Jump to content

Vulture capitalists destroying newspapers

Add links
From Wikiversity
This summarizes an interview 2025-03-06 with Rick Goldsmith,[1] director of the new documentary, "Stripped for Parts: American Journalism on the Brink".[2] A video and 29:00 mm:ss podcast excerpted from the interview are included. It will be released 2025-03-22 to the fortnightly "Media & Democracy" show[3] syndicated for the Pacifica Radio[4] Network of over 200 community radio stations.[5]
It is posted here to invite others to contribute other perspectives, subject to the Wikimedia rules of writing from a neutral point of view while citing credible sources[6] and treating others with respect.[7]
Interview with producer Rick Goldsmith regarding his 2024 documentary "Stripped for parts: American Journalism on the Brink.[8]
29:00 mm:ss podcast from Interview conducted 2025-03-06 of Rick Goldsmith by Spencer Graves about 29:00 mm:ss excerpts from a 2025-03-06 interview with producer Rick Goldsmith regarding his 2024 documentary "Stripped for parts: American Journalism on the Brink" about how vulture capitalists are destroying newspapers.[9]

Rick Goldsmith,[1] director of the documentary, "Stripped for Parts: American Journalism on the Brink",[2] discusses with Spencer Graves[10] how Alden Global Capital has purchased many newspapers in the US, laid off many journalists and closed many newspapers. Malfeasance in government and business are increasing as a result.

Vulture capitalists and hedge funds make money in multiple ways including the following:

  • If society is lucky, the investors find ways to make the company more profitable with, e.g., better marketing, new products or cost cutting. Investors that help put a potentially failing company on a more positive trajectory should not earn the negative term, "vulture".
  • Vultures have often saddled companies they acquire with massive debt at excessively high interest rates like 13 percent.[11] This serves vultures well, because that debt typically survives bankruptcy under current US laws. Many companies owned by vultures were profitable before being bought but cannot service the massive debt that the vultures saddle them with. Vultures have been confiscating pension funds like this at least since the 1980s.[12] Edge (2024) describes this in some detail. He says, for example, that newspaper chains purchased by vultures "were all still profitable ... .. The only thing that took them down was debt.[13]
  • Vultures often make money by cutting costs faster than customers stop buying.[14] As Internet companies started making money from advertising, newspaper revenue has declined. Newspapers adjusted by cutting costs, including laying off journalists. However, vultures have been cutting staff at double the rate of the industry. Nieman Lab at Harvard reported, "Alden Global Capital is making so much money wrecking local journalism it might not want to stop anytime soon."[15]
  • Many companies, especially newspapers, own prime real estate that is worth more than the market value of the company. Before Alden, The Denver Post was right in the center of power in Colorado looking out onto a square with the State Capitol, the state Supreme Court and Denver City Hall on the other three sides of the square. That's the proper place for the "Fourth Estate", the watchdog press. However, not long after Alden acquired The Denver Post, they moved all the staff they did not cut to a far away space with no windows at the intersection of an animal rendering plant, the wastewater treatment plant, and a dog food factory.[16]

The movie rests heavily on the work of Julie Reynolds[17] and Penny Abernathy.[18] It includes extensive comments by Greg Moore, editor of The Denver Post from 2002 to 2016, and others. The movie recommends government subsidies, similar to those provided by the US Postal Service Act of 1792, mentioned by Penny Abernathy and cited in research reports by McChensey and Nichols.[19] The latter two were co-founders of Free Press, an organization lobbying for public support for local news in several states.[20] The Institute for Nonprofit News including their former executive director Sue Cross[21] has been supporting local news nonprofits that are trying to fill the gap created by news deserts and ghost newspapers.

The threat

[edit | edit source]

A previous Media & Democracy interview with Arizona State University accounting professor Roger White on "Local newspapers limit malfeasance" describes problems that increase as the quality and quantity of news declines and ownership and control of the media become more highly concentrated: Major media too often deflect the public's attention from political corruption enabled by poor media. This too often contributes to other problems like scapegoating immigrants and attacking Diversity, equity, and inclusion (DEI) while also facilitating increases in pollution, the cost of borrowing, political polarization and violence, and decreases in workplace safety. More on this is included in other interviews in this Media & Democracy series available on Wikiversity under Category:Media reform to improve democracy.

An important quantitative analysis of the problems associated with deficiencies in news is Neff and Pickard (2024). They analyzed data on media funding and democracy in 33 countries. The US has been rated as a "flawed democracy" according to the Economist Democracy Index and spends substantially less per capita on media compared to the world's leading democracies in Scandinavia and Commonweath countries. They note that commercial media focus primarily on people with money, while publicly-funded media try harder to serve everyone. Public funding is more strongly correlated with democracy than private funding. This recommends increasing public funding for media as a means of strengthening democracy. See also "Information is a public good: Designing experiments to improve government".

