The Washington PostDemocracy Dies in Darkness

Ghost papers and news deserts: Will America ever get its local news back?

Bertram de Souza works on a story in August for the Vindicator, the daily newspaper in Youngstown, Ohio, that was soon to shut down. A new website hopes to help fill the local news void.
Bertram de Souza works on a story in August for the Vindicator, the daily newspaper in Youngstown, Ohio, that was soon to shut down. A new website hopes to help fill the local news void. (Tony Dejak/AP)

First they started showing up thinner than before. Then they were printed on smaller paper, with local columns replaced by more out-of-town news. Then in some places, especially rural and down-on-their-luck parts, newspapers stopped showing up altogether.

Since the Internet arrived in earnest 25 years ago, almost nobody — not the savviest investment bankers, the most well-meaning editors, local entrepreneurs or generous philanthropists — has figured out a sustainable way to continue producing local news.

America lost a quarter of its journalists from 2008 to 2018, the vast majority of them covering local issues, according to University of North Carolina professor Penny Muse Abernathy. Newsrooms lost at least 3,800 jobs in 2019 alone.

She estimates the country has lost 2,100 newspapers since 2004, 70 of them dailies. She has begun referring to about 1,000 surviving titles as “ghost papers” because of their painfully thin staffs and reporting. She has dubbed places with few or no reporters as “news deserts.” “There is a dearth of local news at all levels,” she said.

Now the industry is at a crossroads.

Is bigger better? Gannett merger will test whether local news can be saved.

The top newspaper chains are fighting for their lives, attempting to produce enough news that readers will subscribe online but at a low-enough cost to keep investors — including a vulture hedge fund that continues to ravage newspaper companies — at bay.

Although people still trust local media sources more than national ones, only 14 percent of the public is paying for local news, according to the Pew Research Center. If that number doesn’t rise, many newspapers and digital publishers will be unable to maintain the reporting they are doing now.

Meanwhile, some advocates for local news — armed with new research — are working with community leaders, policymakers and philanthropists to create new ownership models.

In that environment, the chief executives for three top chains, people in charge collectively of more than 700 newspapers reaching more than 12 million subscribers, agreed to interviews with The Washington Post to share their thoughts on the future of their companies and of local news.

The new Gannett: Building local connections

For someone who just joined a company that has to find $300 million in annual savings and is carrying an expensive private equity loan, new Gannett chief executive Paul Bascobert seems remarkably at ease, speaking at length from a small table in his Northern Virginia office without any staff or public relations handlers present.

He is at the helm of the nation’s largest publisher of local news, as Gannett’s merger with GateHouse Media created a conglomerate with 613 newspapers, among them the Indianapolis Star, the Milwaukee Journal Sentinel and 260 other dailies.

The deal came at the behest of two private equity giants, Fortress Investment Group and Apollo Global Management, and requires Gannett to find $300 million in annual savings.

What happens to local news when there is no local media to cover it?

One can see why Gannett board members preferred Bascobert, who arrived on the heels of a hostile takeover attempt by the hedge fund Alden Global Capital.

Rather than investing in a digital future for its newspapers, Alden and the company it controls, MediaNews Group, cut them so dramatically that employees of the Denver Post, one of the papers under its control, protested at the company’s corporate offices after its staff was sliced from 350 to fewer than 100. Alden-owned subsidiaries sell off the publications’ real estate and transfer pension savings into its own funds, a practice the Labor Department began investigating last year.

Alden’s attempted takeover of Gannett prompted panic among Gannett journalists and enough of an outcry that senators including Charles E. Schumer (D-N.Y.) and Sherrod Brown (D-Ohio) spoke out against it. Alden President Heath Freeman did not return messages seeking comment.

Bascobert isn’t interested in stripping Gannett’s papers for parts; he wants to create a sustainable business model that can prevent further cuts.

A native of Buffalo who went to college in Flint, Mich., two communities ravaged by local environmental crises, Bascobert explained that he has seen the effects of “people not paying attention to some of the decisions being made in the local government.”

“I am an optimist about the future of local media,” he said. “I think there’s an interesting new business model available for us to build close connections between buyers and sellers in local markets and I think the brands of journalism that we have been doing over the decades have given us permission to do that.”

Bascobert will draw on experience as an executive at Dow Jones, Bloomberg and the parent company of wedding portal, where he built the kind of connections between a website and local vendors that many newspaper publishers would dream to have.

Whether he can do the same in Gannett’s markets remains to be seen, but his plan relies heavily on readers continuing to trust and rely upon their local newspapers.

“I view great journalism as in fact the most important asset to our future business strategy,” he said.

A hedge fund’s ‘mercenary’ strategy: Buy newspapers, slash jobs, sell the buildings

Wanting to do the right thing isn’t enough, however. Gannett and America’s other largest newspaper chains are publicly traded, requiring their executives to cut costs and issue dividends to benefit shareholders. Those who don’t do so get replaced.

Gannett already has shed some journalists since the deal was announced and has treated others trying to unionize roughly.

Many Gannett journalists, and the union that represents them, opposed the merger and remain wary. If things go further south, analysts say an expensive 11.5 percent loan Apollo issued to facilitate the deal could sink the company.

McClatchy: Staving off bankruptcy

McClatchy owns critical regional newspapers, among them the Miami Herald — which blew open the Jeffrey Epstein case — the Kansas City Star and the Charlotte Observer. Overall, it owns 47 papers, including 30 dailies. It also lost almost $400 million over the past 12 months. After many rounds of layoffs and other cuts, Abernathy and other experts refer to some of McClatchy’s titles as “ghost papers.”

