Private equity owners endanger Daily Camera’s future

Editor’s note: An early draft of this editorial was submitted to the Daily Camera editorial board Friday morning, April 13, 2018, for publication on the Camera’s website Saturday, April 14, and in print Sunday, April 15. This is our usual process. Draft editorials are edited, corrected and revised during the day, but the early draft serves as the basis for approval, or not, and recommended revisions by board members. The editorial board consists of the publisher, executive editor and editorial page editor. In this case, the executive editor and editorial page editor supported publication. The publisher did not. On most matters, the editorial board operates democratically, but in this instance, the subject being the business itself, the publisher exercised his veto and killed the editorial. I elected to publish it on a different platform for the reasons stated in the editorial: This is a story about an important, longstanding Boulder institution. As journalists working in that community, we have an obligation to our readers to tell it.

— Dave Krieger, editorial page editor

 

The first-ever Colorado Journalism Week (April 16-22) arrives at a moment both inspiring and dispiriting for American journalism, and newspaper journalism in particular.

Inspiring because, at its highest levels, American journalism has rarely been more energetic. Investigating foreign interference in our last national election and the most unusual presidential administration of our lifetimes, The New York Times, Washington Post and Wall Street Journal are breaking important stories on a daily basis.

Dispiriting because, at many smaller papers, including this one, the journalistic lifeblood of communities large and small is being systematically drained by their owners’ private equity business model. One of the more insidious aspects of this process is that these communities are generally left in the dark about what is happening because the newspaper is the community storyteller. When it fails to tell this important story about itself, it breaks trust with its readers. We have remained quiet about this for too long.

The Daily Camera is 128 years old, counting its first year as a weekly. Much of the city’s history is recorded in its archives. If Boulder had another 128-year-old institution in danger of imminent demise, particularly one exercising an essential democratic freedom enshrined in the Bill of Rights, the Camera would be obliged to cover it. But we have a dilemma on this particular story: the desire of your local journalists to see the Camera survive and thrive versus the desire of our private equity owners to continue draining cash from the business without encountering any more adverse publicity than necessary.

The Denver Post took this debate to a new level of prominence last week by publishing a Sunday opinion section condemning the draconian cuts required by its owner, the New York private equity firm Alden Global Capital. Alden owns a controlling interest in Digital First Media, which owns the Post, the Camera, and more than a dozen other Colorado papers. The Post urged Alden to support its journalism or sell the paper to someone who will. This decision came after yet another round of personnel cuts, leaving the Post newsroom, now located in Adams County, a shadow of its former self.

The trajectory of the Camera’s decline has been more gradual, but over time the effect has been the same. Including our most recent round of layoffs in late 2016, our resources have consistently declined despite our continuing profitability. Recently, we lost our business editor. We do not know when or if we will be able to replace her. Imagine a daily paper without a business editor trying to cover a town that considers itself the high-tech and startup capital of Colorado.

Part of this loss of resources can be explained by the well-known impact of the internet on newspapers’ business model. With so many advertising dollars moving to the web through behemoths like Google and Facebook, all newspapers face new business challenges. But this secular problem should not obscure the predatory behavior of private equity investors.

“Between 2012 and 2016, according to the Bureau of Labor Statistics, all newspapers lost 24 percent of their workforces,” the American Prospect reported recently. “But at a sample of 12 papers owned by DFM, the layoff rate was more than half, according to a tabulation collected by journalists who worked for DFM papers.”

A lab experiment illustrating this point is occurring in the Twin Cities of Minnesota, which once had two robust metropolitan papers in the Minneapolis Star Tribune and St. Paul Pioneer Press. One, the Star Tribune, was bought by a local billionaire, Minnesota Timberwolves owner Glen Taylor. The other, the Pioneer Press, is owned by Alden. The Star Tribune is thriving, with an estimated 250 journalists in the newsroom, thanks to Taylor’s belief in supporting community journalism. The Pioneer Press has suffered draconian cuts similar to those in Denver and can no longer hold a candle to its former competitor in Minneapolis.

Journalism is not just any business. It is part of our democratic infrastructure. A minority shareholder in Digital First Media recently filed a lawsuit claiming Alden has drained tens of millions of dollars from its newspapers in order to make dubious, unrelated investments. In a court filing in response to the suit, Alden essentially admitted as much. The Nation reported that Alden principal Randall D. Smith bought up 16 mansions in and around Palm Beach, Fla., for $57.2 million. As always, Alden declines comment. It does not appear to harbor any sense of corporate responsibility or accountability.

“There is no long-term strategy other than milking and continuing to cut,” newspaper analyst Ken Doctor told investigative reporter Julie Reynolds. “Their view is that in 2021, they’ll deal with that then. Whatever remnants are there, they’ll try to find a buyer.”

Doctor also helped to answer a question we are hearing from our subscribers: How can we hope to survive by simultaneously shrinking our product and increasing our prices?

“They keep ratcheting up the price for the die-hard subscribers,” Doctor said. “Everybody talks about the demise of the (local) paper. But Alden has been able to track it, and there’s a lag time. It takes people a while to cancel. As people drop the paper, in the meantime they’re maintaining or growing their profits.”

Whether a particular form of capitalism should be permitted to destroy local First Amendment institutions serving millions of Americans is now a national conversation, thanks to the Post. Reaction to its plea was swift. The Nation wrote about it. So did Esquire. The New York Times put it on the front page. The Washington Post published an in-depth piece Friday under the headline, “As a secretive hedge fund guts its newspapers, journalists are fighting back.”

Taking a cue from the Denver Post, even Alden-owned publications are daring to speak up. “In an extraordinary editorial, (the Post) bravely implored their owners — the same investors who own our news organization — to support local journalism or sell the properties to someone who will,” wrote Neil Chase, executive editor of the Mercury News of San Jose. “The union that represents our employees has been saying the same thing for months.”

The Camera takes pride in serving as our community’s public square for discussion and debate of many local issues. To refuse to acknowledge this one would be tantamount to declaring that the Camera’s loyalties lie with its corporate overlords and not the community it serves. If we do not host this conversation, other platforms surely will.

So, as we observe this first Colorado Journalism Week, we believe it is part of our obligation to our readers to let them know as honestly as we can of the existential threat to this 128-year-old Boulder institution. Without a new owner, or intervention of some other kind we haven’t imagined, Boulder, like Denver and many other communities in Colorado and elsewhere, is in imminent danger of losing its daily newspaper once it has been bled dry.

A happier outcome is still possible. Alden has sold certain properties, including the Salt Lake Tribune and Berkshire (Mass.) Eagle, to local investors willing to support these institutions. Groups of potential investors are now discussing possible bids for the Post. We would like to see similar activity in Boulder before it’s too late.

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