"An attack on our democracy": Financial firms gutting some local newsrooms

Summary

The newspaper industry in America faces a dual threat: a two-decade decline in advertising revenue due to digital platforms like Facebook and Google, and the aggressive cost-cutting practices of hedge funds like Alden Global Capital, which has been accused of 'vulturing' newspapers. This has led to a significant reduction in local news coverage, raising concerns about the impact on democracy. Journalists like Evan Brandt struggle to cover communities with dwindling resources, while the potential sale of Tribune Publishing to Alden sparks a fight to preserve local news. The script also highlights the importance of local journalism in holding leaders accountable and the efforts of philanthropists and reporters to reinvent the industry.

Takeaways

• 📉 The newspaper industry is in decline, with a significant loss of advertising revenue to platforms like Facebook and Google.
• 🏛️ Hedge funds and financial firms, including Alden Global Capital, own nearly a third of daily newspapers in America, often prioritizing profits over journalistic integrity.
• 📰 Local newsrooms are shrinking, leading to a decrease in local news coverage, which is crucial for community cohesion and holding local leaders accountable.
• 🏆 The Mercury, a local newspaper in Pennsylvania, won Pulitzer Prizes in 1979 and 1990 but has since seen dramatic staff reductions.
• 💼 Alden Global Capital has been accused of 'vulture capitalism,' buying newspapers, selling off assets, and cutting staff, leading to concerns about the future of local journalism.
• 🤝 Journalists at the Chicago Tribune fought back against Alden's acquisition, highlighting the importance of local and regional newspapers in a democratic society.
• 🏢 The decline in local news has been linked to increased corruption in local government, as seen in the case of Bell, California.
• 🌐 The vacuum left by local newspapers has been filled by national cable news and social media, often leading to more polarized and less localized content.
• 🆘 Solutions proposed include an increase in philanthropic support for local news and the creation of non-profit digital news outlets to focus on community-specific reporting.
• 🏡 The script concludes with a call to action for individuals and organizations to support local news as a vital component of American democracy.

Q & A

What is the main reason for the decline of the newspaper industry as mentioned in the script?

The main reason for the decline of the newspaper industry is the loss of advertising revenue to digital platforms like Facebook and Google.

What additional threat is mentioned in the script that affects newspapers besides the loss of advertising revenue?

The script mentions that hedge funds and other financial firms, which own nearly a third of the daily newspapers in America, pose an additional threat. These firms are often more committed to profit margins than to maintaining the quality of journalism.

Which hedge fund is specifically criticized in the script for its practices in the newspaper industry?

The script criticizes Alden Global Capital for its practices in the newspaper industry, with some in the industry calling it a 'vulture' that is 'bleeding newspapers dry'.

What question did Evan Brandt, a reporter for The Mercury, want to ask Heath Freeman, the president of Alden Global Capital?

Evan Brandt wanted to ask Heath Freeman, 'What value do you place on local news, and I'm not talking about money.'

What significant job loss has the newspaper sector experienced since 2008 according to the script?

The newspaper sector has experienced an astounding 57 percent job loss since 2008.

What was the response of some Chicago Tribune journalists to Alden Global Capital's acquisition of Tribune Publishing?

Some Chicago Tribune journalists, including Gary Marks and David Jackson, fought back by using their investigative and reporting skills to try to save the organization and wrote an op-ed in The New York Times pleading for a philanthropist or foundation to step forward to save their paper.

What was the role of local news in uncovering corruption in the city of Bell, California, as mentioned in the script?

When the local newspaper in Bell, California, shut down, there was no local reporting to hold local officials accountable, leading to increased corruption, including elected officials voting themselves pay raises.

What is Report for America, as referenced in the script?

Report for America is a program co-founded by Stephen Waldman in 2017 that sends journalists to newsrooms in underserved communities across the country to flood those communities with local reporting.

How does the script suggest that the crisis in local news can be addressed?

The script suggests that the crisis in local news can be addressed by a dramatic increase in the commitment of foundations, philanthropists, and donors to support local news.

What is the Baltimore Banner, and how does it relate to the newspaper industry crisis discussed in the script?

The Baltimore Banner is a non-profit digital news outlet launched by Stewart Bainum to compete with the Baltimore Sun. It plans to cover only local news and hire more than 100 reporters over the next three years, aiming to fill the gap left by the decline of traditional newspapers.

