A provocative new research paper confirms many of the fears about private equity firms buying up America’s newspapers.
Horror is not too strong a word for how the news hit me. Alden Global Capital, the most rapacious of the ownership groups currently wrecking local newspapers, wanted to buy my old paper, the Buffalo News.
Huge issues face the United States and the rest of the world – issues that require rigorous local journalism to help people understand the problems and identify solutions. Yet widespread financial disruption has handicapped the news industry just as the need grows. And the news itself – including the pandemic and climate change -- has made the challenge even greater for local journalists.
“The business models of local news have collapsed in many communities, so it has now gone from being just some private companies’ woes to being a crisis for democracy,” said Steven Waldman, the president of Report for America, a service program that places journalists in understaffed newsrooms. Mr. Waldman consulted on the federal provision.
With the news that Alden Global Capital, notorious for gobbling up newspapers and laying off reporters, is moving to acquire Lee Enterprises, one of the nation’s largest newspaper chains, it feels like the hedge fund takeover of local news is inevitable. Even without this acquisition, half of the daily newspaper circulation in the United States is already owned by hedge funds. Hedge fund annexation can be stopped, but only if we look at the problem in new ways and accept that it will require government involvement.
IN JUNE, THE LOS ANGELES TIMES published an op-ed by Steven Waldman—the president and co-founder of Report for America (RFA), the journalism organization that pairs early-career journalists with news outlets that have identified critical gaps in their own coverage—titled “How to stop hedge funds from wrecking local news.” In the op-ed, Waldman writes that such investors, which own “half of the daily newspaper circulation in America,” have “a track record of cutting the reporting staff of local newsrooms to increase profits”; he also suggests policy proposals, including “improving antitrust enforcement,” to “confront” the damages done to local journalism by hedge funds, “head on.” Waldman has written and spoken critically about the perils of hedge-fund ownership on numerous occasions, even as Report for America has placed journalists in newsrooms owned by hedge funds. Now, it seems that one such news organization may have taken issue with those critiques.
“They call Alden a vulture hedge fund, and I think that’s honestly a misnomer,” Johnson said. “A vulture doesn’t hold a wounded animal’s head underwater. This is predatory.”
Some may shrug at the inevitable passing of the local newspaper, writing it off as a dinosaur that doesn’t have much to offer in our modern world of blogs, social media sites, and streamed soundbites. But no news is not necessarily good news for society as a whole, says Harvard Business School Professor Jonas Heese. When local newspapers shutter, some businesses evidently treat the lack of press coverage as permission to act badly and end up committing more illegal violations, including pollution, workplace safety infractions, and financial fraud, according to Heese’s research.