In 1977, shortly after Warren Buffett bought the Buffalo Evening News for $33 million, the Wall Street Journal quoted a Wall Street investor familiar with the so-called Sage of Omaha’s thinking about newspaper economics. David Gottesman, senior partner of First Manhattan Corp., described it thus:
Warren has been largely restricting himself to companies which he feels offer some protection against inflation in that they have a unique product, low capital needs, and the ability to generate cash. For example, Warren likens owning a monopoly or market-dominant newspaper to owning an unregulated toll bridge. You have relative freedom to increase rates when and as much as you want.
At that time, the Buffalo News was far from a monopoly. It was in head-to-head competition with the Courier-Express, the morning paper, which had a strong Sunday edition; the News’s flagship product came on Saturday afternoon each week.
In the 1970s and 1980s, most cities could support only one newspaper. My uncle had been managing editor of the Cleveland Press, which, after his retirement, lost its city’s newspaper battle to the Cleveland Plain Dealer. The Press went out of business in 1982. (And these days, the once-robust Plain Dealer is down to a skeleton staff, like so many other metro dailies.)
So, yes, Buffett won the newspaper war in Buffalo, and the paper’s financial performance was everything he could have wished for. For decades, it boasted profit margins well over 30 percent. Like an unregulated toll bridge, it was able to raise advertising rates almost at will, or at least to keep up with inflation and other rising costs.
Then came the internet. For many years, if you wanted to sell something, the local newspaper was your best bet to get the word out to potential buyers. A boat, a bike, a car you wanted to unload? Put it in the advertisements at the back of the daily paper that were divided into subject categories. Classified advertising was a big chunk of the newspaper’s revenue, and because there were few alternatives (fliers stuck under neighbors’ doors or posted on a church bulletin board?), newspapers could charge plenty for the service—and they did. Department stores and car dealers and supermarkets took out big display ads or special sections. The money poured in. But something was happening in San Francisco that would change all that. A tech entrepreneur named Craig Newmark had started an emailed newsletter in the mid-1990s, and then invented its outgrowth, a website that allowed people to post their goods and services, mostly for free, with a few lucrative exceptions. By 2006, according to Forbes magazine, Craigslist ranked seventh among all websites in terms of monthly page views. And almost immediately, newspapers felt the hit, one they never recovered from—though that blow alone would not have been enough to sink them.
(Interestingly, Newmark in recent years has become a philanthropist deeply devoted to helping quality journalism survive in the digital age, and to helping journalists with new-media issues of all sorts. The City University of New York’s graduate school of journalism bears Newmark’s name, recognizing his $20 million gift; and he has given millions to other worthy journalistic institutions or programs, including a new effort to address digital security and ethics at Columbia University’s Graduate School of Journalism. And Newmark has opened his home in Manhattan’s West Village for salon-like journalism gatherings where you might see former BuzzFeed editor Ben Smith, former Guardian editor Alan Rusbridger, and academic luminaries like Columbia University’s Emily Bell. It’s an outcome that no one could have predicted when the classifieds were falling away.)
An even more profound change was coming from two dominant technology platforms, Google and Facebook, who have been able to attract the vast portion of digital advertising. By some estimates, the “duopoly” was sucking up 60 percent of all digital advertising revenue in the United States by the middle of the last decade. From the point of view of traditional publishers, this seemed almost diabolical because the platforms benefited from “content”—the news stories, videos, photo galleries, etc.—that the old-school companies supplied, but siphoned off most of the revenue. That content (let’s go ahead and call it journalism) is often expensive to produce. It requires, for example, skilled reporters digging through documents or sitting in long government meetings, not always immediately finding the meaty news they are seeking but having to put in the effort anyway.
One key to the platforms’ astonishing success in attracting digital advertising was targeting, particularly in the case of behemoth Facebook. Targeting means determining to a relatively narrow degree who would see a particular ad. Facebook could control that closely and charge advertisers relatively little. For its part, Google could “serve” or deliver advertising when people did a search for a particular product. Advertisers could also see how successful their efforts were, and they were willing to pay a higher rate if they knew a particular ad or ad campaign was leading to purchases. This was a big advantage over print or television ads. And, of course, the platforms dominate online advertising because of the scale of their users. This ubiquity, along with narrow targeting, was a tough combination to compete against.
As the Reuters Institute succinctly put it in its 2018 study of local newspapers in Europe, “Advertisers increasingly invest in online advertising, which is dominated by large U.S. based platform companies that offer low prices, precise targeting, and unduplicated reach. Local newspapers cannot compete directly.” For these papers in France, Germany, Finland, and the United Kingdom, “their traditional business model, advertising, is thus existentially challenged.”