Outlines

00:00

📰 The Decline of Newspaper Industry and Hedge Funds' Impact

The newspaper industry is facing a significant decline, largely due to the loss of advertising revenue to digital platforms like Facebook and Google. This has resulted in fewer Americans relying on traditional newspapers for news, sports, and comics. However, the situation is exacerbated by hedge funds and financial firms that now own nearly a third of daily newspapers in America. These new owners prioritize financial gains over journalistic integrity, leading to concerns about the quality and quantity of local news coverage. The story raises questions about the impact of shrinking local newsrooms on democracy, as seen in the case of Pottstown, Pennsylvania, where reporter Evan Brandt is the last remaining journalist for the local newspaper, The Mercury. Despite past accolades, including Pulitzer Prizes, the paper has seen significant staff cuts and a move to a smaller headquarters.

05:01

🏛️ The Battle for Local Journalism: Hedge Funds and Newsroom Cuts

Investigative reporters Gary Marks and David Jackson from the Chicago Tribune discuss the threat posed by hedge fund Alden Global Capital, which has been accused of aggressively cutting staff and selling off assets of newspapers it owns, leading to a decline in local news coverage. Alden's business model, which prioritizes profit margins over journalistic quality, has raised concerns among lawmakers and journalists. The reporters' efforts to expose Alden's practices and seek alternative ownership for the Chicago Tribune highlight the struggle to preserve local journalism. Despite facing significant challenges, including staff reductions and financial pressures, local journalists continue to fight for the importance of their work in holding local leaders accountable and serving their communities.

10:02

🌐 The Future of Local News and the Role of Philanthropy

The crisis in local news is not limited to Alden Global Capital's practices; it reflects a broader issue in the industry. The absence of robust local reporting has been linked to increased corruption by local officials, as seen in the case of Bell, California. Stephen Waldman, a former journalist and researcher, argues for the need to flood communities with local reporters and co-founded Report for America, a program that places journalists in underserved newsrooms. The importance of local news is emphasized by the trust people have in it compared to national media. The narrative also includes the experiences of local reporters like Chrisana Mink, Camelot Todd, Amelia Farrell, Chris Jones, and Grayson Doctor, who cover various critical issues in their communities. The piece concludes with the efforts of individuals like Stewart Bainum, who is launching a non-profit digital news outlet to compete with established newspapers, and the conviction of journalists like Gary Marks and David Jackson that local news is essential for the survival of American democracy.

Keywords

💡Newspaper industry decline

The decline of the newspaper industry refers to the significant reduction in revenue, readership, and influence that newspapers have experienced over the past two decades. This is largely due to the loss of advertising revenue to digital platforms like Facebook and Google. In the video, this decline is exemplified by the shrinking staff and resources of local newspapers, leading to a diminished ability to cover community events and hold local leaders accountable.

💡Advertising revenue

Advertising revenue is the income generated from the sale of advertising space in newspapers. The script discusses how the loss of this revenue to digital platforms has contributed to the financial struggles of newspapers. This shift has had a profound impact on the sustainability of traditional news outlets, as seen with the newspapers owned by Alden Global Capital, which have had to cut costs drastically.

💡Hedge funds

Hedge funds are investment firms that pool capital from accredited investors and use various strategies to achieve a high return on investment. In the context of the video, hedge funds like Alden Global Capital are criticized for their ownership of newspapers, where they are accused of prioritizing profits over journalistic integrity and community service, leading to staff cuts and a reduction in local news coverage.

💡Local news coverage

Local news coverage refers to the reporting and dissemination of news stories that are relevant to a specific community or region. The video emphasizes the importance of local news in fostering a sense of community and holding local officials accountable. The decline in local news coverage is seen as a threat to democracy, as it leaves communities less informed and less able to engage with their local governance.

💡Democracy

Democracy is a system of government where power is vested in the people, who have the ability to participate in the decision-making process. The video suggests that the decline of local newspapers and the subsequent reduction in local news coverage can lead to a 'shrinking' of democracy, as an informed citizenry is essential for the proper functioning of a democratic society.

💡Vulture capitalism

Vulture capitalism is a term used to describe the practice of buying up distressed assets, often with the intention of stripping them of their value for quick profits, rather than investing in their long-term growth. The video uses this term to criticize Alden Global Capital's approach to newspaper ownership, suggesting that they are more interested in extracting value than in sustaining the newspapers as community assets.

