Moody's Downgrades GateHouse, Bankruptcy Is Possible--Is there any future left for local newspapers?

Pulaski County Daily News ^ | 10/13/2009 | Darrell Todd Maurina

[darrellmaurina]

Sometimes a news story is so bad and filled with such dark clouds that there's no way to find much of a silver lining. That's the case with GateHouse Media, owner of many small-market newspapers in the United States. The staff of Editor & Publisher, one of the two main trade publications in journalism, write this about GateHouse Media: "The Street stopped believing the GateHouse Media story long ago, forcing it into the Pink Sheets as a penny stock. Now comes Moody’s Investors Service declaring Thursday its “over-leveraged capital structure to be unsustainable.” This is based on the decision by Moody's to tell investors that the company is likely headed for bankruptcy. It's easy to blame liberal bias -- anyone who knows me knows I have usually been the most conservative man in the newsrooms where I've worked. There are reasons why the major national networks and national newspapers are struggling, but FOX News, the Washington Times, the Wall Street Journal, and similar right-of-center news operations are doing fairly well. The root of the problem, however, is not debt or bias, but the role of the Internet in delivering news. Why pay for something that comes a day late at best when you can get the news online for free and immediately after it's written? Print media is rapidly becoming much like blacksmiths making horseshoes when the automobile was in the early stages of becoming a mass-market item.

[Proud_USA_Republican]

Moody’s should downgrade itself for the damage they did to the US economy. They collected commissions to slap bogus ratings on all the trillions in fixed securities they graded AAA, when they were nothing but toxic waste.
Their opinion isn’t worth a bucket of spit on anything.

[cowtowney]

we will soon get our news on ereaders. The local newspapers will only survive if they concentrate on producing local news, sports, obituaries, etc. In order to survive they will have to cut costs rapidly, which they are reluctant to do. They had a monopoly on news, which is gone. Technology always replaces these monopolies and the aftermath is ugly.

National news, classifieds, etc can be produced cheaply/free on the web

[Halfmanhalfamazing]

The question is asked in your article:

————The root of the problem, however, is not debt or bias, but the role of the Internet in delivering news. Why pay for something that comes a day late at best when you can get the news online for free and immediately after it’s written?-—————

http://www.freerepublic.com/focus/f-news/2191974/posts

The answer: (which comes in the form of another question:

==========For years, publishers and editors have asked the wrong question: Will people pay to access my newspaper content on the Web? The right question is: What kind of journalism can my staff produce that is different and valuable enough that people will pay for it online?========

Bias plays a much bigger role here than this writer wishes to acknowledge.

Local papers are in a totally unique position to where they often times have a monopoly on the news in their area. So even if it’s a day late, they still hold the key.

And because their bias is such, people still don’t want to hear it.

[FreePaul]

...I have usually been the most conservative man in the newsrooms where I've worked.

I don't know anything about the author but this statement may tell more than he means to tell.

[SamAdams76]

The local newspaper (Gatehouse) in my hometown is next to useless. The front page is usually some insipid puff piece about some new restaurant in the area and there is hardly any content of note inside of it. The police blotter is the most exciting part about it (usually cat up a tree in my neck of the woods).

A week or two back, the newspaper was pink. Some PC crap about homosexual marriage or breast cancer or something. Pretty lame.

The Wall Street Journal is the only newspaper left that I would actually pay money for.

[Berlin_Freeper]

Is there any future left for local newspapers?

You are still going to need something to put on the bottom of your birdcage.

[thulldud]

You are still going to need something to put on the bottom of your birdcage.

Well, if they put the One's face on the currency that replaces the dollar, you could use those.

[darrellmaurina]

I actually agree with much of what my critics here are writing, and have said similar things in the past with regard to the national media and the large metropolitan media.

And for the benefit of people who are wondering about my own politics, I was knocking on doors for Ronald Reagan all the way back in 1980 and was supervising campaign workers in six precincts a few years later for the Republican Party. I’m a lifelong Republican, and I’m no RINO — I was a Reagan supporter back when the Republican establishment considered him a dangerous man whose nomination would cost the Republicans their best chance to defeat Jimmy Carter.

