Here’s an idea to bolster journalism that deserves to take root
Steve Waldman offers another policy solution, called “A Replanting Strategy,” to save community newspapers squeezed by hedge funds.
by Ray Garcia
Against the backdrop of a world widely damaged by COVID, the rapid decline of the U.S. economy placed the legacy newspaper industry in a detrimental bind. The already-waning industry, particularly community papers, remains prey to hedge funds and private-equity firms, but amidst public health and economic crises, it must also resist getting milked or being sold.
Steven Waldman, president and co-founder of Report for America, proposes a third option: donate them.
In “A Replanting Strategy: Saving Local Newspapers Squeezed by Hedge Funds,” recently published in alliance with the Center for Journalism & Liberty, Waldman suggests legacy publications can be saved by replanting for-profit newspapers into local nonprofits and public benefit corporations. He also presented his idea in a Zoom panel.
The way to do that, he says, is by creating a private, nonprofit “Replanting Fund” to aid and simplify the transition. In tandem to the Fund, Waldman calls for the development of public policy that will both incentivize chains to donate newspapers and to mitigate against harmful consolidation schemes.
This proposal is one of many Waldman has developed to support community journalism. Penning a landmark paper “The Information Needs of Communities” for the FCC in 2011, he’s also recently fostered policy solutions, such as providing tax incentives for the donation of newspapers and enacting legislation to slow mergers so communities have time to organize.
Most traditional private equity firms expect a high return on investment, but the Replanting Fund would instead focus on what Waldman calls a “civic return on investment.”
“These are the investments in which a dollar invested provides civically important local journalism that is sustainable and rooted in its community,” Waldman said in the report.
In the past two decades, the journalism industry had already been experiencing a gradual but constant decline. As reported by The Boston Globe, newspaper employment has decreased by more than 60% since 2000. The coronavirus’ effect on the economy further exacerbated that strain, resulting in layoffs, furloughs or pay reductions for more than 36,000 news media employees in the U.S., according to The New York Times.
It’s in this vulnerable state that predatory hedge funds and private equity firms strike. With more than 1,000 newspapers and half of total circulation in the hands of these financial institutions, Waldman’s report aims to mitigate against local newspaper bankruptcies and consolidation through policy reform.
Some organizations, including Free Press and the News Media Alliance, have called for government intervention in hopes of saving local news, though the proposals on how to accomplish that differ. Waldman, for example, is a coordinator for Rebuild Local News, a coalition of locally owned and nonprofit media organizations advocating for the Local Journalism Sustainability Act (H.R. 7640).
If passed, the bill would provide tax credits that aim to revitalize local newspapers and media, relying instead on consumers and businesses — not the government.
“Having the federal government provide direct discretionary funding for local news organizations could threaten editorial independence,” Waldman said in the report. “It’s hard to be a muckraker if you’re taking money from the muck-maker.”
For the replanting strategy to work, Waldman says there are three things to consider: the plant (the newspaper), the soil (the community) and the fertilizer (elements of a successful replanting).
Before a newspaper can be donated or sold to a nonprofit — or on the flipside, converted into one — the viability of the plant and the soil must be assessed; factors would include evaluating whether a community could nurture the renewed publication and help it flourish . Once a prime candidate is found, the Fund would help to provide the community with services needed for a seamless transition, such as re-startup capital, interim ownership, and legal and tax aid.
During a Sept. 23 webinar, Waldman addressed complications that arise when, in certain structures, some newspaper operators focused on short-term profits, not long-term public benefit.
Converting is one thing; but future investment, to ensure viability, is another. Panelist Fraser Nelson, VP of business innovation at The Salt Lake Tribune, discussed challenges arising from that daily converting into a nonprofit in 2019. She’s learned that philanthropic funding will not be enough.
“This is a heavy lift… even with as many years I’ve spent in the nonprofit sector,” Nelson said. “Getting a nonprofit started is one thing but transitioning a 150-year-old institution with dozens of employees and a daily product into a nonprofit was a little more complex than we anticipated.”
In a question fielded to the panelists, a viewer asked why they should even consider giving tax benefits to the organizations that have so damaged the industry. Waldman asserted that the incentives are merely carrots, guiding such organizations toward a permanent, community-grounded solution.
Simply put, he said the benefits to society would very well be worth the price.
In three years, Waldman’s goal is to have replanted 200 newspapers in communities that currently exist within a news desert. By saving local journalism, he hopes to build a media ecosystem that is truly inclusive of the readers it serves.
“If only 5% of the papers could check all three boxes, that would still mean that more than 300 newsrooms could be revived and reconstituted,” Waldman said. “That is about the same as the number of local nonprofit organizations that have been created in the past decade.”
To read Waldman’s full report, visit the Center for Journalism & Liberty.
Ray Garcia is a reporter/researcher intern at the Center of Journalism & Liberty.
