Morning Mediawire: After drastic cuts at The Denver Post, what is Digital First’s end game?

March 19, 2018
Category: Newsletters

Digital First Media has been a big player lately in news about news — and not in a good way. Last week it announced plans to cut 30 news positions at the flagship Denver Post, or nearly a third of remaining newsroom staff.

That's after performing a similar hatchet exercise in January to the East Bay Times, which includes the once-proud San Jose Mercury News and other San Francisco-area papers.  It has been only a year since the Times won a breaking news Pulitzer for its coverage of the deadly "Ghost Ship" fire in Oakland.

Some commentators have used the unfortunate metaphor of "stripping down for parts" for Digital First's actions. Looting maybe, because once news staff — and much of paying audience — has been pulled out, there are no parts of value left.

So what is Digital First owner Alden Global's game plan? The private entities say nothing publicly. Nonetheless, I set out to profile Alden and its founder, Randall Smith, almost seven years ago in a piece as its newspaper industry activity was beginning.

Back then Alden was still assembling the former Journal-Register and Denver-based MediaNews into Digital First company under the leadership of the flamboyant John Paton. 

Alden also had minority investments in many other newspaper companies. In fact, in a talk to a small New York investors club, picked up by a blogger, Smith said that Gannett was undervalued and the best buy on Wall Street. He made millions on his stake, simply by buying low and selling high.

Distressed-asset funds, like Alden, do indeed look to cash in on their investment in the short term, five years max, and then get out. Bleeding declining properties for profit in the meantime, with no regard to their future, is one way to do that.

But my guess is that Digital First will also be quite willing to sell individual properties anytime — as they did when the Huntsman family stepped up to buy the Salt Lake Tribune in April 2016.  A civic-minded billionaire could easily acquire the Denver Post or East Bay Times, though some reinvestment would be required.

Meanwhile Alden Global and Digital First outbid two other private equity-backed outfits for the Boston Herald in February.

And the company was sued earlier this month by a minority shareholder, alleging that excessive profits were extracted from the news properties and diverted to poorly performing other lines of business and insider transactions.

So there remain plenty of chapters to play out, and I will continue to keep an eye out for clues on what Alden and Digital First are up to next.

— Rick Edmonds, Poynter business analyst

* * *

Heat is on Facebook

Several new developments happened Monday. Here’s a roundup:

BRIBES AND SEX WORKERS: Apparently that’s part of the formula that Cambridge Analytica used to help its clients prevail in elections. The company, which was hired by the Trump campaign and is now under scrutiny over its unauthorized use of data from some 50 million Facebook users, used subterfuge to disguise any involvement, according to undercover video captured by the UK’s Channel 4 News. On Monday, British Prime Minister Theresa May backed an investigation into Facebook and Cambridge Analytica. The European Union also said it would launch a probe into the alleged misuse of private data.

TIME TO RETHINK GROUPS: The company has already announced plans to make its Groups show up in more news feeds. Bad idea, reports BuzzFeed. “The unintended consequence is that the more than a billion users active in groups are being placed on a collision course with the hackers, trolls, and other bad actors who will follow Facebook’s lead and make groups even more of a focus for their activities.” This is a must read.

A “MYSPACE MOMENT?”: That’s what Dan Kennedy is wondering as he writes for WGBH: “From creepy psychological experiments to advertising aimed at ‘Jew haters,’ from the manipulation of its Trending Topics feed to the proliferation of Russian-backed fake news, Facebook is looking more and more like a uniquely malign influence in our lives. The question is whether Mark Zuckerberg and company, in their arrogance and greed, have dealt themselves a blow from which they will not recover.”

No one at Facebook seems to want to talk about this, though NPR Silicon Valley correspondent Aarti Shahani tried:

AARTI

TIME TO QUIT?: Facebook doesn't make it easy (and it will still have tons of data on you), but it's possible.

STOCK PLUMMETS: Facebook stock lost 7 percent, or close to $37 billion on Monday, in the fallout from Cambridge Analytica's misuse of data.

Quick hits

IMPORTANT STUDY ON RACE: The New York Times has an extensive write-up about a study of 20 million young Americans that reveals an uncomfortable truth: Systematic racism is making it hard for black boys to achieve what their white counterparts achieve. A quote from the story: “ ‘One of the most popular liberal post-racial ideas is the idea that the fundamental problem is class and not race, and clearly this study explodes that idea,’ said Ibram Kendi, a professor and director of the Antiracist Research and Policy Center at American University. ‘But for whatever reason, we’re unwilling to stare racism in the face.’” The study was led by researchers at Stanford, Harvard and the Census Bureau. … After you’ve read that, it’s worth visiting this episode of WNYC’s “On the Media” titled “Face the Racist Nation.” It’s a deep dive into the media’s coverage of white supremacist groups and includes a thought-provoking observation in its final segment: Ignorant people aren’t the reason for racism; racism comes from the top. Worth your time.

YOUTUBE’S OUTSOURCING: The video site — and Google, which owns it — seems to be asking quite a bit of Wikipedia. First Google started pulling from the site to accompany its search results. And now, YouTube wants to place Wikipedia links on conspiracy videos. Will Wikipedia editors be able to keep up with the trolls and hackers that will surely follow?

FERRO OUT AT TRONC: While the Chicago Tribune played it straight about the resignation Monday of Tronc chairman Michael Ferro, Splinter’s Dave Uberti couldn’t hold back what he really thought. Here’s his lead: “Michael Ferro, a human spigot of poorly conceived ideas, announced on Monday that he’s stepping down as chairman of tronc (formerly Tribune) after two terrible and incompetent years running the storied newspaper publisher.” … Fortune is reporting that two women have accused Ferro of unwanted touching as they tried to secure funding for their businesses. He denied it through a spokesperson.

MORE ON THE TWITTER MYSTERY WOMAN: In Friday’s newsletter, we brought you the story of a viral Twitter thread that helped identify the lone woman in a photo at a whale biology conference. We had reached out to the woman who first tweeted it, hoping she’d tell us of her quest. Though she hasn’t answered our questions yet, she did talk to The New York Times, which has fleshed out the story behind the tweets.

* * *

Want to get this briefing in your inbox every weekday morning? Subscribe here.