For many decades, newspaper and television ads offered the opposite of this targeting. Everyone reading the paper or watching a TV show saw the same advertisement. (There were exceptions but they were blunt instruments, not scalpels. Zoned editions of newspapers might be considered a primitive form of the targeting to come. If you lived in a city’s northern suburbs, for example, you would see advertisements for stores in the northern suburbs.)
Writing in Recode, Kurt Wagner detailed a well-anticipated tipping point that came in 2019. Digital advertising was set to outpace “traditional” advertising such as printed ads for, say, supermarkets in newspapers or broadcast ads for cars on television. The Recode subheadline was straightforward: “TV and newspapers are out. Facebook and Google are in.” Wagner wrote that the change had happened swiftly. “Even though digital advertising was just half the size of the ‘traditional’ ad industry four years ago in 2015, it was only a matter of time before the two swapped roles.” Some 60 percent of digital advertising belonged to Facebook and Google together, amounting to $65 billion. The platforms, despite being under fire from would-be regulators and many, many critics, were hugely successful and becoming more so.
There was a time when newspaper publishers held onto a false hope: Digital advertising revenue would fill the gap left by the print ads that were slipping away so inexorably. Indeed, there is a tremendous amount of digital ad spending. The problem, though, is that most of the money wouldn’t be going to content publishers, also known as news organizations. It would largely go to Facebook and Google, who were able to give advertisers cheap prices and a narrowly targeted audience. What’s more, those platforms controlled the advertising networks that serve most of the ads one sees across the web.
But there was so much more to deal with than just the loss of advertising revenue. In the post-Vietnam and post-Watergate era, social habits were changing. With both parents in a typical middle-class family now working outside the home, there was less time for, and interest in, local papers. Freestanding department stores that were once dependable and deep-pocketed advertisers were first drawn into malls, and then slowly replaced by online shopping. Car dealerships began to reach their customers through targeted internet advertising or direct mail. Amazon was siphoning off the profits and potential ad dollars of local business.
When the 2008 financial crisis came, followed by the Great Recession, newspapers saw their advertising and circulation tumble. It’s no exaggeration to say that revenue fell off a cliff, as a well-circulated graphic from the Newspaper Association of America made abundantly clear. From its peak in 2000 to 2012, print advertising fell 71 percent; digital advertising never made a serious difference in recovering the loss.
With fewer advertising dollars and less circulation, newspapers responded by cutting staff. It was the most immediate and easiest way to save money, and to keep profits relatively high. (Or, in some cases, just to try to stay profitable.) Round after round of layoffs and buyouts at nearly every paper in the country resulted; local journalists who thought they had a lifetime job covering local government, for example, were out on the street. Copyeditors were deemed nonessential. Unsurprisingly, the quality of many newspapers went down.
This was happening everywhere, at newspapers of every size. “We’ve had to make some tough decisions,” said Ken Tingley, editor of the Glens Falls Post-Star, a Pulitzer Prize–winning daily in the Adirondacks region of New York. With his staff down by about half, he has been forced to reduce news coverage of the region and concentrate on the metro area.
What concerns Tingley even more is what happens to the journalism-talent pipeline, that there’s not much of a career ahead for the young reporters on his staff. “Where are they going to go?” Tingley said, when bigger metro dailies keep shrinking their staffs. The career path that helped so many young journalists become superstars of their craft is mostly gone now. David Halberstam, one of the most revered reporters of the twentieth century, started out at the Daily Times Leader in West Point, Mississippi, the smallest daily newspaper in Mississippi, and then moved to the Tennessean in Nashville, before arriving at the New York Times, where his Vietnam War reporting distinguished him. Washington Post executive editor Marty Baron, who has been my boss since 2016 and is considered by many the greatest editor of his generation, began his career at the Miami Herald as a reporter in the Stuart, Florida, bureau, and then as a Herald business reporter. What’s more, Baron may be best known for his role as executive editor of a regional newspaper, the Boston Globe, where he led the coverage of the sexual abuse scandal in the Catholic Church, as immortalized in the Oscar-winning film Spotlight. Halberstam, Baron, and countless others probably could not get their start that way anymore. And that is an incalculable loss.
