The Independent’s mission is to produce truth-seeking reporting on the Outer Cape. But we have another purpose that extends beyond the Orleans rotary: to help change what is happening to local newspapers across the country.
We pledged to include research and reporting on that story, because we are out to prove that good newspapers are not only vital to civic life, but also good businesses — creating jobs and contributing to the local economy.
The big news in journalism last month was the sale of Tribune Publishing, owner of the Chicago Tribune, the Daily News, the Hartford Courant, and other major dailies, to Alden Global Capital, whose slash, burn, and profit strategy is described in the Jan. 21 Financial Times Magazine.
Why are private-equity firms still buying up papers, despite the ubiquitous story that this business has been destroyed by Facebook and Google? Because newspapers are still profitable. The Courant has an annual profit of at least $2 million, according to the Financial Times. That gives us hope. Readers still value local journalism.
Yes, advertising revenue is down, especially now. And newspapers don’t have 35-percent profit margins anymore. But there’s something else behind the decline of journalism that has nothing to do with all that: private equity operates in bad faith.
Companies like Alden are not profitable because they’ve trimmed the fat from big newsrooms. They buy newspapers with truckloads of borrowed money that they know will never be paid back. They load them with debt, pile on “management” fees, and extract profits by selling off assets, like the Courant’s downtown Hartford building, and laying off 80 percent of the staff.
The papers become mere shells of their former selves — “ghost papers.” They’re not being saved, as Alden claims. They become unable to stay relevant, and then they die.
Why would anyone make bankruptcy the endgame? Because the law has allowed private equity to write off debt and walk away with billions. In Monday’s New York Times, William D. Cohan writes that a federal judge has blown the whistle on this fraud, and “the private equity party might be ending.” I’m not optimistic.
These guys won’t go down easy. And they are almost all guys. Worse even than America’s newsrooms, where women hold only about a third of leadership jobs, private-equity boards were 5.2 percent women in 2018. The biggest players are men like Leon Black, founder of Apollo Global Management, which lent $1.8 billion to GateHouse Media in 2019 so it could buy Gannett. (They own more than 550 papers, including the Cape Cod Times, Cape Codder, and Provincetown Banner.) Black was a buddy of the late Jeffrey Epstein, the gazillionaire child rapist and sex trafficker.
Happy International Women’s Day.