As long as there have been nationwide newspaper chains in control of local newsrooms, the locals have dreamed of secession.
Now, the mayor of Sacramento, Baltimore cronies of House Speaker Nancy Pelosi, D-California, and the Chicago Tribune’s newsroom union have broken out in open rebellion, with support from a variety of civic organizations. All three movements seek local control of local papers.
The pandemic may be helping those who hope to restore local ownership of newspapers. Ad revenues had already been falling since 2006, the Pew Research Center has shown, but the economic freeze-up has revealed local newsroom vulnerability at precisely the moment they are widely recognized as a civic necessity with reader demand for news setting records.
Grumblings about decisions coming from headquarters took on a more urgent tone this spring as chain- and hedge-fund-owned newspapers made some of the sharpest and earliest pandemic-related staff cuts.
On Tuesday, Sacramento Mayor Darrell Steinberg injected himself into The McClatchy Company bankruptcy proceedings, arguing the court should favor a local bid for The Sacramento Bee. “The comprehensive coverage by The Bee during this coronavirus pandemic shows once again how integral it is to keeping the public informed,” he wrote in a letter to the bankruptcy judge.
McClatchy filed for bankruptcy in February, reporting outstanding debt of $703 million and unfunded pension obligations of more than $805 million. Much of the debt arose from McClatchy’s purchase of Knight Ridder in 2006, which is how McClatchy came to own 49.5% of The Seattle Times Co.
In a statement, CEO Craig Forman praised Steinberg’s support for local news, but said McClatchy has no comment on the proposal.
Steinberg urged the judge to place the public interest above profit in deciding how McClatchy will be sold off in the upcoming auction to satisfy creditors. He says there is at least one local buyer in the wings. “I have somebody who has the means and the motivation,” he said in a May 4 interview, but declined to offer a name.
Although the public interest asserted by the mayor does not have formal standing in bankruptcy court, a 32-year veteran bankruptcy lawyer said judges do sometimes favor local buyers.
“What they can consider is not necessarily public interest, but local employees,” said Eric Snyder, of Wilk Auslander, a Manhattan law firm. The court can force creditors to auction off parts of a corporation to see if local bidders offer enough money to make the extra work of multiple sale closings worth the trouble.
“If Sacramento comes in and says ‘We’re going to buy it, and we’re going to retain the same number of employees,’ the judge is going to want to hear that,” Snyder said.
Though Speaker Pelosi represents San Francisco in Congress, her family’s political legacy started in Baltimore, and she might be helpful to the secession effort there.
The fortune reaped from the Abell family’s sale of The Baltimore Sun in 1986 is providing capital for the latest proposal to make The Sun local again. The $300 million Abell Foundation wrote Tribune Publishing in February, asking to negotiate for The Sun. Tribune has shown no interest, said Ted Venetoulis, who with Abell Foundation President Bob Embry has been trying for more than 20 years to bring ownership of The Sun back to Baltimore.
He said the Communications Workers of America newsroom union has organized a petition drive and other public activities under the banner of “Save Our Sun,” promoting the effort.
Venetoulis is a former newspaper and magazine publisher who turned to politics and was elected Baltimore County Executive in the early 1970s, under the tutelage of the late Baltimore Mayor Tom D’Alesandro, Pelosis father.
Venetoulis was Pelosi’s high school boyfriend, but he declined to say what role, if any, she is playing. Another source said on background she is removing obstacles.
If Tribune will sell, the Baltimore-based Goldseker Foundation would join the Abell Foundation in providing capital, said CEO Matt Gallagher, and help turn it into a nonprofit, the way The Salt Lake Tribune owners did in November.
On Thursday, Tribune Publishing spokesman Max Reinsdorf said the company declines to comment on either the Baltimore effort or a similar one aimed at prying the Chicago Tribune out of Tribune Publishing.
Hanging over the Chicago effort is a June 30 deadline.
Alden Global Capital, a hedge fund that buys newspapers, slashes newsroom staff and sells newspaper buildings to generate investor cash, announced last year it had bought 32% of the shares of Tribune Publishing, which owns the Chicago Tribune. Tribune agreed to put two Alden nominees on its board, and Alden agreed to buy no more shares until June 30.
In a Jan. 19 New York Times Op-Ed, Chicago Tribune reporters Gary Marx and David Jackson called for Alden to declare it will not damage The Tribune, challenging the hedge fund’s managing director, Heath Freeman, to face the public. He has not responded directly, though in a letter to Illinois’ U.S. senators, he described Alden as a rescuer of newspaper companies.
Meanwhile, Jackson has met privately with Chicago financiers and philanthropists, searching for someone who will extract The Tribune from The Tribune Company, the nation’s third-largest chain.
Last week, the Chicago newsroom union wrote to shareholders, asking them to reject Alden’s two board nominees and protect The Chicago Tribune from the kind of cost-cutting Alden Global Capital has forced on other papers it owns. Tribune declined to comment.
News industry analyst Ken Doctor warns that breaking a paper out of a large chain may be the easy part. The reason for consolidation was to spread costs such as printing, a copy desk and back office functions like payroll and human resources among multiple locations. “If you have the money, if you’re willing to spend it, and you understand you’re going to go through two years of transition hell, it could be done.”