Why Buy a Yacht When You Can Buy a Newspaper?

Billionaires had a pretty good pandemic. There are more of them than there was a year ago, although the crisis has exacerbated inequality. But the trial has followed this blossoming fate. Policy makers are debating new taxes for businesses and high net worth individuals. Even their philanthropy is increasingly criticized as both exercise of power and generosity.

One arena where the billionaires can still receive praise as bourgeois saviors is buying the daily newspaper in the metropolis.

The local business leader didn’t seem like such a rescue a quarter of a century ago, before Craigslist, Google, and Facebook started splitting the newspapers’ fat advertising revenue. In general, the billionaires in the neighborhood are considered worth a careful look by the newspaper’s investigative unit. But many papers no longer even have a unit of investigation, and the priority is survival.

This media landscape pushed newspaper ownership from the pillar of vanity to the philanthropic side of the ledger. If you pay for a few more reporters and fix the coffee maker, you can make a lot less effort than if you spent two decades building the Bill and Melinda Gates Foundation, for example.

The most recent example is an offer from Hansjörg Wyss, a little-known Swiss billionaire, and Stewart W. Bainum Jr., a Maryland hotel magnate, for Tribune Publishing and its $ 680 million list of famous broadsheets and tabloids like The Chicago Tribune, The Daily News, and The Baltimore Sun.

Should Mr Wyss and Mr Bainum manage to hijack Tribune from Alden Global Capital, whose bid for the company has already been backed by Tribune’s board of directors, the purchase will be the latest example of more than a decade in what some of them have been searching for in America’s ultrawealthy, one to prop up crumbling pillar of democracy.

If there was a signal year in this development, it came in 2013, when Amazon founder Jeff Bezos bought the Washington Post and the owner of the Red Sox, John Henry, bought the Boston Globe.

“I invested in The Globe because I firmly believe in the future of this great community and The Globe should play an important role in determining that future,” Henry wrote at the time.

Mr. Bezos and Marty Baron, the recently retired editor of The Post, are known to have revitalized the paper to its former glory. And after a slightly rockier start, experts said that Mr. Henry and his wife, Linda Pizzuti Henry, the managing directors of Boston Globe Media Partners, also went a long way in restoring that paper.

Across the country, Dr. Patrick Soon-Shiong, the doctor and billionaire who bought the Los Angeles Times in 2018, doesn’t always go smoothly. Few prefer the alternative of owning hedge funds.

“I have no doubt that the Los Angeles Times is in a better place today than if the Tribune had held onto it for the past three years,” said Norman Pearlstine, who two years after Dr. Soon-Shiong buys and still serves as a senior advisor. “I don’t think that’s open to debate or disputes.”

From Utah to Minnesota and from Long Island to the Berkshires, local grandees have decided that a newspaper is an integral part of the civic fabric. Your track records as an owner are somewhat mixed, but mixed is better than the alternative in this case.

Researchers at the University of North Carolina at Chapel Hill published a report last year that found that in the past 15 years more than a quarter of American newspapers have gone missing, leaving behind what they termed “news deserts.” The 2020 report was an update of a similar report from 2018, but just in those two years another 300 newspapers died and took away 6,000 journalistic jobs.

“I don’t think anyone in the news industry has rose-tinted glasses anymore,” said Tom Rosenstiel, executive director of the American Press Institute, a nonprofit journalism advocacy group. “You moved them out a few years ago and you don’t know where they are.”

“The advantage of having a local owner who takes care of the community is that they can theoretically give you a runway and also say, ‘Break even on a cash flow basis and you will be good,” said Rosenstiel.

For example, Glen Taylor, a Minnesota billionaire who owns the Minneapolis Star Tribune, doesn’t shower the newsroom with money, said Michael Klingensmith, the newspaper’s editor and executive director. “The understanding we have with Glen is that if we make money we have to keep it, but he’s not interested in investing more,” he said. “He expects the business to be completely self-sufficient.”

In business today


April 9, 2021, 3:29 p.m. ET

With 240 employees, however, the newsroom is the same size as it was when Mr. Klingensmith arrived in 2010, which relatively few newspapers can present in the same period. The Star Tribune’s goal was to reach 100,000 digital subscribers by the end of last year, and that mark was reached by May. And the newspaper just won a prestigious Polk Award for its coverage of the George Floyd assassination and its aftermath.