Meanwhile, chain ownership of newspapers was on the rise. Once mostly the province of local families who ruled their media fiefdoms with a wide variety of wisdom or venality, and usually with at least a modicum of civic responsibility, newspapers began to be snapped up more and more by big corporations. Some of them, like Gannett or Knight-Ridder, which later gave way to the California-based McClatchy Company, were reasonably well run. They did right by readers while still making a profit. Gannett was known for squeezing its newspaper properties by running them with lean staffs; Knight-Ridder had a more expansive reputation. But in the all-new newspaper economy, Gannett employees felt relatively fortunate, especially as one of the most profit-hungry chains, GateHouse Media, swooped in for a merger. The marriage of the largest and second-largest chains would give the combined newspaper giant control of one of every six newspapers in America. The author and news industry analyst Ken Doctor, a longtime Knight-Ridder employee, predicted that the deal would go through, but noted that the merger had nothing to do with producing great journalism. “These companies’ leaders think a mega merger buys two or three years—‘until we figure it out.’ The ‘it’ is that long-hoped-for chimera of successful digital transformation,” he wrote. “Gannett and GateHouse, like all their industry brethren, look at ever-bleaker numbers every quarter; the biggest motivation here is really survival, which in business terms means the ability to maintain some degree of profitability somewhere into the early 2020s.”
As fortunes turned downward in newspapers over the past two decades, a new kind of ownership came along: private equity firms whose management had no interest in journalism, but a great deal of interest in strip-mining papers for whatever financial value they had left. As the unwelcome trend was reaching a new peak, journalists Robert Kuttner and Hildy Zenger wrote a sweeping account of this in 2017:
Companies with names like Alden Capital, Digital First Media, Citadel, Fortress, GateHouse, and many others that you’ve never heard of have purchased more than 1,500 small-city dailies and weeklies. The malign genius of the private equity business model … is that it allows the absentee owner to drive a paper into the ground, but extract exorbitant profits along the way from management fees, dividends, and tax breaks. By the time the paper is a hollow shell, the private equity company can exit and move on, having more than made back its investment. Whether private equity is contained and driven from ownership of newspapers could well determine whether local newspapers as priceless civic resources survive to make it across the digital divide.
Alden Global, through its majority control of the management company known by the benign-sounding name of Digital First Media, was perhaps the worst of a bad lot. Its hundred or so newspapers include weekly and daily papers—including some once-major regional metro papers, like the San Jose Mercury News and the Denver Post.
In 2018, newsroom employees of some of those papers protested the destruction of journalism in their communities outside the so-called Lipstick Building in midtown Manhattan, where Alden Global is based. That effort proved futile, but they did draw attention to what was happening.
I found the Denver situation particularly poignant because of the precipitous fall from prominence of the city’s journalism. I spoke to a young reporter, Jesse Aaron Paul, who told me that when he came to the Denver Post as a summer intern in 2014, “I felt like I had reached the end of the yellow brick road.” In a reverent tone, Paul recalled his first day at the paper with its history of Pulitzer Prizes, its beautiful downtown building (it was, he said, “like a beacon”), and its nationally regarded top editor, Greg Moore, who hired him at summer’s end and, because of his energy and productivity, dubbed him “Super Jesse.”
Four years later, it had all come crashing down, as was so often the case when Alden Global was involved. One of Alden’s trademark moves is to sell off the prime downtown property and move the newsroom operation somewhere much less glorious. Newsroom employees were summoned to an all-staff meeting at the paper’s new headquarters, a printing plant in an outlying county. At this meeting, the staff believed that a small number of buyouts might be offered. They reasoned that there wasn’t much left to cut, after so many employees had been laid off in recent years. But that was a miscalculation: Another thirty newsroom jobs would disappear. The news, Jesse Paul told me, was greeted by “sobs, gasps and expletives.” It meant that the newsroom, which once numbered about three hundred positions, would drop to less than seventy. And since the Post’s competitor, the Rocky Mountain News, had gone under a decade before, that meant fewer than seventy people were left to cover all aspects of a major metropolitan area. (In 2018, the Colorado Sun, a newly formed newsroom made up of twelve former Denver Post employees, added to the local coverage; Jesse Paul has joined that newsroom’s staff.)
Greg Moore described Alden Global’s “harvesting strategy”: Take whatever profits you can right now, and don’t worry about future viability, or about journalism. “Just short of setting the place on fire, being bought by Digital First is about the worst outcome possible,” Joshua Benton, director of the Nieman Journalism Lab at Harvard, wrote in the Boston Globe about Alden’s purchase of the Boston Herald in 2018. “It’s less the Herald being saved than the Herald being stripped for parts.”
