Senate minority leader Chuck Schumer (D-N.Y.) this afternoon jumped into the takeover battle for Gannett, initiated with a premium bid two weeks ago by a subsidiary of Alden Global Capital, parent of the Digital First chain.
As Gannett said in rejecting the offer, Schumer charged that Alden/Digital First are greedy liquidators of newspaper properties and thus a threat to the vitality of local journalism.
He made reference to half a dozen papers in New York state, already shrinking after years of Gannett’s management, that he said would stand to be cut to the bone and ultimately closed if Alden/Digital’s bid was successful.
Schumer also cited a lengthy investigative story in this morning’s Washington Post, making the case that Alden only wants Gannett so as to be able to sell off its real estate — and has already bought some Gannett office buildings through a separate subsidiary.
Schumer did not suggest government intervention but did urge philanthropists to considerer investments and grants to support local news.
Schumer’s remarks in their entirety are below.
“Late last week, I had the privilege of addressing an audience at the Newseum about the current challenges facing the free press in America and I ask unanimous consent my remarks there be put in the record after my remarks here.
One of the most significant challenges the press faces, of course, is economic. Besieged by a fractured media landscape and rapidly changing technology, newspapers have been forced to adapt or die. Some have adapted, but many have died. One area where it’s particularly troubling to me is smaller markets in mid-size and smaller cities. In those areas, local newspapers have been the glue that keeps communities informed and stitched together. I’ve seen it. In cities in upstate New York, small and middle-sized, big companies have left. Some of the community banks have been bought up by major, large banks. And the things that keep a community together are greatly deteriorating. Newspapers are one of the few glues these communities have. They are vital, way beyond the profit and loss that they might make. The external benefits of these newspapers, as the economists would say, are large. But they’re in trouble because of all the economic issues I mentioned.
Now there is a new threat on the horizon. A few weeks ago, a hedge fund, known as the destroyer of newspapers, announced a bid to take over Gannett, which, in addition to USA Today, publishes a lot of small and medium-sized newspapers, and four important papers in my state – The Democrat & Chronicle in Rochester, The Press & Sun in Binghamton, the Journal in Poughkeepsie, the Journal News in Westchester, and newspapers in Elmira and Ithaca. On the front page of The Washington Post this morning is an article about the business practices of Alden and its subsidiaries. Essentially, Alden’s strategy is to buy up newspapers, cut staff and then sell the commercial real estate of newsrooms and printing presses for profits. The article quotes several experts, who have said of Alden, quote, ‘they are the ultimate cash flow mercenary. They want to find cash flow and bleed it to death.’ Their principle is, quote, ‘no new investment and sell off what you can while you can,’ according to analysts who study them. An analysis of the newspapers owned by Alden reveals they cut newspapers’ staff at more than twice the rate of competitors, and in all likelihood when they sell the real estate, the vast majority of the money does not go to revitalizing newspapers as the newspaper itself would do when it sells real estate, but goes elsewhere. For Alden Global Capital, the hedge fund, the acquisition and streamlining of Gannett papers might increase its profits a couple of percentage points, but the loss of The Press & Sun and Democrat & Chronicle would be incalculable.
Let me ask the American people and every one of my colleagues here, what’s more important — having our newspapers, which are so important to local communities, go on, or having a hedge fund raise its market profits by five points if they are public or by a certain amount? What is more important? I would argue the newspapers. I would argue the newspapers.
The Gannett consortium was already the result of consolidated news business. One reporter working multiple beats, placing stories in multiple newspapers — I’ve seen that in upstate New York. What was already an … under-sourced operation now faces potential annihilation by an indifferent media conglomerate backed by an even more indifferent hedge fund.
Well, what do we do about this? I don’t know how to solve the broader economic problem for newspapers big and small. I hope there is one.
But the only antidote to these problems I have seen is the rarer and rarer presence of generous, civic-minded families and individuals who own news outlets for the right reasons. Not simply to maximize profits, although profit is still important, but because they feel an obligation to advance journalism for the greater benefit of us all. Everyone has seen this work at flagship newspapers, but the family model has worked in smaller markets as well, including several papers in upstate New York. So, I would propose that charitably inclined institutions and individuals should begin to think of journalism as a philanthropic endeavor. If it becomes a worthy endeavor to buy a local newspaper and preserve its size and independence, just as it is a worthy endeavor to support the local hospital, school, charity, many more might consider doing it. As Americans, we must continue to support the First Amendment, the freedom and viability of the press. Our democracy depends on it.”