💡Job loss

Job loss in the context of the video refers to the significant reduction in the number of journalists and newspaper staff due to budget cuts and the economic pressures faced by the industry. The script mentions a 57 percent job loss in the newspaper sector since 2008, highlighting the human cost of the industry's decline and the impact on the quality and quantity of local news reporting.

💡Investigative reporters

Investigative reporters are journalists who conduct in-depth research and reporting on issues of public concern, often involving corruption, fraud, or other forms of wrongdoing. The video features investigative reporters from the Chicago Tribune who are concerned about the impact of hedge fund ownership on their ability to carry out their work and hold power to account.

💡Philanthropy

Philanthropy refers to the act of donating money or resources to support good causes, often with the aim of improving society. The video discusses the potential role of philanthropists and foundations in supporting local news outlets, as traditional revenue streams have dried up. It suggests that philanthropic support could be a way to counter the decline in local news and maintain the health of democratic societies.

💡Non-profit newsroom

A non-profit newsroom is a journalistic organization that operates without the primary goal of making a profit, often funded by donations, grants, or other forms of non-commercial support. The video mentions non-profit newsrooms as a potential model for sustaining local news in the face of economic challenges, allowing for a focus on quality journalism without the pressure of generating profit.

💡Digital news outlet

A digital news outlet is a platform that delivers news content through digital channels, such as websites, mobile apps, and social media. The video mentions the launch of a non-profit digital news outlet, the Baltimore Banner, as an example of how digital platforms can be used to provide local news and compete with traditional newspapers, offering a potential solution to the challenges faced by the industry.

Highlights

The newspaper industry has been in decline for two decades, largely due to the loss of advertising revenue to Facebook and Google.

Hedge funds and financial firms own nearly a third of daily newspapers in America, often prioritizing profits over journalistic quality.

One fund, Alden Global Capital, has been criticized for 'bleeding newspapers dry', highlighting a threat to local news coverage.

The decline in local newsrooms raises questions about the shrinking of democracy as local news coverage decreases.

Evan Brandt, a reporter for The Mercury, is the last reporter standing in Pottstown, Pennsylvania, after significant staff cuts.

The loss of local reporters affects communities' shared experiences and the ability to hold people together.

The Mercury, once a Pulitzer Prize-winning newspaper, now operates from a small attic due to cost-cutting measures.

Alden Global Capital has been accused of selling off newspaper assets and slashing staff, leading to a 70% reduction in The Mercury's newsroom.

The newspaper industry has seen a 57% job loss since 2008, with Alden Global Capital's practices being particularly severe.

U.S. lawmakers have expressed concern over Alden's business model, which has been described as 'killing newspapers'.

Alden's acquisition of Tribune Publishing, home to historic papers like The Baltimore Sun and The Chicago Tribune, has been criticized.

Investigative reporters at The Chicago Tribune fought back against Alden's acquisition, fearing irreversible damage to their paper.

Leaked financials show Alden's newspapers had profit margins as high as 30%, more than double the industry standard.

Critics argue that Alden doesn't recognize the civic trust embedded in the profit-making machine of newspapers.

The absence of local reporting has been linked to increased corruption by local officials, as seen in Bell, California.

National cable news and social media have filled the vacuum left by local news, often leading to polarized and less reliable information.

Report for America, co-founded by Stephen Waldman, aims to flood communities with local reporters to counter the decline in local news.

Local news is trusted more than national media, and local reporters have deeper connections with their communities.

The crisis in local news requires a commitment from foundations, philanthropists, and individual donors to support local journalism.

Stuart Bainum, a hotel magnate, is launching a non-profit digital news outlet to compete with The Baltimore Sun, focusing on local news.

Journalists like Gary Marks and David Jackson emphasize the necessity of local news for the survival of American democracy.

Heath Freeman, the president of Alden Global Capital, has been criticized for his company's practices but has made significant personal real estate purchases.

