EPISODE 26: Taking the Corporate Profits Out of Your News

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Show Notes

Hedge funds have quietly bought up local newspapers across the country. A movement of nonprofit newsrooms is countering corporate news. 

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Transcript


Straw media. This is Lucas greenly
from next city, a show about change

makers and their stories. Truth is, there are solutions to the problems of

pressing people in cities. If you're
listening, I hope it's because you want

to spread good ideas from one city
to the next city. With all that's

happening in the world. You might
have missed a hearing earlier this year from

the Senate Judiciary Subcommittee on competition policy. Here's the committee's chair, Senator Amy

Klobash are, kicking off the hearing
by talking about her dad. He was

proud to be a newspaper man and, as you can imagine, in my

house growing up, it was impossible
to forget the importance of a free press.

And that is what we are here
to talk about today, to talk

about the critical work news outlets around
the country are doing and explore solutions to

some of the existential challenges facing journalism. Existential challenges meaning we're talking about the

very existence of local news in the
senator is about to rattle off a bunch

of statistics that, if you listen
carefully, are truly shocking. Local news

is facing a crisis in the US
since two thousand and five. About two

thousand two hundred local newspapers across America
have closed, and any of the ones

that remain are on life support.
Between two thousand and eight and two thousand

and nineteen, newsroom employment fell by
fifty one percent, with much smaller newsrooms.

Surviving outlets are often mere shelves of
their former selves. I was thinking

about that really troubling photo from the
Denver Post where the journalists say, show

a picture of everyone happily smiling and
then a few years later they show the

hollowed out images, a silhouettes of
the journalists who are no longer. They

are less than half of them left. I don't know whether you caught that.

She said newsroom employment fell by fifty
one percent. Imagine what it means

if suddenly half the people you work
with were gone. Imagine the employees at

any business just vanished. But also
imagine there's not half as much work to

be done. That dynamic, that's
journalism. Most people assume everything's fine at

their local news outlet, but most
people don't know that hedge funds have started

buying up newspapers, selling off their
buildings and cutting staff. Also, hedge

fund owners can pay themselves with the
profits. So why are we talking about

this? At next city, later
in the show, we're going to talk

with one leader whose job it is
to spread a solution, a nonprofit alternative

for news. BUT FIRST WE'LL HEAD
TO MEMPHIS, Tennessee, where we meet

Wendy Thomas. She is a journalist
in the founder of a local nonprofit news

site called mlk fifty. Her site
was needed because the business model for local

news leaves out lots of people.
So your idea once upon a time was

for a free news product in a
low wealth community and you had a professor,

I guess, who told you that
was, quote unquote, not viable.

So not viable, those words words. How did that turn out and

what was he getting at? So
this was the professor of a class on

Social Entrepreneurship at Harvard University, or
you go and you come up with these,

you know, social minded ideas,
whether it's nonprofitable business, and so

they wanted to see, like,
what the revenue model was for that.

And so in that sense I get
that he I get why he didn't think

it was viable. Right, like, how are you going to pay for

a product when the end users don't
have the money to support that business.

And so, you know, I
get that. I get that he ended

up being, you know, remarkably
wrong, but but I understand where he

was coming from and kind of laugh
about it now. And he was wrong

because you started in looka fifty and
five years later, it's still going.

There's lots of money out there.
You just have to find the people who

have it and get them to direct
it to what you're doing. And so

we've relied heavily on national foundations to
support the work. Implicit in the professor's

concern is that the way for profit
newsworks is it's designed not to serve people

in the wealth communities. Like it's
designed to attract readers who are interesting to

advertisers and readers who can pay for
subscriptions. Does that sound right? Like

the for profit business model for news
does not serve people who do not have

money. It's not built to serve
people. And let's be clear, that's

generally it's serving white people. Yeah, yeah, white people, affluent people,

college graduates, and that's I mean, if it ends up serving other

people, it's kind of by accident, you know what I mean? It's

not, but that wasn't the intense
the attend is to make money. Now,

that said, I think a lot
of the journalists at for profit publications

want to be serving the public right, but that's not the business model.

But with nonprofit news that's completely different, or you know, in theory is

supposed to be completely different. And
you know, most nonprofit newsrooms make their

content completely free to consumers because they
don't want them to be that barrier.

