Alden Global Capital, the hedge fund whose Media News Group last month bid $1.4 billion for USA Todaypublisher Gannett, is again fueling speculation about the future of the ailing U.S. newspaper industry.
Regardless of whether MNG’s bid is approved — possibly in a bruising proxy battle — Gannett faces a longer-term existential threat from tech companies that can deliver solid ROIs for advertisers, which aren’t obligated to fund journalism organizations in trying to reach consumers.
A possible Alden-Gannett deal is notable for its possible effect on local newspapers that historically have been a key source of information for rural and lower-income communities. The deal will make Alden the second-biggest owner of local newspapers after GateHouse Media, which is owned by Japanese telecom giant SoftBank.
The Financial Times this week has an excellent analysis of the Alden-Gannett deal, which has “horrified” local news advocates. U.S. newspapers have lost more jobs than the beleaguered coal-mining industry that has been the target of stricter clean air and water laws. Newspaper employment plunged 58% from 412,000 people in 2001 to 174,000 in 2016, according to official labor statistics cited by the FT.
Alden is likely to accelerate those job losses, given its history of buying local publications and gutting their newsrooms. The firm’s Digital First Media last year cut one-third of newsroom jobs at The Denver Post, leaving fewer than 70 reporters to cover the city and its surrounding counties, which have a fast-growing population of more than 3 million people.
The Denver Post can now be called a “ghost newspaper” that’s a thin shell of its former self, filled with wire copy, ad and fewer original stories. Penny Abernathy, chair of the University of North Carolina’s school of journalism, estimated that about 1,000 to 1,500 U.S. newspapers qualify for ghost status.
Unfortunately, printing wire copy that’s available from zillions of other online sources is no way to invest in value-added content that makes any publication worthwhile. If Gannett management is intent on protecting its existing corporate structure, it likely needs to find a more beneficent buyer, like a billionaire who has noble aspirations of protecting press freedom.
Local publishers also will have to look at ways to grow subscription sales and implement paywalls that replace some of the revenue lost to advertisers shifting their spending to digital platforms, like Facebook, Google and Amazon.