Discussion

[edit | edit source]
[Interested readers are invited to comment here, subject to the Wikimedia rules of writing from a neutral point of view citing credible sources[6] and treating others with respect.[7]]

Edge (2024, p. 70) reported that his "2023 study of newspapers in the UK, where all companies must file annual financial statements with Companies House whether they are privately-owned or publicly-traded, showed that newspaper profits are the best in years since many adopted online subscription schemes. The profits of Rupert Murdoch’s Times and Sunday Times, for example, doubled to £52.5 million in 2022. Murdoch reversed the falling fortunes of the Times newspapers in 2010 by introducing a hard paywall". However, a similar subscription scheme at his Sun tabloid failed, presumably because few readers were willing to pay for its kind of content, which could be found elsewhere for free.

We record here two observations based on this:

  • Might it make sense to push for a law in the US similar to that in the UK that requires "All limited companies (including subsidiary, small and inactive) [to] file annual financial statements with" a government agency? (In the UK, that agency is Companies House.) Doing so should reduce temptations for many kinds of malfeasance described in this article and references while also making it easier to evaluate proposed changes to business law.
  • A solid stream of research documents how nearly everyone benefits from quality journalism consumed by others, because it tends to increase voter participation and reduce malfeasance in business and government; the only losers are the beneficiaries of fraud and political corruption. This raises questions about the value of paywalls: If they reduce consumption of the news, their value to society may decline, even if they increase the profitability of news outlets.

Notes

[edit | edit source]
  1. ↑ 1.0 1.1 Rick Goldsmith, Wikidata Q1792246. Goldsmith was co-director of the 2009 documentary, "The Most Dangerous Man in America".
  2. ↑ 2.0 2.1 Goldsmith (2024).
  3. ↑ Media & Democracy, Director: Spencer Graves, Pacifica Radio, Wikidata Q127839818{{citation}}: CS1 maint: others (link)
  4. ↑ Pacifica Radio, Wikidata Q2045587
  5. ↑ list of Pacifica Radio stations and affiliates, Wikidata Q6593294
  6. ↑ 6.0 6.1 The rules of writing from a neutral point of view citing credible sources may not be enforced on other parts of Wikiversity. However, they can facilitate dialog between people with dramatically different beliefs
  7. ↑ 7.0 7.1 Wikiversity asks contributors to assume good faith, similar to Wikipedia. The rule in Wikinews is different: Contributors there are asked to "Don't assume things; be skeptical about everything." That's wise. However, we should still treat others with respect while being skeptical.
  8. ↑ Stripped for Parts: American Journalism on the Brink, Director: Rick Goldsmith, 2024, Wikidata Q132826328{{citation}}: CS1 maint: others (link)
  9. ↑ Stripped for Parts: American Journalism on the Brink, Director: Rick Goldsmith, 2024, Wikidata Q132826328{{citation}}: CS1 maint: others (link)
  10. ↑ Spencer Graves, Wikidata Q56452480
  11. ↑ Substantial debt like this is typical with Leveraged buyouts (LBOs).
  12. ↑ Vultures may not succeed in using bankruptcy laws to shed liabilities while retaining assets if a court rules that the LBO debt is a "fraudulent conveyance". See also the section on "Failures" in the Wikipedia article on Leveraged buyout.
  13. ↑ Edge (2024, p. 69-70).
  14. ↑ Cutting costs faster than customers stop buying is called "harvesting". It is the opposite of a sustainable business model, according to Edge (2024, p. 73).
  15. ↑ Doctor (2018).
  16. ↑ Denver Post staff pushed back with an editorial titled, "As vultures circle, The Denver Post must be saved"; see Denver Post Editorial Board (2018). This attracted nationwide attention; see, e.g., Ember (2018). Layoffs continued. The Colorado Sun was founded by former Denver Post journalists.
  17. ↑ e.g., Reynolds (2017, 2018, 2019, 2021), Hutchins (2018).
  18. ↑ Abernathy (2018).
  19. ↑ McChesney and Nichols (2021, 2022). The documentary mentions two dates in the early history of newspapers in the US. The first is the US Postal Service Act of 1792. Its contribution to the current dominant position of the US in the international political economy is discussed in the Wikiversity article on "The Great American Paradox". The second date is 1835 when James Gordon Bennett founded the New York Herald. Bennett achieved considerable success selling advertising packaged with news that was officially nonpartisan. This led parts of the industry away from postal subsidies.
  20. ↑ Aaron (2021). See also "Legal concerns of Free Press including Section 230", "Information is a public good per communications prof Pickard", Neff and Pickard (2024), and the appendix in Graves (2025).
  21. ↑ Sue Cross, Wikidata Q132855544

Bibliography

[edit | edit source]
Retrieved from "https://en.wikiversity.org/w/index.php?title=Vulture_capitalists_destroying_newspapers&oldid=2811310"