A big business deal went down this past week that could have a profound impact on the proper functioning of democracy and an informed public.
Last Monday, the two largest newspaper-holding companies, Gannett and Gatehouse Media, announced a $1.4 billion deal in which the latter would buy the former. Together, they will own more than 260 daily newspapers in the nation’s largest markets and a raft of community papers.
Gatehouse is owned by a larger hedge fund, New Media Investment Group, and the company has acquired a reputation the last few years for consolidating and cutting costs significantly. If you reduce expenses enough, newspapers are still plenty profitable, though ultimately it is the community that loses out.
Within North Carolina, the two companies own 14 titles, from Asheville in the mountains to Wilmington on the coast. Nearby, papers in Asheboro and Fayetteville will be affected.
The deal is widely viewed within our industry as a “time-buying” move to see if the combined company can find a way to stem the almost 13-year slide of revenue and readership among daily newspapers. Everyone has been seeking a model of sustainability. Only the big boys — The New York Times, The Washington Post and The Wall Street Journal — have found a foothold.
Here’s what’s likely to happen: These two companies will consolidate most of their “back-office” operations. Functions like accounting, marketing, ad sales and distribution have significant overlap, so layoffs there will save millions.
Newsrooms also will see a hit, especially as the combined company, under the Gannett name, seeks to leverage reduced resources. Typically, this means “sharing” stories across a region. So in places like Fayetteville and Asheboro, expect to see less news about those towns but plenty of coverage from Asheville, Wilmington, Burlington and Kinston. Those are all towns in which Gatehouse owns titles, so expect newsrooms to be sharing their stories.
All of this, combined with some “beefed up” investigative reporting teams working on broad, national stories, will be marketed to consumers as community journalism. But what it really is propagating is a scenario known as “ghost papers,” a phrase coined by UNC journalism professor and ardent Pilot fan Penny Abernathy. These papers are mere shadows of what they once were.
Fayetteville once sent reporters and photographers with troops into war zones. Now they barely leave Cumberland County. Other newspapers are suffering a dearth of coverage where it counts: at City Hall, at the police station, the school board meeting room, the community festival grounds. A newsroom spread thin by layoffs to reduce costs can barely cover local news, much less what’s going on in communities the size of Pinehurst or Carthage.
In the Bay Area of San Francisco, there used to be more than 600 journalists covering the multitude of towns and cities there. The San Jose paper alone once had more than 400 journalists. Today, the total number of journalists in the region is down to fewer than 100.
Neil Chase, the former executive editor of the Bay Area News Group, said the corporate owner, a hedge fund, required drastic budget cuts to meet budget goals. In an interview with The New York Times, Chase said, “We gutted those papers by taking the journalism out of them.”
Now is usually when I turn to my guru Yoda, who in direst of times would calmly say, “Always hope there is.”
Your community newspaper, The Pilot remains unaffected by all of this — still. We certainly have experienced our share of challenges, but we are healthy and happy. We have hired this year, and not just to replace people who left. Unlike virtually every other newspaper in the nation, our classified advertising is expanding. We are growing into new opportunities across this company every day.
There’s a reason for this, and it’s a business philosophy neatly summarized by Frank Blethen.
Unless you’re from the Seattle area, this name probably means nothing to you. The Blethen family has owned The Seattle Times newspaper since the 19th century.
Blethen has long explained his company’s success over the years with this expression: “We don’t publish newspapers to make money. We make money to publish newspapers.”
Nothing sums up The Pilot better than that. It is only through the success we’ve had over the years with the Moore County telephone directories, our magazine division and, lately, our First Flight digital services agency that allows us to continue providing community journalism to Moore County.
And we are also blessed to have patient, committed owners who do not seek to pull every dollar of profit from the business.
We send reporters to meetings and events in Carthage and Robbins. We still write about high school sports. We’ve maintained coverage of equestrian pursuits. You might think this no big deal until you think of communities across the country that no longer see their news anywhere.
This is not a new subject for me, I know. But it’s worth keeping attention to it. As we look ahead to our 100th year serving this community, we continue seeking new ways to make money so we can print newspapers.
Without this newspaper, how much information would you get on the Pinecrest High School girls soccer team? The Pinehurst Comprehensive Plan? A new courthouse being planned for Carthage? Budget overages for the new schools being built?
All across America, in towns much larger than ours, an unfulfilled craving remains for that kind of information. Last week’s deal isn’t likely to change that.