Information should be free, and so
mlka Fifty, like most nonprofit newsrooms,

no pay wall ry, which you
want, and it's free for other newsrooms

to publish if they want, even
for profit newsrooms. So you know,

for decades, maybe centuries, you
know, daily newspapers is just where I

got my start, or making money
hand over fist. I mean it was

just obscene. I think the journalists
motives were the same then. You know,

they wanted to write wrongs and whole
powerful people accountable and amplify the voices

of people whose voices are muted.
And I think that's the dynamics in newspapers

and media's have gotten such that,
you know that these are a lot of

companies that are just seeing them as
targets to be chewed up and distill to

scraps. I mean that's what we're
saying with the hedge funds just, you

know, raping loose outlets. It's
really abusive. It feels violent. What's

what's happening to daily newspapers in under
the radar. I don't feel like people

who read the newspapers have an idea. No, I don't think. I

think they may notice the change in
the product, right so they noticed when

the size of the paper gets smaller
or it's thinner, or the fewer stories

or they see more typos. I
hear a lot of people complaining about Typos

and the paper and I'm like,
well, you know, they got rid

of all of the copied is.
No, like those gotty that don't even

exist anymore most newspapers. But I
don't think they have any idea of how

the financial model has been dismantled.
You might be wondering how many newspapers are

owned by Hedge Funds. A team
of finance professors tried to figure that out.

Their report, titled Local Journalism Under
Private Equity Ownership, found that the

share of newspapers owned by Private Equity
Funds increased from five percent in two thousand

and two to twenty three percent in
two thousand and nineteen. That's already a

huge increase in just seventeen years right. But it gets much worse from there.

An analysis by the Financial Times found
that by the start of two thousand

and twenty one, more than half
of us daily newspapers were owned by hedge

funds, and they're trying to buy
even more. Later in the show will

hear more from Wendy Thomas about what
mlk fifty is doing in Memphis, but

first we need to understand what research
shows is happening in cities when newspaper owners

put profits above all else, and
we need to learn more about one solution,

making newsrooms nonprofit. After the break
will hear from Sue Cross. She

is the Executive Director for the Institute
for Nonprofit News, which prioritizes public service

over corporate profits. Welcome back to
next city. Before the break, we

heard how communities of color are failed
when owners of local news businesses value profits

above all else. But it's really
our entire country that is being failed,

our entire democracy. Joining us now
is one person whose job it is to

help reinvigorate local news, Sue Cross, the Executive Director of the Institute for

Nonprofit News. So one thing people
might not be aware of that's happening simultaneously

across the country is that, yes, some local newsrooms are disappearing, others

are just shrinking as more and more
newspapers are bought by hedge funds. So,

for folks who don't know what a
hedge fund is, why would a

hedge fund have any interest in buying
local newspapers? And what does it look

like if you're a reader after that
happens? Yeah, there's there's a dramatic

impact actually. So hedge funds or
investment houses that typically go out and one

category of investment at the very active
inness what's called distressed companies. So news

organizations. The decline of local news, and the reason your local newspaper has

gotten skinnier and skin here and skinny
heer, is because of global shifts in

advertising. The advertising revenues for newspapers
in particular have plummeted. And then income

hedge funds, which by these investments
that don't look that great, and then

they pull resources out. They typically
in a news operation the expensive resources are

the reporters to go out there and
collect the information, the journalists and so

they will cut and cut and cut. They continue to pull profits out of

a community. So they're very extractive. They're not committing to the coverage of

the community and creating news as a
community asset, but rather's simply pulling profits

out, and that can be very, very harmful. If you're in a

town where this has happened, studies
have shown you see an immediate it drop

in the amount of recording. So
the newspaper may still be there, but

it's reporting lesson last or it's filling
out with national wire copy that isn't local

news. As hetche funds cut reporters, newspapers that were filled with local stories

are replacing those with less expensive syndicated
national news stories. Suddenly local politics is

mixed up with national politics and everything
feels like it's been politicized. Misinformation spreads

and it's no coincidence that Americans are
becoming more divided. One study in two

thousand and nineteen by researchers from Texas
A and M Colorado State and Louisiana State

universities found that when a community loses
its newspaper, Party line voting increased by

two percentage points. Maybe that seems
small, but I can think of quite

a few races decided by less.
One solution to all of this a wave

of nonprofit newsrooms. They're even getting
the attention of former President Obama. Here

he is in a speech on ways
to strengthen democracy earlier this year at Stanford

University. Part of this project is
also going to require us finding creative ways

to reinvigorate quality journalism, including local
journalism, because one of the challenges we

have, part of the reason that
you've seen increase polar relation is all media

has become nationalist and hence more ideological, and one encouraging trend has been a

number of nonprofit newsrooms beginning this pop
up in places like Baltimore, Houston my

hometown of Chicago, all aimed at
providing a central coverage of what's happening locally

and in state houses. That's an
example of how new models of journalism are

possible, along with smart ways for
communities to reinvigorate local news. So it's

pretty cool. Recently President Obama gave
a shoutout to nonprofit news. He said

that he was pleased to see them
spreading across the country, and I know

when you started Ann in two thousand
and fifteen. It was described as a

little over a hundred nonprofit newsrooms.
How many are there now? How is

it spreading? We're just about to
hit four hundred news rooms across the country.

