Saving Local News – Idea #1: Funded by the people, for the people (ie. Taxes)
Fundamentally, we understand that municipal governments fund the things that communities decide are important – things that shouldn’t be left to chance, or subject to the whims of profit or politics. Things like community centers and parks; streets and schools; sanitation and sewerage; police and fire departments.
These are the services and facilities that benefit everyone in a community, and we’ve collectively agreed that even if not everyone in town uses them, we all need to be taxed to ensure their existence and continuity.
So what about local news? Is it not a public good? Don’t we all benefit from local reporters who watch how our elected officials behave with our tax dollars? Don’t we want to read stories of the local institutions and people who make decisions that can dramatically impact our lives… and the lives of our children and neighbors?
There was a time that local news was a profitable business, well-suited to private ownership. But a couple things happened that changed the equation. First, local owners across the country began to cash out and sell their profitable newspapers to major corporations, anointing massive chains as the rulers of local news in America. Second, these sales coincided with the advent of new technologies, such as the internet, social media, and mobile devices, that prompted major changes in consumer behavior. And so, the new owners – which had higher demands for profitability to fund additional acquisitions and debt service – reacted as all corporations do when faced with declining revenues amid fixed or rising costs.
As one observer succinctly put it: “The business model that once made newspapers one of the most profitable industries in America has collapsed. Advertising, long the financial lifeblood of papers, is drying up. Circulation, another major source of revenue, is plummeting. Online revenues are growing, but don’t come close to making up for lost print revenue. As a result, newspaper staffs have been slashed, and local coverage along with it.”
I previously wrote about the this week’s massive layoffs at the Greensboro News & Record and the Winston Salem Journal, the latter a daily paper in a place I hold dear to my heart. Owned by a major corporation – Lee Enterprises, which is the country’s fourth-largest newspaper group – these dailies (like the rest of the news industry) have seen major additional declines in advertising revenue of late due to the pandemic.
Ironically, Lee Enterprises only just purchased these newspapers in January (from Warren Buffett’s BH Media Group), closing the deal in March as the pandemic was starting. And the sale was itself only part of an even bigger deal that saw BH lend Lee the money needed for the acquisition of its papers ($140 million) along with $436 million more to refinance Lee’s existing debt and to allow it to terminate its revolving credit facility. In other words, the previous owner lent someone all the money to become the new owner, and to allow the new owners to restructure their business (at a 9 percent interest rate, I might add) to try and become more profitable.
It’s worth remembering that Lee racked up $1 billion in debt in the 2000s by purchasing other newspapers, ultimately filing for bankruptcy in 2011. After re-emerging, the company reduced its debt by aggressive cost cutting – which largely came through staff reductions. One report noted that between 2010 and 2013, Lee reduced its headcount by 26 percent, from 6,304 people to 4,678. I wonder where those numbers stand today.
No one wants to see local newspapers fail. (Well, perhaps except for corrupt politicians.) Newspapers, as we all know, are vital institutions in a functioning democracy. When freedom of the press is eroded, the potential for unchecked authoritarian leadership increases.
And so, I would argue that our nation’s local news organizations have reached a tipping point. Either we declare local news a priority to benefit everyone in a community – a public good – or we watch them wither, die, and disappear, opening up a pandora’s box of unchecked influence over our daily lives.
And so, the grand unified theory of media sustainability, as I see it, is to incentivize local control and independence of news organizations, by connecting some portion of our tax dollars to designated non-profit news entities in each county of this country. And this shouldn’t be seen as government support of media, rather amid the terrible stewardship by corporations like Lee Enterprises, we’d simply be using the convenient mechanisms of government to declare — collectively and deliberately — that local news is a necessity in our communities, just like schools and sewers.