Big media feels the financial squeeze too
by Peter Weinberger | firstname.lastname@example.org
In late July, a top executive of Gannett Co., the largest newspaper/website chain in the U.S., declared they remained, “Unrelenting in our commitment to the communities we serve and will continue to deliver bold and uniquely innovative reporting … for our loyal readers.” Several weeks later, Gannett laid off 400 staffers, while at the same time leaving another 400 open jobs unfilled.
“There’s no magic cure to the ailments of the local news industry,” wrote Tim Franklin, senior associate dean, professor, and John M. Mutz Chair in Local News at Northwestern University’s Medill School of Journalism, recently. And that continues today even as the media industry continues to sink, especially newspapers but websites too.
Between 2018 and 2020 alone, “300 newspapers closed, another 6,000 journalists employed by newspapers vanished, and print newspaper circulation declined by 5 million,” according to Penelope Muse Abernathy, an American journalist and author specializing in news deserts.
Gannett has lost more than $1 billion over the past three years. They own more than 400 papers/websites in 46 states. Their losses can partially be attributed to leadership over the years, as the internet chipped away at retail and classified advertising. Yet the cuts kept coming, especially in the reduction of reporting staff across all their properties. This has had a big impact on local news coverage throughout the country.
Impact of media losses
As news deserts become common, small towns across America lose coverage of city councils, schools, high school sports, opinion, watchdog reporting and more. This has resulted in lower voter turnout, more corporate crime, and has driven up city borrowing costs as investors feel uneasy about local expenditures going unmonitored.
When the Rocky Mountain News closed in 2009, municipal borrowing costs went up one-third of a percentage point. Research has shown when a newspaper/website leaves town, local corporate firms increased violations by 1.1% and penalties went up by 15.2%.
Whether its city government or corporate America, if no one is watching, entities can begin to think they are untouchable, and the risk of wrongdoing increases. This holds true even in Claremont, where we have many excellent public servants.
Short-term gain, long-term losses
We have also seen how media companies contribute to their own demise, especially publicly owned companies with a mountain of debt or hedge fund owners with the arrogance to think they have all the answers. When Alden Global Capital first purchased the Orange County Register in 2016, it hired hundreds of staffers to make up for years of layoffs. At first, those of us in the industry thought this was fantastic. As it turned out, none of Alden’s initiatives made any difference in slowing revenue declines. Less than two years later all those hires were gone, and staffing was lower than ever. Alden has been trimming ever since.
I remember attending meetings when working at the St. Paul Pioneer Press daily newspaper in the Twin Cities. At the time, advertising managers just wouldn’t take Craigslist seriously. Classified revenue was a cash cow, especially employment advertising with higher pricing. Why worry? By the time management realized there was a serious classified competitor, it was too late.
While at the Charlotte Observer, I was involved with an important project of adding “hyperlocal” editions throughout the readership area. Believe it or not, this was the second time the company went hyperlocal. The first time, local bureaus were all staffed and established. But during a cost cutting phase, the bureaus were shuttered to save money. Problem was, circulation kept sinking, so the Observer tried it again, hoping it would help the company grow as a strong provider of local news. Numerous aspects of this plan were very solid.
But after six months of preparation and hard work, its parent company McClatchy could not stem its falling stock price, so the Observer had to make cuts. The first cut was the entire hyperlocal project, gone before it even started.
Lessons at home
These hard lessons have influenced my decisions in running Claremont COURIER Inc. It showed me the value of producing a product consumers will not only use but pay for. I discovered the importance of new ideas to build new products. And if they are not working, try something else. Easy to say, but it’s been hard work for the COURIER staff.
Cost cutting continues to plague the industry, giving readers and advertisers more reasons to cancel their subscriptions, or stop advertising. The difference for the COURIER is we applied for nonprofit status early, and with the help of federal grants and local donations, have weathered the storm while eventually growing our staff above pre-pandemic levels.
The need for objective information is only getting more critical. And the need for answers continues. So far, we have implemented many changes to adjust to a fluid local news landscape. It’s been incredibly challenging.
It’s just nice to know the COURIER has a unique advantage over other media companies: our supporters.