As Congress readies to pour another $310 billion into short-term payroll protection loans through the U.S. Small Business Administration, a picture of who did and who did not get money among media organizations is emerging.
In a nutshell, a small number of independent newspapers and digital organizations did. Chain-owned newspaper organizations and local broadcast stations mostly did not because their groups have total employment above a limit of 1,000. (For a freestanding organization the limit is 500.)
Among organizations that have reported receiving the Payroll Protection Plan stimulus loans to keep employees paid over the next three months are The Seattle Times ($10 million, the maximum), the Tampa Bay Times ($8.5 million) and Axios (about $5 million).
The Poynter Institute also applied for and received a stimulus loan of $737,400.
The loans are forgivable if organizations can document that the money was used for payroll and a few other authorized expenses like utilities.
Industry advocates hope for wider support next time around, or the time after that, if life-threatening revenue losses continue on into the summer or fall.
Dean Ridings, CEO of America’s Newspapers, wrote in an advocacy piece Wednesday that his and allied media groups are seeking “affiliation waivers.” That means Congress would judge news organizations so essential to local communities that the 1,000-employee rule would be waived. Chain-owned local papers would be able to apply.
“While some of these outlets may be owned by large organizations, they must survive on their own,” Ridings wrote. “It’s only fair that they should be included in any expansion of the program. These loans will keep the newspaper employees — your neighbors — on their payrolls and help get the news to you in print as well as online.”
The “affiliation” rule has tripped up some other potential recipients, including the independent Minneapolis Star Tribune.
“We were ineligible for the PPP in both rounds,” said Mike Klingensmith, the Star Tribune’s CEO, in an email. “… You have to consider all the companies owned by your majority owner. In our case, Glen Taylor owns many other large companies including the Minnesota Timberwolves. We tried (in conjunction with the News Media Alliance) to get an exception for newspapers (like the one granted for restaurants and hotels) but were unsuccessful. We’ll try again next time.”
I don’t know of a count of what percentage of the nation’s 1,350 or so daily newspapers are chain-owned, but would guess at least two-thirds. Ridings agreed in an email. Among public companies, Gannett has 250 titles, McClatchy 30, Lee Enterprises 75 and Tribune Publishing 11 (mostly large circulation).
Substantial privately held chains include Hearst, Advance Local, Media News Group (controlled by Alden Global Capital) and such less well-known groups as Adams Publishing, CNHI and Ogden Publications.
A second requirement for the stimulus is that organizations show they do not have the means to cover payroll with reserves or readily available borrowing. That would leave out national titles like The New York Times, Washington Post and Wall Street Journal — all of which would have too many employees in any case.
Richard Tofel, the longtime president of the nonprofit ProPublica, emailed me, “We did not apply, because I did not believe that we could certify, as you are required to do, that the money was “necessary’ to sustain our current operations. Our concerns financially will grow significantly if the economic crisis extends into next year or beyond.”
Tofel also suggested that some recipients, private companies not subject to reporting requirements, may be choosing, at least for now, not to disclose that they have received the federal money.
Rebecca Ross, chief operating officer of the large education reporting nonprofit Chalkbeat, said her organization applied for $1.1 million but was not funded in the first round. Chalkbeat has been told by its bank that it will be “in what they are calling the ‘SBA transmission queue,’ which means we are on the list of names (the bank) will start sending to SBA once the second round of funds becomes available.”
An estimated half of the 1.6 million round one approved applicants did not get loans because appropriated money ran out.
The Texas Tribune, another of the largest nonprofits, applied for and received $800,000. Before taking the government money, editorial director Stacy-Marie Ishmael told me the organization wanted to be sure the loan was part of a general subsidy to small businesses, not a special concession to media organizations.
Some continued tinkering with the rules, assuming funding rounds continue, is likely to expose fault lines within the industry.
The NewsGuild, for instance, is advocating for federal help — but with conditions to assure hedge-fund controlled chains do not pocket money and drop it to the bottom line.
Local broadcast recipients might be problematic for the affiliation waiver. The business is being hit hard but remains much more profitable than newspapers or digital-only startups. And most of the industry is controlled by five large chains.
The split between independents and chains has played out once already — in Congressional action late last year. Tucked in a huge appropriation bill was a provision allowing some independent newspapers to postpone some additional contributions to their pension funds that would have otherwise fallen due in 2020.
The action was pushed by The Seattle Times. The Star Tribune, the Tampa Bay Times and a few smaller papers that benefited.
McClatchy, whose pension obligations contributed to its need to file for bankruptcy reorganization protection earlier this year, tried to be included but was dropped at the last moment.
Strong advocates for the help for financially pressed newspapers last year and now have included Sens. Maria Cantwell (D.-Wa.) and Amy Klobuchar (D-Mn). They have been joined in the current push by Sen. John Kennedy, a Republican from Louisiana, whose leading paper is The Times-Picayune/The New Orleans Advocate.
Rick Edmonds is Poynter’s media business analyst. He can be reached at firstname.lastname@example.org.