The questions several people here have raised are part of the problem of posting an opinion piece written for a local audience on a nationally-read board like Free Republic. I decided the subject matter of my article was of broad enough interest that it was worth posting here, but in a different context, I’d agree completely with several of the people posting that bias plays a much bigger role in the collapse of the “mainstream” news media than most reporters want to admit. I’ve been saying for more than twenty years — actually closer to 25 years, dating back to my college journalism classes — that newspapers cannot survive if they continue to be totally out of synch with their readers’ political and social views.

However, even the conservative newspapers are having problems. It’s not just a problem of liberal bias, and especially at the level of rural midwestern American newspapers (since my subject was GateHouse Media, that’s important — except for the recently-acquired New England division, most of GateHouse’s newspapers are small midwestern papers) liberal bias isn’t anywhere near as big of a problem as it is in major cities. The problem is affecting newspapers as a whole, and hurting even conservative newspapers.

We have at least five separate and largely unrelated problems that have come together in a “perfect storm” to wreck the news media. Those include:

1. Massive debt has been taken on in recent years by most of the major newspaper companies because they decided the only way to survive was to acquire as many newspapers as possible to provide an economy of scale. There are some things which can be done much more cheaply by one group of 50 or 100 newspapers than by any of them individually, and newspaper owners in the last couple of decades made a deliberate decision that the cost of debt service was not only worth the expense but was an unavoidable expense.

2. The economic downturn has cut profits at the same time that uncontrollable expenses have shot skyward, and newspapers with large debt service loads are faced with only one option: cutting back on the news content that is their only “hook” to attract readers.

3. The trend toward corporate newspaper ownership and away from local newspaper ownership has made the pre-existing problem of “nomad journalism” even worse than it already was. Reporters today move so frequently in their efforts to be promoted to larger newspapers that they often never learn what is really happening in the towns where they live. The result is a poor-quality product that provides little value to paying readers who, all too often, know the community quite a bit better than the reporter who is supposed to be telling them what happened. A contributing factor is that if a young reporters’ goal is to write for a large liberal metropolitan newspaper, he’s going to start out in small town America where his views don’t match community at all, and will try to leave at his earliest opportunity.

4. Both technological changes and our public education system are progressively “dumbing down” American society and turning Americans from a literate culture to a visual culture. That benefits television and radio at the expense of newspapers, but it also means the declining number of people willing to read serious journalism are turning to the internet which can deliver lots of content at the same speed as television. Many newspapers are killing themselves by responding to this trend by running short articles that provide no better content than somebody could get off their television set for free, but even those newspapers which are still providing solid meat to their paying readers are struggling with trying to find a way to get people to buy a newspaper when they can get the content for free off the newspaper’s internet website.

5. The media as a whole has moved so far to the political and social left that most people in the working press, even conservative reporters like me, get hurt. Fifty years ago, people understood that there were conservative newspapers and liberal newspapers, and people picked their preference. Today, far too many conservatives have forgotten that the First Amendment was not written by the ACLU but rather by the Founding Fathers who believed a free press was essential to preserve constitutional government. Because it has been at least two full generations since most people have had a conservative media ooption in their local city, lots of people who love FOX News at the national level for its coverage of national issues have forgotten what a conservative local newspaper looks like and don’t understand what a great benefit a local conservative reporter could be at their city council and school board meetings, ferreting out efforts by elected officials to raise taxes, seize private property, abuse citizens, or do other things that frequently pass under the radar today because the local reporter either doesn’t care or is too new in town to understand what’s happening, or perhaps doesn’t even show up at meetings anymore because of cutbacks.

Most of these five problems are not directly related to each other, but they’re combining to destroy newspapers all across America.

