Can Moguls Save Newspapers?

Communities can’t thrive without strong, independent journalism.

When the business model that pays for news fails, we need alternatives. That was the idea behind my 2013 book, The Wired City, which explored new forms of online local journalism, with a focus on the New Haven Independent.

But traditional newspapers still matter, whether in print, online, or both. A good daily paper can reach an audience and command attention more effectively than most other types of media. Newspapers are often seen as dinosaurs lumbering toward extinction, laid low by technological advances, the collapse of advertising revenues, and greedy hedge-fund owners seeking to squeeze out every last drop of profit before discarding them like yesterday’s news. In such an environment, can newspapers be saved?

That’s the question I try to answer in my new book, The Return of the Moguls: How Jeff Bezos and John Henry Are Remaking Newspapers for the Twenty-First Century, published earlier this year by ForeEdge. The outline of the book came together in one weekend in August 2013. On a Friday, we learned that John Henry, a wealthy financier who was the principal owner of the Red Sox, would buy The Boston Globe from the New York Times Company.

The following Monday, Amazon founder and chief executive Jeff Bezos announced that he would purchase The Washington Post from the legendary Graham family. At the same time, a Boston entrepreneur named Aaron Kushner (no relation to President Trump’s son-in-law, Jared Kushner) was winning praise for improvements he was making to the Orange County Register in Southern California.

Here, I thought, were three interesting examples of wealthy, civic-minded owners who just might be able to apply the knowledge they had picked up along the way to reviving the newspaper business. What I didn’t realize until later, though, was that all three had come along at a historical turning point. After two decades of hoping that newspapers would be able to make money by giving away their journalism on the internet and paying for it with advertising, publishers were coming to the realization that free news wasn’t working — and might never work.

What happened?

Take a look at this chart. As you can see, newspaper ad revenues grew from 1950 until 2000, then fell off a cliff. By 2014, newspapers were making less from print advertising in inflation-adjusted dollars than they had in 1950. And digital advertising has barely made a dent. There were three reasons for this.

First, expectations that newspapers would be able to control the lucrative market for classified ads online as they had in print evaporated when Craigslist came along and gave most of them away. You can’t compete with free. Second, display ads failed to make a successful transition to digital; the very ubiquity of the internet drove the price through the floor, and banner ads on websites have never had the same appeal as print. Finally, nearly all new spending on digital ads goes not to newspapers but, rather, to Google and Facebook. Thus newspaper owners find themselves scrambling for ways to persuade their readers to pay for their journalism so they can survive in what is essentially a post-advertising environment. The three moguls I followed each took a different approach.

Aaron Kushner emphasized the print newspaper, improving coverage and even upgrading the quality of the paper used to print the Orange County Register. Unfortunately, his ambitions proved wildly out of sync with reality. He nearly doubled the size of the newsroom he inherited in a matter of months and immediately set about buying and launching additional newspapers. In early 2015, with losses mounting, he was forced out by his investors, and his papers slid into bankruptcy.

John Henry has earned a grade of ​“incomplete” at the Globe. Early on he tried adding new or expanded sections to the print paper covering football, politics, business, features, and the arts, only to scale back most of them. He launched free websites covering specialty topics with mixed success — though Stat, which covers health and life sciences, remains a going concern. Printing and distribution have been problematic.

A new printing plant in the exurbs that opened in the summer of 2017 was plagued with frequent breakdowns and poor quality during its first few months of operation. But Henry has done reasonably well in persuading readers to pay, especially on the digital side. The Globe projects that by the end of June it will have 100,000 digital-only subscribers, who pay an industry-high $30 a month. Globe executives say that if they can double that, the paper may become profitable.

Jeff Bezos’s Washington Post is the one unalloyed success. He did it by taking what had been a large regional newspaper and transforming it into a national digital news organization competing directly with The New York Times and The Wall Street Journal. If you subscribe to one of several hundred regional newspapers across the country, you can get a free digital subscription to the Post. A Post app comes preinstalled on the Kindle Fire, and the Post is available at a steep discount through Amazon Prime. By the end of 2017, the Post reported that it had signed up more than a million paid subscribers and had been profitable for two years in a row.

The Post under Bezos is notoriously secretive about its numbers, so it’s difficult to know exactly how the paper’s executives define ​“profitable.” But there is no question that the Post is growing and establishing itself as a real alternative to the Times in a manner reminiscent of its Katharine Graham-Ben Bradlee heyday in the 1970s and ​’80s.

At the same time that Bezos, Henry, and others — most recently Patrick Soon-Shiong, a billionaire surgeon who’s buying the Los Angeles Times — are trying to revive the newspaper business and restore its civic mission, corporate chain owners are cutting staff and coverage in an attempt to squeeze out every last drop of profit. The most notorious is Digital First Media, the former owner of the New Haven Register, which operates about 100 papers on both coasts (including the Orange County Register) and points in between.

Digital First, controlled by the hedge fund Alden Global Capital, has sparked an insurrection at The Denver Post, which recently published an editorial as well as other commentaries denouncing its corporate overlords as ​“vulture capitalists” and demanding that the company either reverse some of the cuts or sell the paper to someone else. The newspaper analyst Ken Doctor recently revealed that the profit margin at Digital First’s papers is 17 percent — an obscenely high figure that helps explain why Alden Global’s principal, Randall Smith, has been able to load up on $57 million worth of property in Palm Beach, Florida. Greed will not reverse the financial crisis that threatens journalism.

The challenges facing the newspaper business are enormous, and solving them is vital. It’s been estimated that more than 80 percent of the journalism we rely on to hold government and other large institutions to account originates with newspapers. In an era of political and social divisiveness, accusations of ​“fake news,” and a slide toward authoritarianism, we rely on newspapers to provide us with the information we need to live in a democracy. If the new media moguls can show the way forward, they will have performed a tremendous public service for all of us.

Dan Kennedy is an associate professor of journalism at Northeastern University and a nationally known media commentator. His blog, Media Nation, is online at dankennedy.net.