Transcripts

newspaper industry in state of decline

not exactly a stop the press's headline

for two decades now owing largely to the

loss of advertising revenue to facebook

and google fewer and fewer americans get

their news comics and sports from all

those gazettes and tribunes and journals

but that doesn't tell the whole story as

we first reported in february there is

an additional threat hedge funds and

other financial firms that own nearly a

third of the daily newspapers in america

and these new owners are often committed

not to headlines and deadlines but to

bottom lines one fund in particular has

been called by some in the industry a

vulture bleeding newspapers dry

it all prompts the question as local

newsrooms and local news coverage

shrivel up to what extent does democracy

shrink with it

the story will continue in a moment

[Music]

behind the marching band and baton

twirlers at the annual 4th of july

parade in pockettown pennsylvania

you'll find a one-man band

reporter evan brandt snapping photos

taking notes and gathering quotes

the paper comes out tomorrow tomorrow

every day

tell me all about what you're doing here

we're just looking forward to a great

fourth of july for the last 24 years

he's chronicled this community of 23 000

for the local newspaper the mercury

j-a-s which at one time had dozens of

reporters

now brandt is literally

the last reporter standing in pottstown

when a community like this loses their

local reporters

what else are they losing it reminds us

all about shared experiences

you know who died

you know who graduated from high school

you know whose kid had a great game you

know those are all important elements

about holding people together

describing the

soul of a community sure

brant took us to the old headquarters of

the mercury punching above its weight

the mercury won a pulitzer prize in 1979

and another in 1990.

now it looks like this

my desk was

right about here

and the editor sat up there

the sports guys were along here the

photographers were in the back anyone

could walk in the front door and say

i need to talk to a reporter my sewer's

backing up and the township isn't doing

anything about it can you do something

behold the new mercury headquarters

we're going up to the mercury newsroom

france turned his attic into a command

center

here's where the magic happens

it's here that he scrambles to cover

pottstown 20 surrounding towns and nine

different school districts

overworked and overwhelmed brandt has

seen his industry battered by all sorts

of forces disappearing classified ads

people getting news for free online but

he says the worst culprit is the hedge

fund alden global capital which bought

the mercury in 2011 and has since sold

the paper's building and slashed

newsroom staff by about 70 percent

severe even by the standards of the

newspaper sector that has seen an

astounding 57 percent job loss since

2008.