About forty percent of those are local. So what you've seen is this

evolution of the whole field, which
started about thirteen years ago with twenty seven

organizations in as best we can tell
those far about it at the time,

there might have been a handful of
others, but they were all investigative,

because has a very endangered part of
journalism. But it's sense has spread as

communities have lost their news. Why
would a nonprofit newsroom be the solution to

that problem, that newsrooms are disappearing? Why not just more for a profit

ones? It's a really good question
and I should think there are some for

profit startups out there, small,
mostly independent, but they really differ.

We see distinct things with nonprofits that
particularly speak to community needs. First of

all, nonprofits start by by just
how they're organized across the United States by

the IRS and federal guidelines. They're
formed to serve the public and they have

to be rooted in the community's needs
to even get off the ground. And

so it's that deep rootedness in the
community that makes them very important as solutions,

and by solutions in that I mean
they're providing information, of course,

and they're verifying information. They're fact
based. So they're out there. At

a time when there's so much rumor
Inuendoh, you opinion, you have it

all over social media, these newsrooms
are going out and checking and finding the

facts and then bringing it to the
public. I wonder, with the loss

of newsrooms that you're referencing, how
much of what you see that's going wrong

in the world, just broadly speaking, is connected to a loss of those

local news sources? I think there's
no way to know for sure, but

we sure see signs that it is
having an impact. Where where you have

local news lost, you will see
organizations come into that vacuum that often they

are politically funded or their anonymously funded
and they may have a political angle or

they may just be sewing dissension rather
than connection, and we are seeing that

around the country. That two institute
at Columbia has tracked. I believe it's

more than one hundred of them,
and there's probably far more than that now

that are these kind of nebulous,
hazy organizations that seem to be promoting an

agenda other than just public knowledge and
information. So we think that's an issue.

And also when people lose a steady
source of news that they've come to

trust and rely on, they're more
prone to not knowing what to believe and

just seeing things on social media,
sharing it, perhaps without knowing whether it's

true or not. You know,
the study of local news and it's disappearance

and these new models is very,
very early, because the whole field is

just over ten years old. But
we are starting to see research now that

points out the impact of having this
kind of news coverage or not having it.

Communities that have strong local news coverage
tend to have more people voting,

more people running for office. Studies
have found they have lower levels of debt,

they don't go out and issue bonds. Is is aggressively and so forth.

And a new study that came out
that's not pure reviewed yet, has

specifically found that where there are nonprofit
newsrooms, they looked at members of the

Institute for Nonprofit News. Is Their
control measure. Where those news rooms exist,

there is more prosecution of public corruption. So actually the legal system changes

and it's a little more aggressive in
protecting the interests of citizens and all the

people who live there. That's the
thing that worries me most about the loss

of local news is that when you
start losing so many reporters, it's the

stories that never get done. and
to me, when I hear that stat

it's that well, now we have
reporters on the beat who are, you

know, taking on the duties of
the fourth estate and holding people accountable,

and that's otherwise not happening. Is
what it sounds like to me. That's

correct. If you look at the
nonprofit news rooms will they started small and

many of them are individually small,
as are many weekly newspapers or small dailies

for that matter. But collectively these
nonprofit news rooms across the United States are

now produced, saying, more than
four hundred thousand unique reports a year.

It's about one hundred a day,
one thousand one hundred. That is news

that simply otherwise would not get told. Those are stories that wouldn't come out,

no one would know about if not
for these sounprofit newsrooms. After the

break we will talk again with Wendy
Thomas from mlk fifty about a story that

might have gone untold in Memphis and
how that local reporting changed one woman's life

forever. Welcome back to next city. Before the break, we heard how

nonprofit newsrooms are repairing gaps and information
for cities. That can have far reaching

implications. Study show more candidates run
for office, higher rates of voting,

and nonprofit newsrooms are designed to watch
out for all their readers, not just

the high income readers that advertisers want
or who can afford to buy subscriptions.

But it's easy to get lost in
all the studies, in the research.

It's really about the stories. Here
again is Wendy Thomas, the founder of

mlk Fifty in Memphis. Can you
share with us what you described as one

of your proudest moments as a journalist
was you were investigating the debt collection practices

of a healthcare system? Out of
that playout? Yeah, so this is

a investigation I did in connection with
Pro Publica looking at the debt collection practices

of the largest nonprofit, speaking nonprofits, nonprofit hospital system here in Memphis that

was dragging thousands of people into court
for hospital bills these people couldn't afford to

pay, and so, month after
month, for months, I went and

set in car court and watched these
defendants faced off with the hospital's lawyers,

you know, having to bear the
most intimate details of their financial challenges and

open court in front of unsympathetic judge. So we wrote these stories. Or

One note about the issue that really
shocked readers was that the hospital was also

suing its own employees. So people
that they knew they weren't paying a living

ways, they were also dragging them
into court. And so you would see

in court people wearing methodist uniforms being
sued by their employer. was really incredible.