McClatchy chief executive Craig Forman, a former journalist who worked at Yahoo and EarthLink, disagrees.

Speaking in a phone interview, he said the company’s growth in digital subscribers shows that its titles “have a deep, essential commitment to our communities.”

“The challenge is to continue to grow that at an accelerating rate,” he said.

Forman is also exploring partnerships to keep local news alive.

The Compass Experiment, a project of McClatchy and Google, launched a website in Youngstown, Ohio, where the daily newspaper, the Vindicator, announced in June that it was shutting down.

Forman said he is pleased with the results so far, saying the future “has to be a collaboration. You can’t just depend on any one thing.”

McClatchy has other challenges, namely $5 billion in debt from a decade ago and a 75-year-old pension fund that is underfunded by $535 million and that the company has asked the federal government to take over. Through cost-cutting and other measures, Forman has brought the debt down to $700 million, but many analysts still expect it to file for bankruptcy in 2020.

Tribune: Chasing digital subscriptions

Tribune’s situation is even more dire. After being rebuffed by Gannett, Alden turned its sights to Tribune, where it has purchased 32 percent of shares and taken over two seats on the board in exchange for an agreement that the hedge fund would not buy any more shares for seven months.

Crain’s Chicago Business columnist Joe Cahill called the agreement “indefensible” and “an extraordinarily generous concession to an investor that has done nothing for the company.”

The death knell for local newspapers? It’s perilously close.

More than 400 of Tribune’s employees signed a petition opposing Alden’s new position with the company. Chicago Tribune columnist Mary Schmich wrote a column seeking a new owner and referring to Alden as “strip miners,” “liquidators” and “vultures.”

Tribune’s 74 papers, including the Chicago Tribune, the Baltimore Sun and the Orlando Sentinel, have already survived a murderer’s row of owners, from a real estate magnate who plunged the firm into bankruptcy to an entrepreneur who was accused of sexual misconduct on his way out the door.

Timothy P. Knight, Tribune’s chief executive, declined through a spokesman to answer questions about Alden directly.

But Knight said in an email that it was clear readers have come around to paying for quality news online. Tribune ended the third quarter with 314,000 digital-only subscribers, up 38 percent from last year, although overall revenue and profits continue to drop.

“In media broadly, people are more willing to pay a dedicated amount each month for all-access content. For our properties, digital subscribers understand that quality content costs money to create and that journalism is important to their lives,” Knight said.

Knight said the growth in digital subscriptions and the nearly 500,000 print subscribers who have activated digital accounts “inspire my confidence in the company’s long-term outlook.”

The idea that digital growth will eventually replace revenue from print subscribers is exactly what Alden, through its public statements, has argued will never work. Knight is under immense pressure to prove his vision is working before Alden can begin buying again.

Nonprofits and hometown initiatives

Despite the optimistic talk from the big chains, many researchers expect the hemorrhaging of journalists to continue. Even digital advertising began to fall at all three chains in 2019. And so far not nearly enough people are willing to pay for news to make up the difference.

For the first time in years, out-of-the-box ideas for resurrecting the industry are on the table, among community leaders in small towns and at the corporate boardroom level.

Abernathy said three presidential campaigns had contacted her for ideas to address the issue. Executives at Google and Facebook, which gobble up an estimated 75 to 80 percent of all online advertising and produce no original local news, have made statements affirming the importance of news in American democracy.

Cancel in protest? Or stay with a local newspaper that is being strip-mined for profits.

“We feel that it is time to radically rethink how we think of journalism in this country from a commercial product to a public good,” said Viktorya Vilk of PEN America, which just produced a report chronicling the “crisis” of lost journalism in America.

“Part of that means that [journalism] requires protection and support not only from the philanthropic sector but also public support.”

Already the Philadelphia Inquirer, the last remaining seven-issues-a-week paper in a city of 1.6 million people, is owned by a nonprofit organization. Last month the Salt Lake Tribune, once owned by Alden-controlled MediaNews Group, got approval from the federal government to become a nonprofit itself.

The nonprofit Report for America announced this month that it will fund 250 journalism positions at 164 host news organizations, including many papers owned by the top chains.

Bascobert welcomes the support but says the industry still needs to focus on righting itself.

“I worry a little bit about propping up industries in the long run because at some point, there’s a recession, there’s a change in administration,” he said. “It’s hard to bet on the future when you’re relying on things that are temporary in nature.”

Local entrepreneurs may have as good a chance as anyone at convincing their community that local news is worth paying for.

In Memphis, businessman Eric Barnes took note of deep cuts at Gannett’s local paper, the Commercial Appeal, and launched a new, independent website called the Daily Memphian. He brought on some Commercial Appeal journalists, starting with 25 staffers and growing to 35. He hired the executive editor of the Indianapolis Star, one of Gannett’s top papers, to run the site, and he now has 11,000 paying subscribers.

Barnes has been adamant from the get-go that people need to pay for content. At first he said he charged too little —$7 a month — so he quickly upped the price to $10.99 a month or $99 a year. The reception has been positive.

“One of the things I see all over the country with local papers is that they are almost apologizing with the way they price,” he said. “We said, ‘You got to pay for this.’ We all saw what happened when we didn’t pay for this, and it didn’t turn out well.”

Correction: The story has been corrected to accurately reflect the population of Philadelphia.