The ban announced August 11 has yet to affect the group that bought both Chicago dailies, and its major altweekly. But it revealed concerns about those investors’ links to telecommunications mogul Denis O’Brien, who has sued and fired critical Ireland journalists — he purchased an ownership stake in their Wrapports, LLC — and about the influence of tech millionaires and billionaires on the news industry.
In a statement, the Arlington-based National Association of Newspapers (NAA) said the Federal Communications Commission (FCC) decision was “disappointing.” The FCC opted to keep a cross-ownership ban that prevents newspaper and television mergers. “The rule is outdated and does not reflect the current state of media,” NAA CEO David Chavern said.
FCC spokeswoman Kim Hart declined to comment on the process that shaped a proposal by FCC Chairman Tom Wheeler, the draft for a decision that passed by 3-2, or about the chance that broadcast conglomerates like ABC, CBS, NBC or Fox might combine without the ban.
“The current media ownership rules remain necessary,” Hart said.
To understand how multiple interest groups have launched a war over technology companies’ victims, corporations that produce less news than at any stage since Watergate, it’s useful to return to spring. This year, a team helmed by Chicago Tribune alum Tim Franklin and run by a well-connected industry figure bought a Tampa newspaper with over 265 employees.
The newsroom had no sense about the team’s intentions until they saw their new visitor. When they recognized Indiana Journalism Hall of Fame inductee and former Committee to Protect Journalists and Pulitzer chairman Paul Tash, they realized the newspaper was to be closed and its staff gutted.
“Frankly, it seemed vain and mean-spirited,” former Tampa Tribune writer Kate Bradshaw said of what happened that day. “There was no final edition.”
They shuttered the newspaper immediately. It was May 3, World Press Freedom Day. On May 6, Tampa Media Group filed notice with the state of Florida for 300 layoffs by July 3. Tash’s Tampa Bay Times, which was called the St. Petersburg Times until 2012, had purchased the Tribune‘s TMG from Revolution Capital Group for an undisclosed amount.
The Times acquired new debt to make that move, which had reportedly been planned since early 2016. It requested an estimated $13.3 million in loans, and sold its St. Petersburg building.
An email shared with wtsp.com showed that RCG CEO Robert Loring reacted to questions about the sale with, “There’s a leak here somewhere.” Loring, who lives in Los Angeles, did not respond to requests for comment.
“The attitude of big business toward its employees has made it easier for companies to fire employees,” said National Press Photographers Association (NPPA) general counsel Mickey Osterreicher.
With the closure of the Tribune, Creative Loafing Tampa is now the second biggest paper in Tampa. It’s owned by SouthComm, a company based in Nashville that has less than a dozen alternative papers.
“All of us at Creative Loafing were heartbroken to see the Trib go, and to see it go the way it did,” managing/online editor Scott Harrell said. “This has always been a two-daily town.”
Osterreicher argued in a blog post that TMG might have violated the WARN Act. However, he said the Athens-based NPPA does not have standing to file a complaint.
“The employer must, at the time notice actually is given, provide a brief statement of the reason,” he said. “The employer bears the burden of proof that conditions for the exception have been met.”
Industry lobbyists say mergers are required to guarantee publications have the resources for quality content.
NAA public policy vice president Danielle Coffey said the FCC’s ban is “incredibly counterintuitive,” and cited the investments investigative reporters’ organizations typically covet.
“The broadcaster and newspaper and radio industries remain significantly harmed by the decision. It is difficult to create the scale that is necessary to compete against growing technology companies who ironically do not have the same restrictions on investment,” she said.
But in practice, mergers have often left mainstream news outlets with diminished workforces and extra debts.
Recent surveys from Pew Research Center, a nonprofit based in Washington, show some companies have raised profits through spinoffs and dropped newspaper assets to collect television properties. Support from technology companies has not translated to a premium on newsgathering, Pew found in its 2016 report, released this June, but it has fueled a spike in social network experiments, where tech companies reap the profits and set the terms.
