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Newspapers have been in a decline since 2005 but this year marks another leg down. As newspapers close or get cut to the bone, public accountability of local institutions declines. The watchdog role that newspapers play will be lost without models subsidized by philanthropy. 1/
With a hedge fund being the high bidder in the bankruptcy auction of McClatchy Company (publisher of 30 papers including Miami, KC, Sacramento, Charlotte) this week, financial players now control almost 45% of total newspaper circulation. This isn’t going to get better. 2/
Accountability is a public good, which are usually subsidized with govt money. But local, state, or fed govts directly funding its overseer creates a risk on editorial independence. This market failure results in a shortage of oversight and, thus, worse societal outcomes. 3/
Many studies have shown a link between reduced local media coverage and civic engagement, informed voters, voter turnout, corruption, public finance outcomes, corporate misdeeds, and polarization. 4/ https://medium.com/office-of-citizen/how-we-know-journalism-is-good-for-democracy-9125e5c995fb
Economist James Hamilton details the extraordinary public benefits from investigative reporting in his book Democracy Detectives, but also notes that these benefits are positive externalities that don’t have a natural funding source. 5/ https://www.huffpost.com/entry/investigating-investigati_b_12537054
This creates a huge need for philanthropy. While grantmaking has increased dramatically over past decade, much has been from national foundations to orgs with a national focus. The donor base for local and state journalism is less robust, particularly outside of NY, TX, & CA. 6/
Here are a few models that being tried. @propublica has set up efforts in IL & TX to leverage their investigative journalism model, brand and fundraising ability at the state level. While showing much promise, the effort is constrained by donor interest for particular states. 7/
' @propublica also partners with local newsrooms that don’t have the resources for in-depth investigative projects. This leverages the specific knowledge and story ideas that local reporters have with PP’s investigative experience, distribution, and financial resources. 8/
' @TexasTribune is the gold standard for state nonprofit journalism. As the local papers have cut reporters, TT has created the largest statehouse news bureau in the US and makes it’s content available for free to the legacy print newspapers. 9/
' @TexasTribune has developed the most robust revenue model, combining donations, events, website sponsorship, & membership to fund its annual $10 mil budget. With large donations only 50% of its budget, TT has removed the risk of any one contributor getting donor fatigue. 10/
The @JournalismProj, co-founded by Texas Tribune founder John Thornton, was recently launched to help other journalism orgs develop diverse and sustainable revenue streams. The effort is testing whether the model can work in smaller markets like VT, MS, and WV. 11/
The Philadelphia Inquirer is an interesting test of nonprofit ownership of a local newspaper. Gerry Lenfest donated the paper and a $20 million endowment (supplemented by others to $50 million) to a new entity in 2016. It’s the largest newspaper run as a public benefit corp. 12/
But a low 7-figure annual endowment payout & some tax savings don’t negate the fact that the industry is in shambles. The Inquirer had to do buyouts to avoid layoffs last year. The task of running a local daily close to break even is a Herculean task in today’s environment. 13/
The Tampa Bay Times was the first newspaper to be run under nonprofit model. It, too, is suffering from the industry malaise, with ad sales down 50% y/y. It cut print circulation from 7 days to 2, furloughed employees, and started a campaign to seek philanthropic donations. 14/
Jeff Bezos bought WaPo in 2013. While not held in a nonprofit entity, Bezos brought long-term stability, willingness to invest, & helped the transition to digital. The newsroom has grown considerably and has no announced cutbacks this year. 15/
The benevolent billionaire model can work but is risky. Some owners will be completely hands-off the editorial process while others may act to shape the paper around a personal ideology. Editorial independence is more assured in other models. 16/
Philanthropic grants to journalism have quadrupled in past 10 years according to @MediaFunders. That has allowed the creation and scaling of the national orgs. Grantmaking needs to quadruple again in next 10 years, with particular focus on creation and scaling of local orgs. 17/
As philanthropists consider grants in response to Covid, it’s important to remember that local journalism has been severely impacted. The societal benefits it confers are at risk, and likely can only persist as a strong watchdog with philanthropic support. 18/18