This was happening not just at Alden Globa’s newspapers but at those owned by GateHouse Media, another large chain, and in somewhat less drastic ways at papers owned by Gannett and McClatchy. In some cases, the news was even worse. One day in late June 2019, the 150-year-old family-owned Vindicator in Youngstown, Ohio, announced that it was shutting down in a matter of weeks. There was no middle ground of trying an all-digital approach, or deciding to cut certain days of print or home delivery. Youngstown would become the first substantial American city to have no daily paper.
The local-news environment is not without its bright spots. One of the most encouraging developments is the significant growth of public radio, and the collaboration among stations. In 2018, for example, ten stations across the United States, from Dallas to Atlanta, teamed up for a two-year reporting project on gun violence, with grant funding from a family foundation. And National Public Radio editorial director Nancy Barnes, in an interview with Poynter.org, said she envisioned adding more than one thousand local-news jobs, maybe double that. That’s something that gets less attention than it should, and could make a significant difference in the overall local-news scene.
Local TV stations, for the most part, have seen revenues either stabilize or go on the upswing, though their viewership has declined as younger generations increasingly turn to their smartphones for news and information of all sorts. From a business perspective, they have a great advantage, reports Pew Research: Revenue from retransmission fees paid by cable and satellite systems to carry local channels has been increasing rapidly in the past decade. Using estimates from Kagan, a media research group, Pew noted that revenue from retransmission fees grew from $9.4 billion in 2017 to $10.2 billion in 2018, and would reach $12.2 billion by 2023. But will those billions be used to produce valuable journalism, or simply pocketed?
Some stations have found a competitive advantage in pursuing investigative reporting, or at least some version of it. “Stations need market differentiation—a distinction between what they offer and what everybody else offers,” Al Tompkins, senior faculty member for broadcast at the Poynter Institute, told me. He observed, though, that not all of what TV stations tout as investigative journalism meets his definition. “A lot of investigative folks are doing ‘day turns’ and you have to ask: How investigative can you be in eight hours?”
“Stories about bedbugs that are called investigative journalism are kind of silly,” said Sarah Cohen, who runs a data journalism team at the New York Times. “But not everything has to be a six-month project. The core of investigative work is something of public importance that somebody doesn’t want you to know.”
A 2018 Knight Foundation study called for local TV stations to improve their journalism: “Drop the obsession with crime, carnage, and mayhem. And focus on ways to connect with local communities through a focus on issues such as education, the economy, and transportation.” The good news for local TV only seemed relatively positive because of an adjacent disaster: “In some ways, local TV news benefits because its competitors are so troubled. Newspapers have been losing circulation since long before the internet, revenues are plummeting, and many newspapers might not survive beyond the next few years.”
If that revenue can be harnessed for good, TV can be a part of the answer. But it’s unclear that it will be. Adam Symson, president and chief executive officer of E.W. Scripps Company, which owns sixty local television stations across the country, told me he isn’t especially hopeful about putting the future of serious local journalism in the hands of the huge media companies that own most American stations: “There’s an incredible opportunity to fill the gap created by the decline of newspapers, if we focus our attention on enterprise reporting and beat reporting.” The staff size at many local television stations is no longer dwarfed by that at local newspapers, largely because newspaper staffs have shrunk so dramatically. “It’s incumbent on local television to carry the mantle of accountability reporting,” he said. As a former investigative TV journalist himself, Symson insisted that the Scripps stations and the company as a whole operate under the mantra of “journalism first.” But “journalism first” is not the standard across the local-television industry, as many owners put profit first. “What we’re seeing is the move of pure financial players into the television space,” Symson said, “with the same motivations as the newspaper players,” such as Digital First Media, which is essentially a hedge fund.
In order for local television news to meet its journalistic potential, he said, “we have to recast our product–to get away from stenography and move in the direction of enterprise reporting.” And despite its relative financial health, local television is plagued by changes in consumer habits, as people of all ages move away from what was once the daily routine of tuning into the local news on television at 5:00 or 6:00 p.m., and then again at 11:00 p.m. In short, television journalism can be part of the answer to the crisis in local news, as newspapers struggle for survival and digital upstarts attempt to fill the void. Whether it will reach its potential is far less certain.
In 2020, even Warren Buffett was giving up on newspapers. Over the decades, Berkshire Hathaway had amassed thirty-one dailies and forty-nine weeklies. But in January, the corporation announced that it was exiting the industry and selling its entire newspaper empire to Lee Enterprises, a publishing conglomerate that already owned fifty dailies and had been managing most of Berkshire Hathaway’s print operations. Among the papers being sold was, of course, the Buffalo News.