When the country needs journalism the most, reporters and newspapers are responding to keep their communities informed. News outlets are seeing a surge in online traffic and remain open despite plummeting ad revenue and dropped paywalls. Journalists are risking their health and safety for the public good.
But as Save Journalism Project co-founder John Stanton said recently in the Hill, the journalism industry was in crisis before the coronavirus pandemic because tech giants like Google and Facebook had decimated its business model. That resulted in hundreds of newspapers closing and tens of thousands of layoffs for journalists and other newsroom staff. But it also made newspapers a ripe takeover target for private equity titans scavenging on the carcass of the industry.
This trend reached its peak last year when private equity-backed GateHouse Media acquired the Gannett chain in a deal making it the largest newspaper chain by circulation and it now owns 566 newspapers across the country. GateHouse is owned by SoftBank of Japan, and it tapped a $1.8 billion loan from Apollo Global Management to fund the takeover at a whopping 11.5% interest rate. GateHouse has a record of making hundreds of local newspapers across the country “unrecognizable,” and with that kind of debt burden, its focus is on cutting costs to maximize revenue, not journalism.
It's no wonder while other news outlets are doing everything they can to keep service going, Gannett is moving quickly to slash costs during the early stages of the coronavirus crisis. In a memo to staff Monday, CEO Paul Bascobert said Gannett would implement furloughs and pay reductions across the company. The move will result in most staff being furloughed for one week per month, with Bascobert telling staff that “everyone will be touched by these changes.”
The following is a statement from John Stanton, former DC Bureau Chief for BuzzFeed and co-founder of the Save Journalism Project, regarding the industry’s losses:
The private equity vultures have swooped in to capitalize on the decimation of the business model of the journalism industry by Google and other tech giants. With the journalism industry as a whole responding to the crisis with selfless actions in pursuit of the common good, the private equity side of the industry is only focused on the bottom line. When communities need their newspapers most, we can thank Google and Wall Street for reducing coverage at 566 newspapers across the country.
Journalism in America is facing an existential threat from the monopolistic control of tech giants like Google, Facebook, and Apple. Big tech’s dominance over the digital advertising market and their unrivaled capacity to monetize its platforms are having drastic effects on journalism as a whole.
