The end of local news? How hedge funds are taking over journalism
by Ranziba Nehrin, CWA Associate Member
Next Generation Summit delegates on a labour tour of Detroit, walking away from an impromptu #NewsMatters rally at the Detroit News Building.
“Like a slow motion car wreck, you see it time and time again.”
That’s how Emilie Rusch described the dangerous new trend of vulture hedge funds destroying local newsrooms.
Rusch, a reporter at The Denver Post, spoke last week in Detroit, Michigan at the Communications Workers of America’s 2016 Next Generation Summit.
Panelists Sara Steffens, CWA Secretary-Treasurer, and Rusch, representing TNG-CWA Local 37074, spoke about the troubling phenomenon of hedge funds buying hometown newspapers and destroying good jobs and good journalism for the sake of profits.
Steffens, a former journalist, outlined the fight against one company: the hedge fund Alden Global Capital. Rusch provided her insights as an overworked reporter in a shrinking newsroom.
Both argued that newspapers are profitable investments and said the strategy of these vulture fund managers may indeed be to run the businesses into the ground.
An old story
The story of Alden Global Capital is common in today’s ever-challenged media landscape. Alden Global, which has purchased distressed newspapers across America, owns such well-known dailies as the Philadelphia Inquirer, Denver Post and Orange County Register.
Since 2008, Alden Global CEO Randall Smith has focused his investments on newspapers with pressure for short term profits, not long term growth. After purchasing the papers, Alden has a few different methods of churning profit:
- The company could combine business services and editorial functions across papers and push for digital distribution.
- They could buy up a significant portion of the state media, form a consolidated company of the embedded newspapers and sell that company for profit.
These practices have led to job loss, newspaper devaluations, bankruptcy, corporate buyouts, and masthead closures – all at the cost of journalistic independence. Steffens gave the example of The Oakland Tribune, a recent casualty in the new business of dismantling papers.
Digital First Media, a New York publishing company that is controlled by Alden Global Capital, owns the Bay Area News Group. Due to a mass consolidation, roughly 20 percent of the company’s newsroom staff was cut and now there are no dailies holding the Oakland name.
Most of the job losses were in the production department – meaning copy editors and designers.
A snowball effect
When a single company can effectively monopolize local media, there is a legitimate threat to the democratic enterprise of journalism. If only one paper makes the money, only one paper tells the story.
The strategy of selling off, cutting and then reselling the whole chain for the benefit of the investors has had a negative effect on the community.
“They’ve cut so much and fast that the community isn’t interested in the same way,” said Rusch. “The ads are worth less, the staff is smaller and coverage is limited.”
There is also an economic monopoly enforced by consolidation. Companies like Alden Global can drive down competition for advertising by leveraging their size and the diversity of their holdings to offer low rates and undercut other papers.
Pushing back
TNG-CWA has fought against the vulture hedge fund takeover of journalism.
Union leaders launched a campaign called #NewsMatters on June 17, 2016 to fight for fair wages and job security at their papers, where some workers have gone eight to 10 years without a raise.
“You can’t cut your way out of these problems, you have to have a strategy for growth,” said Steffens about the future of newsrooms. Both panelists highlighted the importance of local ownership and investor transparency as tools to combat the hedge fund takeover of journalism.
The panel ended with audience discussion about the mismanagement of state budgets, the myth that news media is no longer profitable, and more strategies for collective organizing.
During the Summit, delegates were able to attend workshops to develop their organizing skills and build solidarity networks across districts.
Other highlights of the conference included a march and rally through downtown Detroit with allies, Michigan United. Updates from the event are posted across Twitter, with the hashtag: #NextGen16.
The Next Generation program aims to mobilize members aged 35 and under to form a network of committed union activists across North America.