So after the story ran, the
investigation ran, the hospital announced sweeping

reforms and it's charity care policies.
They change the threshold at which the income

threshold of which they'd sue somebody.
So now most people in the area won't

ever be sued because they don't make
enough. They raise the pay of their

lowest paid workers to least fifteen hour
and they ended up a racing nearly twelve

million dollars worth of medical debt for
more than fifty three hundred defendants. And

so one of the defendants was Miss
Marilyn, Miss Maryland. I still stay

in touch and when the notice was
filed with the court that her dead had

been raised, I wouldn't got a
copy of it and I picked her up

from work. Was Maryland, done
drive. And so a lot of times

when we be interviewing and she'd be
like, Hey, don't have right on

work it. Take me out to
work. Sure, take a hope work.

She want to go to zax beast. She really likes xpies. So

I take her to xpis and so
we're sitting in the parking lot, exact

spees and I give her this paper
and I'm like no, you're dad is

gone, and she was completely incredulous
and then she was overjoyed and then she

started crying and like I'll remember that
moment until I go to my great like

that's why we do this work.
That's why I do this work, to

be able to make a measurable,
tangible difference in the lives of vulnerable people

in the city I call home.
Yet that was a good day when you

were imagining ema a fifty back in
that Harvard class. Is this kind of

the type of work you imagine doing
now? That point, this far exceeds

anything I could have dreamed, which
is one of my informations, though,

is that like that my dreams are
small and that things will exceed my wildest

imagination. Like that's one of my
informations, and so doing that work with

republic and that investigation definitely seeded my
wildest imagination and being able to have that

kind of impact on like very good
of folk. Any other affirmations you could

share with people who want to start
their own nonprofit news outlet there, thinking

they might want to? Yeah,
so I don't think I want to be

clear. That doesn't like this can
be done by affirmation, because I had

a lot of luck and there was
a lot of hard work and a lot

of lucky breaks. But for someone
who has struggle with depression, I have

found it helpful for me to interrupt
that negative self talk that can go on

in my head with affirmation. So
that's why it works for me. But

in my office, on my walls
it looks like that scene in a beautiful

mind with like all these notes written
all over the wall. So one of

them over here says we can do
this and we will own your ambition.

Is another one on the wall.
Train your mind to see the good in

every situation. All this is one
I have to get a hot the temptation

to quit will be great as just
before you are about to succeed. So

I remember that on the days when
things aren't going well and I'm just in

tears and I'm like, I don't
know if this is going to come together.

And here's another one. If you
haven't felt like quitting, your dreams

aren't big enough. And so I
did use those things to kind of motivate

myself on the days when running a
news organization gets challenging, which I'm sure

you can identify with, because it's
it's a lot of work. Oh,

I do. Yeah, it's a
lot of work. So where do people

go to support you in a monkey
fifty? Oh yeah, so they can

go to Amaka Fiftycom and on our
website or if you're looking on some mobile,

there's a red button at the top. So if donate, we welcome

all donations. But even aside from
that, you know, read our stories,

share our stories on social media,
sign up for our newsletter, follow

us on social media, you know, become engaged. That is valuable to

us too, and I know not
everyone always has the financial mean to support

but there's lots of ways to support
this work. That we're doing in Memphis.

We hope you enjoyed this episode of
next city, a show about change

makers and their stories. Together we
can spread good ideas from one city to

the next city. Thank you for
listening this week. Thank you to our

guest Wendy Thomas from mlk fifty.
Next city is proud to republish a number

of mlk fifty stories at next city
dot Org, and thanks to our guest

Sue Cross from the Institute for Nonprofit
News. By the way, next city

is also a news organization with a
nonprofit model. We are one of those

members of the Institute for Nonprofit News
and this is our eighteen year of producing

journalism that centers public service over profits. If you like what we're doing here,

please consider pitching in to support our
work. visit next city dot org

slash membership to make a donation.
Our audio producer is Silvana Alcala. Our

executive producers are Tyler Nielsen and Ryan
till it's M We'd love to hear any

feedback from our listeners. Please feel
free to email us at Info at next

city dot Org and, if you
have an already, subscribe to the show

on Apple, spotify or anywhere you
listen to your podcasts.
Next City
Join Lucas Grindley, executive director at Next City, where we believe journalists have the power to amplify solutions and spread workable ideas. Each week Lucas will... View More

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