There are places where liberal newspapers should be doing very well — San Francisco, for example. But they aren’t, and that city could end up being the first major metro American city that no longer has a daily newspaper. Why? Technology is the issue: people don’t see a need to get their news a day late and pay for the privilege when they can get it for free off the internet. And likewise, conservative newspapers in conservative communities are having problems, due in large measure to technological changes in the way people get their news.

I do, however, see one major good thing that’s coming out of this. Since at least the end of World War II and probably since the 1920s, it has been prohibitively expensive to start up a newspaper in all but the most unusual situations. It took the money of Sun Myung Moon and Rupert Murdoch to start the Washington Times and FOX News, and those people aren’t very common. The result of the incredibly high “buy-in” cost to purchase or start a print newspaper, television station or cable news operation has been that most of our cities are one-newspaper towns and the FCC’s rules have pretty much prevented the development of conservative local television stations.

Today, with the tremendously lower costs to run an online newspaper operation, it is at least conceivable that we could see news media startups from a conservative perspective in many of our American cities. I’m trying very hard to do that outside Fort Leonard Wood in central Missouri, against very difficult odds in the current economy. And like all clear-headed start-up businessmen, I know full well that most new businesses fail.

Long-term, regardless of my own personal success or failure, I believe the rise of the internet could provide the best chance in at least half a century for local conservative news media to provide at the local level what FOX is doing nationally.

I hope that clarifies what I believe for a Free Republic audience.

[conservatism_IS_compassion]

Ping.

[abb]

All the frustrated letter-to-the-editor writers (and I’m one of them along with just about every FReeper here) can now blog. I started one four months ago. We can go the City Council/School Board/County Commission meetings and quite well take the place of local newspapers. And we don’t have to worry about advertisers keeping us from writing the story about the Mayor’s nephew who owns a construction company getting all the good contracts with the city.

See this story in Newsweek about how this is likely to play out.

http://www.newsweek.com/id/216703
Bloggers across the country are obsessively chronicling small-town life.

One other thing to keep in mind - newspapers, radio, television and magazines were never more than information distribution systems. They never “made” news - they just told about it. That function is now being taken over by the internet, just as the telephone supplanted the telegraph.

[conservatism_IS_compassion]

An interesting article, and especially an interesting reply at #9 with its "clarifi[cation of] what I believe for a Free Republic audience." I'm pointing it out to some folks who might be interested.

You note that there are hardly any conservative papers left, but indicate that there were some fifty years ago. I'm old enough to remember not just Ronald Reagan but Senator Joseph McCarthy, and IMHO there wasn't really any conservative journalism even in the 1950s, when I was in my teens. I stipulate that there were conservative editorial pages - as the Wall Street Journal has a conservative editorial page today - but IMHO "straight news" is anticonservative, inherently.

Today, far too many conservatives have forgotten that the First Amendment was not written by the ACLU but rather by the Founding Fathers who believed a free press was essential to preserve constitutional government.

I agree with you, but not precisely. If you wanted to trouble to follow the link to this article and its hundreds and hundreds of replies, you would see me struggling to get my arms around the issue of "bias in the media." Coming at it from a libertarian perspective, and not looking for a conspiracy by trying to understand why journalism had the bias that it so transparently (once one looks the facts in the eye) did, and does, have.

But, to my surprise, I find myself having produced something very like a "conspiracy theory." I have found a villain. You note that

most of the major newspaper companies . . . decided the only way to survive was . . . to provide an economy of scale. There are some things which can be done much more cheaply by one group of 50 or 100 newspapers than by any of them individually, and newspaper owners in the last couple of decades made a deliberate decision that the cost of debt service was not only worth the expense but was an unavoidable expense

. . . and that is my villain. But it didn't happen yesterday, it started in the middle of the Nineteenth Century. Prior to that time newspapers were pretty open about their politics, and famously fractious in their independence. But those early newspapers generally weren't dailies; most of them were weeklies and there were newspapers which had no fixed deadline and just went to press when the printer was good and ready. That was the milieu of the newspaper business in the founding era when the First Amendment was written and ratified.