“There is money being made on the web, just not by news organizations,” the Pew researchers said. “In 2015, these companies experienced their greatest decline since the recession years of 2008 and 2009.” Their ad dollars plummeted 8 percent, similar to the drop after the dot-com bubble.
A study from Reuters this summer found online paradigms have put “severe pressure” on their businesses. About 9 percent of consumers told Reuters they’d pay for content, only 7 percent in the UK, and they’re even less willing to watch the ads companies need to monetize online videos.
Pew found newspapers continue to offset circulation drops by cutting costs. Some companies have spun off print properties, and sold the publishing assets to protect their more profitable broadcast divisions. E.W. Scripps separated its newspapers into Journal Media Group, which Gannett bought.
“That was a transaction between those two separate companies,” said Valerie Miller from E.W. Scripps external communications, who pointed out that Pew incorrectly claimed Scripps, Gannett and Journal Communications are one company, and the broadcast division was less profitable after spinoff. “After that deal closed and Scripps was no longer involved with it, Gannett, also a separate company, approached Journal Media Group.”
A Pew spokesman said they meant the number of newspaper companies has dropped.
“They got a few things wrong,” Scripps corporate communications vice president Carolyn Micheli said. She said their company never included a $59 million pension charge from the sale of print assets to Journal Communications. Without it, they were more profitable after that sale. “Regarding the FCC cross-ownership ban, obviously it doesn’t affect us anymore,” Micheli said, but in their view “those rules do not reflect the reality of the way people get news and information.”
The NAA ceased sharing revenue numbers on the industry after 2014, according to Pew. Researchers listed “major staff cuts” at over ten metro dailies from 2015 to spring 2016. Time Inc. announced about 40 newsroom cuts this summer. Conde Nast followed suit recently. Canadian newspapers that promoted ambitious mobile plans shed over two hundred employees last month, the Globe and Mail reported.
“Count me as very worried about the narrowing of local and regional coverage,” former New York Times executive editor Jill Abramson said, after a Women’s Conference of Florida appearance in Tampa this May. “The duty of our profession is to hold the powerful accountable.”
Google, Facebook, Yahoo, Microsoft and Twitter got 65 percent of revenue from online ads in 2015. “Technology companies like Facebook and Apple,” Pew said, are “supplanting the choices and aims of news outlets with their own choices and goals.”
Those companies have no tradition of neutrality, however. Executives at corporations like Google and Apple mix openly with political administrations hostile to independent media.
“Even those publications that aren’t owned by tech kingpins are beholden to the technology industry in troubling ways,” Slate‘s Will Oremus wrote recently.
That is a concern in Chicago, where a tech millionaire from the group that owns the Sun-Times and the Reader is now chairman of Tribune Publishing. Michael Ferro, Jr. has said he gave his shares in Wrapports to a charity, but he won’t identify it.
Wrapports investors include Morningstar investment advisors’ CEO Joe Mansueto, private equity fund Madison Dearborn chairman John Canning and “Beau” Wrigley, according to Crain’s. A Morningstar spokeswoman said Mansueto declined to comment.
Ferro was at Wrapports when it backed the Chicago News Coop, which shut amid disagreements with the New York Times and Wrapports’ bid to buy the Sun-Times. Some of those investors reportedly want to combine the major Chicago dailies, but there are antitrust concerns.
“I think single newspaper towns, single newspapers well run, have done much better,” Canning said last year. “You might look at the Washington Post as an example, I think there are people that would do the same thing, if the L.A. Times were ever for sale.”
Ferro has provoked controversy for his lack of newspaper knowledge, and his advocacy of Aggrego and the Sun-Times Network. Both were known for their emphasis on automation. Tribune began sharing content with Aggrego after Ferro took over there in February, and the STN closed this summer.
“I knew the photographers would be going from the day we took this paper over,” he told Chicago magazine, which said he represented a wave of “rich men without media experience taking over important newspapers.”
Ferro’s software company, Click Commerce, turned him into a millionaire with its 2000 intial public offering. He sold it in 2006, to launch private equity fund Merrick Ventures.
