s harder to cover local government with fewer staff.
These concerns have been heightened under the current public health crisis and subsequent economic collapse, as a greater number of CNHI papers have been closed or reduced circulation. The Gardendale, Alabama–based North Jefferson News, founded in 1970 and acquired by CNHI in 1997, was one of the pandemic recession’s newsroom casualties.
Prior to the closure, CNHI had been a relatively fair steward of the paper. Robert Carter, a journalist who worked at the North Jefferson News for more than seven years, told me that while he felt CNHI was not very adept at guiding its properties into the digital age, he felt little pressure from his corporate owners on how to do reporting, and praised them for keeping the business side separate. (CHNI only intervened editorially once that Carter can recall, in 2016, when CHNI executives requested the papers write editorials endorsing Hillary Clinton. “That didn’t really please many people,” Carter recalled. “Maybe it works for their northern Massachusetts papers, but if you ran that thing in Cullman or Gardendale, Alabama—which is one of the most heavily Republican districts in the country—needless to say, it didn’t go over well.”) Bronner declined to comment for this story, and Ketter said it was not mandatory and some papers chose to forego an endorsement.*
This past April, CNHI closed the paper, “merging” it with another based in a town 40 miles away. Arenberg said he thought North Jefferson News, which served the northern part of his county, “was a very good paper.” The publication covered everything from public schools and sports to local government and businesses and impacts from natural disasters. It ran obituaries and local op-eds, and featured birthday, graduation, and engagement announcements.
In April, CNHI also consolidated a number of its northeastern Kentucky weeklies into one daily, for example merging The Morehead News with a paper covering a town 55 miles away. “Many dailies have swallowed up sister weeklies, but it’s unusual if not unprecedented for such consolidation over such a distance,” Cross wrote. In the following months, Indiana, Iowa, Oklahoma, and Florida endured more mergers of long-standing papers. The three North Florida CNHI papers to close in July—the Suwannee Democrat, the Mayo Free Press, and The Jasper News—had covered rural Florida communities since the 1800s.
Abernathy, the UNC professor, said there are “degrees of aggressive management” of investment entities over journalism, and thinks CNHI “is by no means the worst.” That said, Abernathy predicts CNHI will continue to sell off its properties, pointing to the summer of 2018, when CNHI announced its plans to step back from newspaper ownership, and noted the pension fund has faced mounting pressure to increase the return on its investments. While the Retirement Systems of Alabama does not break out financial results for CNHI, back in 2001 the pension fund was fully funded, but since then its investments have frequently fallen short of expectations. By 2015, it faced $13 billion in state pension debts and $11 billion in unfunded liabilities. “Like the readers and advertisers who abandoned the CNHI papers in recent years, RSA has decided to shed its newspaper habit,” Abernathy wrote. In effect, the local news crisis is converging with the nation’s looming pension crisis. No pension fund would now consider making the kind of investment Alabama’s made back in the late twentieth century.
Ultimately, though, it’s not just financial investment vehicles that cannot be counted on to give local journalism the security it needs to effectively serve communities. Billionaires—once viewed as potential media saviors—are increasingly ducking out, too. Earlier this year, Warren Buffett, who at the time was the third-richest man in the world with a net worth of $88 billion, felt dissatisfied with the returns on his chain of newspapers and decided to sell. That was quite a change in tune when, just a few years earlier, he told CNN, “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper.”
Likewise Laurene Powell Jobs, who has a $21 billion net worth, waded into journalism but has made brutal cuts. In 2019, she purchased a majority stake in The Atlantic, and just two months into the Covid-19 pandemic, the company laid off nearly 20 percent of its staff, including 22 editorial employees, despite Powell being financially equipped to help her magazine weather the tough advertising tides of the pandemic many, many times over. Powell Jobs also purchased the award-winning magazine California Sunday in November 2018, only to shutter the entire publication in October.
To save journalism—which desperately needs saving—it’s clear policymakers need to act, and finally grasp that neither financial investment entities nor the wobbling interest of the ultrarich are real solutions.
Some journalists have resisted the idea of public subsidy for journalism—arguing it violates a sacred firewall of reporting. Accountability-driven reporting requires independence, and if the state funds a publication, then that could implicitly or explicitly affect coverage. It’s an understandable concern, but in 2020 it’s an overblown fear when considering the potential tradeoffs. Thankfully, many leaders in media have been changing their tune, recognizing there frankly just is no viable alternative if we believe access to news is something all citizens deserve.
Besides, journalists already have the tools to hold outlets and fellow reporters accountable. We have extraordinary reporters providing hard-hitting local news with public subsidy through NPR and PBS, and as Victor Pickard, a media studies scholar at the Annenberg School for Communication, has pointed out, the United States is a global outlier among democracies for how little it spends on public media.
Times are changing. In March, the Department of Homeland Security designated newsrooms as “essential” services throughout the pandemic, and hundreds of newspapers received federal Paycheck Protection Program loans over the last few months to stay afloat. On the state level, advocates have been organizing for more public subsidy, too. In 2018, New Jersey became the first state to pass legislation establishing a new consortium that will fund local reporting with public funds. Activists in states like Colorado and Massachusetts are considering similar ideas.
We already subsidize the arts nationally, and electrical power in rural areas. If we believe local journalism is a public good, essential for citizens in every democratic community, then we need to ensure everyone has access to it. Billionaires and pension funds were never going to save us from the news desertification of the U.S. And if, like universal mail delivery, news outlets can’t survive through market forces and charity alone, then the government must step in and make that possible.
*This article originally misstated that David Bronner drafted the Clinton endorsement and required the paper to run it. The endorsement requests were made by CHNI corporate leaders, and were not considered mandatory.
This article was produced in partnership with the Center for Journalism & Liberty, an anti-monopoly think tank that is part of the Knight Research Network.