North Carolina’s Two Largest Newspapers Now Bankrupt
The McClatchy Company — which owns The News & Observer, The Herald-Sun and The Charlotte Observer — declared bankruptcy this month.While North Carolina’s printing presses will continue rolling, the papers’ offices will likely reorganize under a private equity firm’s management.
How will these changes affect local and statewide news coverage? Host Frank Stasio talks with Penelope Muse Abernathy about how press finances affect political accountability. Abernathy is the Knight Chair in Journalism and Digital Media Economics at the University of North Carolina Chapel Hill and author of the annual report “The Expanding News Desert.”
They buy em, strip em and flip em.
On why newspapers are slashed and sold:
If you are investing in a community for 13 [or] 14 years, you're going to have some civic mission. If you're a private equity and hedge fund, undoubtedly newspapers are just part of a bigger portfolio. As a result, you manage the newspaper the same way you manage a financial services group, a private railroad, a golf course — you give them two to three years. You're a short-term investor. And so you just cut costs across the board. And, let's face it, you don't have a civic mission. Your sole responsibility is to the shareholder.
On public awareness of the struggling news business:
The Pew Research Center recently did a study and asked people: Are you getting the local news you need that's very relevant to you? And half of people said no, they had noticed it had gone down, especially in recent years. But the problem is that most people are unaware of what's causing it — which is the economic situation facing newspapers. … Seventy-five percent didn't realize the financial problems that were facing local newspapers, and another only 15% said they paid for a subscription in the past year. So there's been a general lack of awareness in the public about what's really going on and how the news has decreased.
One of the first things people who went West and established a town would do is set up a newspaper because that gave them a community identity.
On the knowledge lost with newsroom cuts:
There's an interesting study done by a Stanford economist several years ago in which he looked at putting a price tag on the number of lives saved and environmental disasters averted because of the great investigative work or contextual work done by papers like the Raleigh News & Observer on the hog farm industry, on trucking, or by The Charlotte [Observer on] brown lung — all of which won Pulitzers or received national recognition for what they did and also changed the course of what we did in terms of policy here in the U.S. That's one of the things that's lost when you go from a newsroom like the Raleigh News & Observer from 250 down to about 60. You just don't have the reporters to do as many stories. And so we miss stories and the follow-up.
On the role of newspapers in local and state elections:
You do not know what you're missing. Both the N&O and The Charlotte [Observer] were sacred in my house. My parents used the editorial page for the recommendations and who they vetted. I don't know about you — I'm a North Carolinian, and I think I'm pretty good at judging who should be governor, not sure on the raft of judges that we have or what their track record is. And I sure don't know who should be the best agricultural secretary. So I depended on those two papers — through their editorials, in addition to the reporting — to help make an informed decision.