“It is extremely disappointing that the Sun-Times management, like a growing number of other publications, has taken the misguided step of decimating its photo staff,” Osterreicher said.
By email, Sun-Times columnist Neil Steinberg said media aren’t improved when cities lose newspapers.
Wrapports bought the Sun-Times in 2011. Telecoms billionaire Denis O’Brien invested $10 million and got an ownership stake in Aggrego two years ago, through his mobile company Digicel. Through his 29.9 percent stake in Independent News and Media, O’Brien owns more than half of Ireland’s daily newspapers, and through his majority ownership in Communicorp, 24 percent of its radio market and most of Dublin’s.
He has sued news publications 24 times, Ireland Dail representative (TD) Catherine Murphy told a banking inquiry commission last year. Several journalists who reported his connections to corrupt businessmen and politicians, such as disgraced TD Michael Lowry, have been fired and targeted with lawsuits.
He secured a High Court injunction for Radio Telefis Eirann (RTE) last year, to censor reports about the loan he got from a nationalized bank. Then he sued the Oireachtas Commission and Ireland’s attorney general, arguing that stories about his companies were “a breach of his rights under the Constitution and the European Commission of Human Rights.”
When it supplied a third of the bailout for Ireland’s banks, Canning was chairman of the Irish Pension Reserve Fund. A condition of that bailout was that Ireland monetize its water utilities.
Since Ireland exited its bailout in 2013, O’Brien’s ties to nationalized Irish banks and water contractors have set off two investigatory commissions.
Canning said he doesn’t know anyone currently at the pension fund, since the Ireland Strategic Investment Fund. He declined to respond to questions about it.
Spokespeople for O’Brien’s water meters company, Actavo, and Communicorp declined to comment. A spokesperson for Independent News and Media did not respond before publication.
Questions to the Tampa Bay Times brought the following response from their St. Petersburg company, Poynter:
“Tim Franklin is tied up now. He asked me to find out the subject.
Also, do you want to send some questions by email?
It may be easier for him to respond or to get it to the expert in the area you are writing about.
Let me know and we’ll see what we can do.
Thanks!
Bobbi Alsina”
Tampa journalists said the Tribune will be missed, if not the factors that shuttered it.
“So much news is coming through social media now, but that’s a global thing,” Harrell said. “Alternative media is doing pretty well in the Tampa Bay area.”
Bradshaw, who left the Tampa Tribune for Creative Loafing before the Times purchase, said even the 2012 team “didn’t fully get how newspapers work in a number of ways.”
“The Times accomplished this,” she said. “By absorbing the competition, they are bleeding a little less than they were. They’ve absorbed the tbo.com domain and the many clicks it gets.”
Pew research suggests that approach is not likely to reverse an industry trend. “While media companies used to control, and get ad money from, the distribution of news, they now need tech companies to reach their consumers, but they don’t have any say in the tech companies’ decisions,” research associate Mike Barthel said. “And they don’t get anywhere near as much of the revenue.”
Hart said the FCC has no plans to revisit its cross-ownership ban. It has shifted to a spectrum selloff that will bring profits for NBC, CBS and Fox, as they cede the airwaves to corporations like AT&T, T-Mobile, Comcast, Dish and Verizon. “The broadcast TV incentive auction is underway and its results will not be known” for awhile, she said.
That process is a Dutch auction that has buyers compete to the lowest price. It is among multiple developments that might overhaul the news industry.
“Another source of revenue for the local TV industry that has been growing substantially in past years has been political advertising,” Pew researchers said, “due to the huge influx of campaign cash” after the Supreme Court’s 2010 decision.
Pew counted 20,000 fewer jobs from newspapers since 1996. Like Abramson, the researchers worried about what will counter the void, and what those technology companies will do. That industry “is determining how and with what kinds of storytelling Americans learn about the issues and events facing society and the world,” they said.
Bradshaw said the industry needed to develop a profitable web content model in the nineties. Instead, it was riven by protracted battles between legacy newspapers and online startups, and those companies’ business complications have paved a road to worse problems.
She called it “an unprecedented dumbing down of our culture.”
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