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Nov. 25, 2019, 11 a.m.

McClatchy — now the country’s second-largest local newspaper company, after the merger of Gannett and GateHouse closed last week — is trying to diversify its revenue with a focus on investing in its journalism as it teeters on the edge of bankruptcy.

Ken Doctor’s piece here last week reviewing McClatchy’s options and examining how the “money men” bankers may push the company toward bankruptcy to reward its investors showed how the journalism itself can often be compromised in the cost-cutting. In the background of that lovely scene, Lauren Gustus and a small team at McClatchy are trying to drum up more philanthropic support of its journalism with a new plan to invest in 10 newsrooms via “community-funded labs.” It’s the same playbook that Sharon Chan pioneered at The Seattle Times (and has since taken to The New York Times) and has now been introduced at The Boston Globe and a handful of McClatchy newsrooms already. As I wrote last month:

Can chain newspapers pull off the same trick that’s worked at locally owned papers in Seattle and Boston?

McClatchy is trying, following the playbook of building relationships with local philanthropists (and a local foundation to coordinate the tax-tricky donations) in order to support quality journalism that needs an extra financial boost. An early test: California’s Fresno Bee.

McClatchy — with outlets in 30 markets including Miami, Charlotte, Kansas City, and Fort Worth — faces the same challenges as any newspaper company these days: Its advertising revenue continues to fall (down 20 percent in Q2) and it has emphasized digital subscriptions. (It has 185,500 — up more than 50 percent year over year, but still not a giant number for 30 markets.) [Update November 2019: Subscriptions are now up to 200,000.] While McClatchy tries to suss out what might work locally — some Google News Initiative money is supporting an experimental trio of new sites, and CEO Craig Forman is still expecting “greater digital advertising revenues in the future” — there’s a newfound opportunity in The Fresno Bee’s local philanthropic community, focusing on education journalism.

“As you look at the fundamental challenges the news industry faces, as you hear the big sigh in my voice, our traditional advertising model is challenged. Certainly the print model is challenged,” Lauren Gustus, McClatchy regional editor, said. “We know that by doing work the community values, we can find a way forward. Asking people to support the Bee via digital subscription can be a path for us. However, that path is long. This effort can help serve as a bridge.”

Gustus is now the director of community funding initiatives, “responsible for building community support for important local journalism initiatives through grants, contributions from philanthropic organizations and individuals, and partnerships with local stakeholders and readers” (while still continuing on as west region editor, overseeing newsrooms in California, Washington, and Idaho). From McClatchy’s announcement:

Over the course of 2020, McClatchy plans to launch as many as 10 community-funded journalism labs in local newsrooms across the country.

Already in 2019, Gustus has supported McClatchy’s entry into this space. She supported the September launch of The Fresno Bee’s Education Lab, a philanthropy- and community-funded editorial initiative focusing on education issues critical to the advancement of residents in Fresno, Calif., and the San Joaquin Valley. The Education Lab will expand The Fresno Bee newsroom by 20 percent.

In September, she helped the Miami Herald launch an Investigative Lab, a $1.5 million fundraising effort to support the largest team of investigative reporters in the South Florida region. The Herald’s groundbreaking reporting on Jeffery Epstein with the Perversion of Justice package is just one example of high-impact reporting that starts at a local level.

Last month, The Sacramento Bee launched Tipping Point Lab, a 4-person reporting team of journalists to cover Sacramento as it grows toward a prosperous and inclusive future.

These new labs could potentially help bolster local journalism in a third of McClatchy’s newsrooms — if the money men don’t get to them first.

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