in 2017 after another round of layoffs

brandt says he felt angry and wanted

answers and accountability so he paid a

visit to the hampton summer home of

heath freeman the 41 year old president

of alden global capital and knocked on

the door what did you want to say to him

what i settled on is

what value do you place on local news

and i'm not talking about money what

value do you place on

brent recalls that a woman let him in

behind her he caught a glimpse of

freeman who walked away

you never got to ask him that question i

did not

this secretive hedge fund their website

shows this single photo started building

its print empire over the last decade

and now owns more than 200 newspapers

making it the country's second largest

newspaper owner behind ganette

alden's rapid takeover and cuts have

alarmed u.s lawmakers in 2019 21

senators wrote to heath freeman asking

him to abandon his newspaper killing

business model

freeman though has doubled down last

year alden made a play for tribune

publishing home to historic papers like

the baltimore sun and the chicago

tribune this is an attack on our

democracy

gary marks and david jackson spent 30

years as investigative reporters at the

chicago tribune a paper that has won 27

pulitzer prizes local and regional

newspapers are so important

to our communities to holding our

leaders accountable they're not just

going after some business that is trying

to make money

they admit the tribune had been crippled

for years by bad management but after

seeing alden by the denver post and then

gut staff by 70 percent the journalists

were worried the hedge fund would do

irreversible damage so what'd you do we

fought back

that's what we did dave and i just

decided that we are going to throw

everything we possibly can use all our

investigative and repertorial skills to

save this organization that is so

important we felt to the future of the

city we love chicago

so this investigative team accustomed to

exposing corruption and injustice acting

as watchdogs on local government they

turn their attention to their potential

new owners

you've said when alden capital arrived

it was an existential threat

why is this firm

particularly nefarious well alden has

sort of a playbook of going into a

distressed newsroom

and selling off the real estate and

property equipment things like that and

second of all diminishing the resources

that the reporters have

leaked company financials show in 2017

alden built in profit margins as high as

30 percent at certain papers more than

double industry standard

in recent filings the new york times

company reported 10 profit margins these

are uh executives from a hedge fund who

live in a very uh wealthy lifestyle

they're not

taking the profits and uh using them to

build the tribune what's your response

to someone who'd say look this is

capitalism well we've always been aware

that we're doing journalism in

a capitalist democracy and we've always

embraced that but we felt that alden

didn't recognize the civic trust that's

embedded in this profit-making machine

jackson and mark say what they learned

about alden only fueled their sense of

urgency so in 2020 putting their jobs at

risk they wrote an op-ed in the new york

times pleading for a philanthropist

foundation anyone to step forward to

save their paper

one man tried maryland hotel magnate

stuart bainum a lifelong subscriber to

the baltimore sun

baynam committed 200 million dollars and

we followed him last year scrambling to

put together a deal to buy tribune

publishing we've done the due diligence

we just need a buyer

bainum couldn't find a partner last year

alden bought tribune publishing for more

than 600 million dollars and two days

later started offering buyouts to

tribune employees more than 40 have

since left the chicago tribune including

one-fourth of the newsroom

freeman declined our repeated request to

sit down with 60 minutes but his public

relations team sent us letters he wrote

to other newspaper owners that state

alden is committed to providing robust

independently minded local journalism

and that it's time for tech giants to

start paying for the billions of dollars

they're making off of news publishers

content

the newspaper crisis didn't begin with

aldon and this is not the only financial

firm in this sector but alden is often

held up as the worst actor one study

conducted by the university of north

carolina in 2018 found that some alden

owned newspapers had cut staff at twice

the rate of their competitors

stephen waldman is a former journalist

in 2011 he studied the decline of the

local news industry for the federal

communications commission he says that

in the absence of local reporting

there's evidence of increased corruption

by local officials one example he points

to dell california

when the local newspaper there shut down

scandal ensued thank you thank you very

much the elected officials just kept

voting themselves pay raises to the

point where the city manager was making

800 000

just because there was no one there i'm

guessing there's nothing specifically

corrupt about belle california this

wouldn't replicate in any of a thousand

other towns pretty much through all of

human history and throughout the world

when you have power that isn't watched

it tends to get abused waldman says it's

not just that local news has been

hollowed out it's what has replaced it

the vacuum was filled

by

national cable news

and social media and very opinionated

polarizing material

waldman believes in flooding communities

with local reporters in 2017 he

co-founded report for america a program

that sends print radio and television

journalists to newsrooms in underserved

communities across the country

we brought together five reporters

i'm chrisana mink i'm a pediatrician and

also a health reporter i'm camelot todd

i report on mental health from buffalo

i'm amelia farrell nicely i'm an

investigative reporter that covers

poverty in west virginia

chris jones a marine corps veteran

covers domestic extremism in appalachia

grayson doctor covers race and equity in

charlotte these studies that show that

people trust local media more than

national media it doesn't sound like

that surprise you those results

and these are our neighbors you know i

mean we're not writing about someone i'm

never going to talk to again they're

people before their interview subjects

this is jones on january 6th

he had cultivated such a level of trust

from his sources that he was one of the

few reporters covering the

insurrectionists as they stormed the u.s

capitol i got a lot of calls immediately

after the six from a lot of different

like news organizations people who

wouldn't answer an email from me you

know a week prior you were the local

journal you had the sources you had the

relationships a lot of national media is

coastal and it stays coastal unless

there's a big news event and then they

fly the reporters in

write the story and fly them out

grayson doctor experienced this

firsthand her mother was one of nine

african americans killed by a white

supremacist

in the 2015 mother emanuel church

shooting in charleston

doctor felt that when the national media

parachuted in they were looking for

sound bites instead of examining the

deeper questions especially in a place

like charleston south carolina where

like the history of racism runs very

very deep that was the opportunity to

really dive into some of that history

you know like why did this happen in

this community

while newspapers like the washington

post and la times have been bought by

billionaires waldman says addressing

this crisis falls to all of us

we need a dramatic increase

in the

the commitment of foundations and

philanthropists and donors like you and

me to actually supporting local news

remember stewart bainum who lost out to

alden global capital he's launching the

baltimore banner a non-profit digital

news outlet to go head to head with the

baltimore sun for subscribers it will

cover only local news with plans over

the next three years to hire more than

100 reporters

all digital the web newsletters podcasts

apps wherever people receive their news

we're going to go there

after sounding the alarm about alden

global capital gary marks and david

jackson left the chicago tribune jackson

is still working as a reporter at a

non-profit newsroom in chicago full

speed full speed marks is now living

what he calls his second dream job as a

high school football coach

they're more convinced than ever that

local news cannot become yesterday's

news you're faster than that journalism

is one of the most noble professions

there is you can have tremendous impact

on society

i work with a lot of young people and i

tell them that the

we're leaving them a smashed and broken

system but that they're gonna have to

reinvent it because it's necessary

journalism is necessary for the survival

of american democracy

as for heath freeman this past summer he

bought a miami mansion for 19 million

dollars a transaction discovered and

reported by a local news outlet