October 17, 2016

Joseph Pulitzer, William Randolph Hearst and E. W. Scripps are out. Digital First Media, GateHouse and Civitas are in.

That’s one of the conclusions reached by a group of researchers from The University of North Carolina at Chapel Hill, which on Sunday published a report examining the effects that corporate ownership and digital disruption have had on local news across the United States.

The results aren’t encouraging: In the last decade, several hundred newspapers have shut down, merged or gone weekly as they were passed from owner to owner.

The report, titled “The Rise of a New Media Baron and the Emerging Threat of News Deserts” documents the trend toward corporate consolidation and emphasizes that the future of local news rests on companies that are often beholden to faraway investment partnerships:

Newspapers represent only a fraction of their vast business portfolios — ranging from golf courses to subprime lenders — worth hundreds of millions, even billions, of dollars. Their mission is to make money for their investors, so they operate with a short-term, earnings-first focus and are prepared to get rid of any holdings — including newspapers — that fail to produce what they judge to be an adequate profit.

Researchers illustrated the damage disruption and consolidation have done to local media, showing a United States pockmarked with newspapers that have been closed or merged since 2004.

(Screenshot, NewspaperOwnership.com)

(Screenshot, NewspaperOwnership.com)

The report’s findings include:

  • More than 33 percent of U.S. newspapers have changed ownership since 2004:

    The new owners can then cut costs and recoup their investment in only a few short years. Whole newspaper chains have disappeared, acquired by other companies. Before the 2008–09 Great Recession, the most active acquirers were large publicly traded chains, such as Lee, McClatchy and News Corp. Since then, newly formed investment groups, including New Media/GateHouse, Digital First and Civitas, have been the most aggressive purchasers.

  • The biggest newspaper companies are getting bigger:

    At the end of 2004, the three largest companies owned 487 newspapers with a combined circulation of 9.8 million. Today, the three largest companies own about 900 papers that have a combined circulation of 12.7 million.

  • The biggest investment groups follow a playbook of cost-cutting and financial restructuring:

    With revenues and profits still declining, much initial cost cutting has been painful, but necessary — and may have actually saved some newspapers in the short-term. However, for the most part, profits derived from cost cutting have not been reinvested to improve their newspapers’ journalism, but used instead to pay loans, management fees and shareholder dividends.

  • Investment groups often aren’t in it for the long haul:

    . Because they own so many newspapers, they can absorb the loss if an individual newspaper fails. If investment firms cannot sell an underperforming newspaper, they close it, leaving communities without a newspaper or any other reliable source of local news and information.

    A snapshot of the ownership picture across the United States is included in the report, which shows that America is dotted with newspapers owned by investment partnerships, which tend to focus on maximizing shareholder value.

    Notably, there are still many privately owned newspapers scattered throughout the country, with concentrations in Northwest Washington, Minnesota, Louisiana and Hawaii.

    (Screenshot, newspaperownership.com)

    (Screenshot, newspaperownership.com)

    This isn’t the first time the concept of news deserts has been raised. Alex Jones, the former director of Harvard University’s Shorenstein Center on Media, Politics and Public Policy, examined the decline of local news ecosystems in his 2009 book, “Losing the News.” Tom Stites, a former journalist at The New York Times and the Chicago Tribune, proposed “news co-ops” as antidote to the emergence of news deserts through his nonprofit, The Banyan Project.

    You can read the full report here.

Support high-integrity, independent journalism that serves democracy. Make a gift to Poynter today. The Poynter Institute is a nonpartisan, nonprofit organization, and your gift helps us make good journalism better.
Benjamin Mullin is the managing editor of Poynter.org. He previously reported for Poynter as a staff writer, Google Journalism Fellow and Naughton Fellow, covering journalism…
Benjamin Mullin

More News

Back to News