This past week a milestone event took place in the world of news media when two powerhouse media companies, GateHouse and Gannett, merged to form the largest newspaper company in the country. Was this a positive thing for the American public along with the readers of the newspapers impacted by the merger? Time will tell.
If the names sound familiar you must be a newspaper reader. GateHouse was one of the buyers of the South Idaho Press and Minidoka County News during a time between 1996 and 2004 when our local newspapers were bought and sold five times. In all, Seaton Publishing, Media General, Gate House Media, Liberty Group Publishing and Lee Enterprises were all owners of our local papers.
Each time a newspaper is sold there is a cost to the new owner. One would hope that the acquiring newspaper company would be in an expansion phase and would have lots of cash on hand to do the buying, but that simply hasn’t been the case. In most scenarios mentioned above, the money to buy the paper was borrowed from investors.
This isn’t necessarily a horrible thing, but it does change the way a newspaper operates. New debt must be paid off, often at higher interest rates because of the added risk. With the GateHouse and Gannett merger the interest rate being charged is something close to nine percent, a rate determined by the level of risk that is involved when a company acquires a new newspaper.
For the South Idaho Press to go from being owned by Seaton Publishing, which carried zero debt, to GateHouse Media, who was leveraged to the max, meant changing the way we ran the paper. The same will be true of the New Gannett, which is what the GateHouse and Gannett merger will be called. Often the money for newspapers comes from private equity firms who aren’t in the newspaper business, they are in the money-making business.
With the goal of trading risk for big profits, private equity firms want to make lots of money, doing so in part by cutting costs. The New Gannett company investors are looking for savings upwards of 30 percent to take out some of the risk they are taking on. It’s their money after all and they have the right to make money even though doing so takes away from the quality of the morning newspaper sitting on your porch.
In case you haven’t noticed, the newspaper industry has been in a steady decline of late. As recently as 2005 the industry was profitable, growing, and was as healthy as it had been in decades. In 2004, my last year at the South Idaho Press, our gross profit margin was just under 33 percent, a return that would please any investor. Returns at newspapers today are in the single digits.
Then came the digital transition where people could check the news on their phones or computers. The relatively slow pace of collecting news by attending a meeting, writing a story, editing a story and then putting that story into a printed edition we call a newspaper and was then delivered by a kid on a bike, is under extreme pressure.
History has been recorded on paper and reproduced over and over ever since Gutenberg invented the printing press in the 15th Century. For centuries the way you found out what was happening in your community was reported in the printed edition of a newspaper. My parents were voracious newspaper readers. They learned what was happening in their community by picking up the evening edition of Logan’s Herald Journal, turning every page until they were satisfied that everything they needed to know had been seen. Merchants placed their advertising in the paper as the best way to let people know what was on sale, what was available and when they could pick it up.
The printed word had a fantastic run that was centuries long, but recently that grand opportunity has been challenged. Media companies that are run primarily by investors will be under the greatest pressure to perform but no media company is exempt. The Weekly Mailer is far from a daily newspaper. The news we print comes largely by way of people in the community sending us their happy news as I like to call it.
Obituaries are some of the most important news stories we print because it becomes a record of someone’s passing. There was once a day when every birth was printed in the newspaper too, but concerns over patient privacy have made that kind of news too hot to handle. There was once a day when every town council meeting was attended by a newspaper reporter and the details of that meeting, though a few days late, were recorded in the city’s local newspaper. Today there are simply too few reporters to cover everything that is happening.
I have a great fear about a future without strong newspapers. When a city council makes a decision in a meeting that doesn’t have a reporter in attendance, how will you know what they are up to? I suppose you could simply let the municipality send the newspaper their version of what happened but that is hardly an independent source. What happens when they simply fail to tell anyone what went on in their meeting? It makes for an uncertain future to be sure.
I want you to think about this simple fact of life. When news events aren’t printed in a newspaper where will you learn about them? Newsprint isn’t a medium that lasts forever but properly stored a newspaper can last several hundred years. If all your news comes to you in a digital format how is it preserved for the future? Properly indexed and archived it could conceivably be stored for millennia, but you can’t save news that was never written. If newspapers aren’t in business to send reporters to a meeting, who collects the facts and writes the story that eventually becomes a digital file? Nobody.
Fast forward a hundred years and you will see a future that knows very little about the past because there weren’t enough people out there gathering the news. What you will have to read is the sterile version of the news the writer wants you to see, which might contain the truth, or it could easily be a fictional version they want you to see. It’s not a future I’m excited about.
The bottom line is simple – support the newspapers you have today so they are in a position to record the news for our posterity. To not do so might be the worst outcome imaginable.