Then lightning struck. It is known as "the telegraph." Suddenly the newspapers which had operated on a business model which was more about selling the perspective of the printer were in a position to print information to which the general public could not be privy until the local newspaper committed the story from the AP newswire to print and started selling the newspaper. In a (historical) instant, the business changed from printing the opinion of the printer to printing stories from the newswire, with the "editorial page" thrown in for the printers opinions. There was no hiding the concentration of propaganda power which the AP entailed, and challenges were made on that basis. Those challenges were fended off by noting that the AP member newspapers notoriously didn't agree on much of anything, and claiming that therefore the AP itself was objective.

That sounded logical, sort of, and people bought it because the alternative was to hinder the ability of the public to get news reports in days which historically had taken weeks to arrive from distant places. But in reality the AP was a blender which homogenized newspapers even while the editorial pages retained their independence. De facto, the "fractiously independent" newspapers became mere fronts for the AP. You see that in the absolute refusal of any journalist to question the "objectivity" of any other journalist - precisely the mechanism Dan Rather and CBS counted on to initially sell and, once the cover was blown by FR and later by bloggers, to stonewall the obvious political motivation of, the "Texas Air National Guard Memo" hoax.

"People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices." - Adam Smith

Smith goes on to say that on that account it was a bad thing for tradesmen to assemble together, and that although it could not be entirely prevented in a free country, the government should certainly do nothing to promote it. Certainly Smith was right - and certainly that problem is even more difficult when the "tradesmen" in question are dealing not with things but with information and ideas. But that does not change the fact that we-the-people need, not "a free press," but free and independent presses. The singular "the press" we have presumes to wear the name "the press" as a title of nobility which it presumes entitles it to prerogatives not available to the people generally.

Newspaper sale$ decline should be blamed on the journos
By Jack Kelly:

People who work at journalism full time ought to be able to do a better job of it than people for whom it is a hobby. But that's not going to happen as long as we "professional" journalists ignore stories we don't like and try to hide our mistakes. We think of ourselves as "gatekeepers." But there is not much future in being a gatekeeper when the walls are down.

With the internet in being, the "walls" of communication delay between distant places are obliterated. The AP as a homogenizing influence on American journalism no longer has a justifying rationale. According to this interesting web site put up by a college teacher, the AP was found to be in violation of the Sherman Antitrust Act 'way back in 1945; today IMHO it should be sued into oblivion.

Further elucidation of my perspective here.

[rwfromkansas]

I work for a Freedom paper, and we are struggling a great deal as well despite being fairly conservative.

[rwfromkansas]

Hyperlocal is king. The question is, are co-ops or other similar startups a good idea?

I am not exactly fond of my reporter’s salary, but I am glad to get paid for doing something I love. These new startups typically can’t pay anything remotely close to what a paper can (not that they pay much either of course), so I have a hard time imagining they would take off.

Regardless, I do wish you luck.

[Landru]

Simply excellent, again, c_I_c.

Thanks for the ping, an illuminating essay.

[Old Professer]

Also of late, a remarkable thing has happened and that is the general inability of people to properly parse a correctly written complex sentence and arrive at the writer’s essential meaning:

“’People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices.’ - Adam Smith”

Strip the above quote of its descriptive assertions and you get the text message version:

People of the same trade seldom meet but to raise prices.

Bare of contrivance and motive, bias or affliliation the raw fact remains that in numbers there is power.

[T Lady]

BTTT

[E.G.C.]

BTTT

[Mind-numbed Robot]

Darrell, subscription and sales income from newspapers basically paid for the cost of printing and distribution. The real money was in advertising sales.

Nothing is lost by going online instead of print. No print, no print and distribution costs, a wash. Online advertising can be much more effective than print advertising and more widely distributed.

So, why try to charge for accessing a news website? You are in better shape giving access away than you were when you printed the paper.

[rwfromkansas]

Papers so far aren’t having much luck with online advertising. The return is much less.