“The communities where newspapers are owned by the very wealthy people in general have done much better because they have stayed the course with big newsrooms,” said Ken Doctor, who paused as a media industry analyst to become CEO and Founder of Lookout Local attempting to revitalize the local news business in smaller markets, starting in Santa Cruz, California. Hedge funds, on the other hand, have expected up to 20 percent of annual sales from their properties, which can often only be achieved by removing reporters and editors for short-term profit.

Alden has made profound cuts on many of the MediaNews Group’s publications, including The Denver Post and The San Jose Mercury News. Alden argues that it is about saving papers that might have gone out of business in the past two decades.

And a billionaire buyer is far from a panacea for the ills of the industry. “It’s not just about finding a rich man. It’s the right rich person. There are a lot of people with a lot of money. Many of them shouldn’t be running newspaper companies, ”said Ann Marie Lipinski, curator of the Nieman Foundation for Journalism at Harvard and former editor of The Chicago Tribune. “Sam Zell is exhibit A. So be careful who you ask.”

Mr. Zell, the real estate outsider and billionaire whose nickname is “the grave dancer,” took Tribune Publishing private in a leveraged buyout in 2007. The company filed for bankruptcy the next year. His brief tenure helped kickstart the events that led to the Alden Capital offering.

Other rescuers have come and gone. There was a time when Warren Buffett looked like a potential newspaper saver and invested in it through his Berkshire Hathaway company. Since then, he has struck a retreat from the industry. And there have even been reports that Dr. Soon-Shiong investigated a Los Angeles Times sale (which he denied).

“The great fear of every billionaire is that he will become a millionaire by owning a newspaper,” said Rosenstiel.

Elizabeth Green, co-founder and executive director of Chalkbeat, a nonprofit educational news organization with 30 reporters in eight cities across the country, said saving a dozen subway dailies that are “obviously clams of their former selves” would never be enough on the local Turning news business around.

“Even these attempts still preserve institutions that have always been flawed and not leaned into the new information economy and how we all consume, learn, and pay for things,” said Ms. Green, who also co-founded the American Journalism Project works to create a network of to create non-profit outlets.

Ms. Green is not alone in her belief that the future of American journalism lies in new forms of journalism, often as a nonprofit. The American Journalism Project was funded by Houston philanthropists Laura and John Arnold, Craigslist founders Craig Newmark, and the Emerson Collective by Laurene Powell Jobs, who also bought The Atlantic. Herbert and Marion Sandler, who built one of the largest savings and loans in the country, gave money to start ProPublica.

“We are seeing a huge increase in relatively small nonprofits that are now part of the philanthropic journalistic complex that I would call,” said Mr Doctor. “The question is really not corporate structure, nonprofit or profit, the question is money and time.”

The scion of a wealthy Utah family, Paul Huntsman, bought The Salt Lake Tribune, Utah, from a hedge fund in 2016. The circulation fell by half, advertising revenue fell and he cut off more than a third of journalists. Since then, he has made it the first metropolis to operate as a non-profit organization.

After cable television entrepreneur HF (Gerry) Lenfest bought The Philadelphia Inquirer, they built a hybrid structure. The paper is run as a nonprofit nonprofit organization but is owned by a nonprofit organization called the Lenfest Institute. The complex structure is intended to ensure editorial independence and maximum flexibility in the management of the company, while at the same time promoting philanthropic support.

Of the $ 7 million Lenfest provided to supplement The Inquirer’s revenue from subscribers and advertisers in 2020, only $ 2 million came from the institute, while the remaining $ 5 million came from a wide range national, local, institutional and independent donors came from Jim Friedlich, executive director and general manager of Lenfest.

“I think philosophically we have long accepted that we have no museums or opera houses without philanthropic support,” said Ms. Lipinski. “I think journalism deserves the same consideration.”

Mr. Bainum has announced that it will form a nonprofit group that would buy The Sun and two other Tribune-owned Maryland newspapers if he and Mr. Wyss successfully completed their offerings.

“These buyers are represented across the political spectrum and have little in common on the surface other than their wealth,” said Friedlich. “Everyone seems to feel that American democracy is sailing through troubled waters, and they’ve decided to buy a newspaper instead of a yacht.”

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