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Jeff Israely: Five years in, our news startup is seeing the pace of change slow
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Sept. 24, 2014, 3:30 p.m.

Could a Bay Area news nonprofit take over some of its biggest newspapers?

There are plenty of reasons for it not to happen. But news nonprofits could end up being vehicles for civic-minded locals to take over dailies as they continue to drop in value.

Editor’s note: I wanted to share this piece, originally published on Steve Katz’s blog, with a wider audience.

Katz is the publisher of Mother Jones, which among its peers has been unusually adept at navigating the digital transition, and here he raises a question: Is there room for nonprofit forces to step into the chaos of the 2014 local newspaper scene? Think of it as a companion provocation to yesterday’s piece on efforts to bring nonprofit ownership to San Diego’s daily.

As with that effort, we’re on uncertain ground IRS-wise here. But these things are true: Local newspapers are continuing to decline in price, and their futures aren’t growing brighter. Quite a few papers are up for sale, and more will soon join them, stripped of broadcast properties to prop them up. Local buyers seem, in many cases, to be the last ones standing; the hedge fund money is fleeing or has fled, and your local daily could probably be had for a song. A number of regional nonprofit news orgs have had successes in journalism but struggle to find audiences. And many potential buyers are more likely to be spurred by civic duty than by visions of dollar signs.

If all that’s right, might there be room in some markets for a nonprofit, fueled by local philanthropists, to take control of the biggest newsroom in town? (Fun to think about, anyway.)

John Paton, Digital First Media’s CEO, announced recently that Alden Global Capital, DFM’s hedge fund owner, is considering selling its newspapers holdings. DFM has newspapers from Vermont to California, including historically important metro outlets like The Denver Post, San Jose Mercury News, and the St. Paul Pioneer Press. Besides the Merc, it also owns a dozen other local Bay Area papers managed through the Bay Area News Group, including my hometown paper, the Marin Independent Journal.

center-for-investigative-reporting-cir-logoKen Doctor, who’s been following the ups and downs (mostly downs) of the newspaper trade for years, figures that Alden will sell the papers region by region. It’s easy to imagine an investor group looking to buy the papers with an eye on short term ROI (which was Alden’s strategy all along, anyway). But if the papers end up being sold to an owner with that approach, it spells more death spiral for local newspapers. (That’s how the Newspaper Guild sees it, too.)

Instead, the Bay Area could be the model for how to turn a decaying, declining, near-dead newspaper system into something beautiful and powerful. For that to happen, it’ll take a smart team and smart money to figure out how to reverse the trend. This could be an opportunity for the nonprofit journalism world to take the lead — but only if we look beyond our constraints and limitations (self-imposed and otherwise) and begin to act on a bigger stage. Call me crazy, but how else will local journalism survive and thrive?

And so, at the risk of causing Rosey Rosenthal (CIR’s executive director) even more reason to worry, and in full knowledge that the chances of this actually happening are close to nil, here are five reasons and a bonus point for why the Center for Investigative Reporting — Mother Jones’ fraternal Bay Area journalism organization, founded around the same time we were — should put together the deal and the investor group to buy DFM’s Bay Area newspapers.

1. CIR understands why we need to manage for the long term.

Managing local papers for short-term profit is the end of local newspapers. Managing local newspapers for the long run, based on deeper engagement with the local community, is the future of local journalism.

Like Mother Jones, CIR is a nonprofit organization, but with a sharp eye for the need to build out a dynamic business model. With increasingly diverse revenue streams, CIR is looking more and more like the kind of organization that MoJo’s been for a while — a hybrid, with a mix of earned (circulation, ads, syndication, consulting, events, etc.) revenue and philanthropic revenue.

This kind of economic model allows you to manage for the long run, to build an institution and a community of interest among people who care about the work — that’s why they’d give dollars to it. When this happens, a journalism outfit can begin to attract advertisers who want to get their stuff in front of a motivated audience who trust the journalism brand. No, it’s not easy. Yes, it can work.

2. CIR has handled mergers before.

It wasn’t easy, but CIR’s been there, bringing the Bay Citizen into the CIR fold after Warren Hellman’s death and with Phil Bronstein in the lead. They’ve been through it before, they can do it again. It’ll take a lot of support, but it won’t be their first time on the dance floor.

3. Bronstein and Rosenthal are newspaper guys.

They know the game and the players, with as good a sense of what’s ahead as anyone could have at this point. They’re not innocents in this world.

4. This solves a problem for CIR.

Pretty much from day one, CIR has been a great journalism organization in search of a retail audience. For most of its nearly 40-year history (I worked there for a short time back in the ’90s), CIR produced content for other outlets; call it wholesale journalism. It’s begun to experiment with ways in which to go direct to its own audience — via social media, for instance, events (including live theater), and an intriguing new radio show, Reveal.

That’s where local papers could really help them out. Local papers have a brand that still counts for something, and there’s an audience out there, waiting. The news hole at these local papers has been pretty much emptied out; it’s actually kind of embarrassing how little local news these papers deliver now. The rest of it is national wire service or regional chum that’s shipped out from a central office to the local papers, and not worth subscribing to (which I suspect is why DFM’s metered paywall idea never went anywhere: there was nothing worth buying). But these papers do have a brand, locally. People write letters to the editor, they pay attention, there’s untapped audience, and an enormous need for real local journalism. CIR could really benefit from this connection.

5. CIR is making impressive strides in figuring out how to engage with contemporary audiences.

The Guardian just threw down a challenge to the rest of us with its new membership-plus-events program: get the conversation going, understand what your readers are interested in, get them up close and personal with your people — staff who are comfortable having direct interaction with your readers — and understand how to manage that and then build it out. Build a membership program that rewards people for stepping up and supporting the cause of good journalism in the community, open out your pages, don’t be trapped by the local chamber of commerce and elites. Tell the stories that need to be told. CIR could take its experience — plus its deep savvy of tech, digital, and social — of how to do this and bring it to regional scale.

Bonus point: CIR has no money.

Of course. But this sale comes at a point when there is way too much cash sloshing around the Bay Area right now. So the assignment: Find the right investors — wealthy people who want to make a mark over the long run in the local community, who measure their ROI in terms of reputation and not short-term profit — and who get that they’re investing for democracy, local accountability, and real journalism.

You want to do newspapers right in local communities? Bring good money together with the right guys who can manage the transitions and the investments, know the trade, know the technology, understand the role of a community-facing operation.

And who can function on not a lot of sleep.

Steve Katz is publisher for Mother Jones and its nonprofit publisher, the Foundation for National Progress.

POSTED     Sept. 24, 2014, 3:30 p.m.
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