March 9, 2023, 2:43 p.m.
It might not be as mustache-twirling a villain as Alden Global Capital, but its enormous scale has meant enormous losses for local journalism.
Gannett, America’s largest newspaper chain, should wake up each morning thankful for the existence of No. 2 Alden Global Capital.
After all, who could ask for a better point of comparison? Alden is the perfect industry villain, a faceless private equity fund dedicated to nothing but cost-cutting and cashflow-draining. Its corporate website contains a total of 21 words, nine of which are “Alden,” “Global,” or “Capital.” It’s run by a secretive billionaire who last gave an interview in the 1980s — the sort of person who can own 15 mansions in Palm Beach and still think: I could really use a 16th.
It’s the type of company that inspires debates over whether “vulturous” is too kind of an adjective. If you’re writing an Atlantic cover story on “Who Killed America’s Newspapers?” Alden Global Capital will hand you the murder weapon, already dusted for prints.
Gannett, meanwhile, is at least a newspaper company, one more than a century old. It’s rarely been considered a particularly good one, mind you — its reputation for cheapness and cookie-cutter products go back decades. (As The New York Times described it in 1986: “a chain of mostly small and undistinguished, though highly profitable, newspapers.”) But it was at least a familiar name, run by news people and with at least some dedication to its civil role in hundreds of communities.
When Alden attempted a hostile takeover in 2019, anyone who cared about local news was put in the unfamiliar position of rooting for Gannett. Heck, if you squinted hard enough, Gannett could almost feel like the good guy. (If only because people like to believe there is a good guy in their industry, somewhere or another.)
But “we’re better than Alden!” has its limits as a brand promise, and Gannett’s most recent annual report drives home the fact that no company has done more to shrink local journalism than it has in recent years. Let’s total up the damage — in raw numbers, if not in stories unbroken and facts not uncovered.
Vaporizing a newspaper chain in four years
While Alden failed in its bid for Gannett in 2019, it sparked a wave of newspaper industry consolidation that some had foreseen for years. Within a few months, the two largest newspaper companies in the United States — No. 1 Gannett and No. 2 GateHouse — announced they were merging. The name would remain Gannett, but GateHouse execs were mostly left in charge.
At the end of 2018 — the last full pre-merger year — the two companies had a total of 27,600 employees, according to a Gannett spokesperson. The merger closed in mid-November 2019, by which time it had about 25,000 and was diving headlong into a hunt for “inefficiencies.”
By December 31, 2019, the combined company was down to 21,255. By the end of 2020, that had dropped to 18,141. A year later: 13,800. And its most recent SEC filing reports that, as of the end of 2022, Gannett had just 11,200 employees remaining.
In other words, Gannett has eliminated 59% of its jobs in four years. It’s as if, instead of merging America’s two largest newspaper chains, one of them was simply wiped off the face of the earth.
That’s a cut substantially deeper than the rate of newspaper revenue decline. Why? Well, one reason is that to get the merger done, Gannett had to take out a giant loan at high interest rates, meaning hundreds of millions in revenues have had to be redirected to debt payments. To put it in perspective: In Q4 2022, digital subscriptions at Gannett newspapers — all of them — brought in a total of $35.5 million. But the company spent more than that, $47.3 million, just on debt payments. (This may remind you of Elon Musk’s ongoing evisceration of Twitter, driven by the same sort of M&A debt.)
You can also see the shrinkage in the number of newspapers Gannett publishes. In 2019, post-merger, it owned 261 daily and 302 weekly newspapers. By the end of 2022, those totals were 217 daily and 175 weekly newspapers. Some of that decline is Gannett selling a few newspapers to local buyers, but a lot of it is straight-up closures. Last spring, Gannett shuttered 24 weekly newspapers here in the Boston area alone.
Paid readership has evaporated
Per capita newspaper circulation has been declining in the United States since World War II, so it’s hardly shocking that it’s still dropping. If you’re The New York Times, you’ve been able to more than make up for the loss in print subscribers with digital ones. But for most local newspapers, digital gains are nowhere big enough to stop the print bleeding.
Still, Gannett’s newspapers stand out for the steep angle of their decline. Here are Sunday circulation numbers for (pre-merger) Gannett’s largest local newspapers, according to the company’s own filings with the Alliance for Audited Media. These totals include both print and digital subscribers, as well as the few remaining single-copy sales in print.
Let’s compare Q3 2018 to Q3 2022:
Every Gannett paper here saw a circulation decline of at least 56%. The average drop across these papers is an incredible 77%. They’ve lost three-quarters of their paying readers in four years’ time.1
How bad is that? To find out, I assembled a comparison set of non-Gannett papers in other metro areas to see how their declines compared. These aren’t outlier successes like The New York Times — they’re metro dailies, most with chain or hedge fund owners, facing the same problems as everyone else in the business.
It’s a wildly better showing. The worst performing of these newspapers each did a better job keeping paying readers than the best performing Gannett newspapers above. Take The Seattle Times: It lost 62,000 print readers over this period — but it also gained 52,000 digital subscribers, making the overall trend lines tolerable. Instead of losing 77% of paid circulation, as those Gannett papers did, these have lost only 26%.
There are plenty of explanations for the gap — but it’s hard not to believe that Gannett’s gutting of their editorial products hasn’t been a driving factor.
And I haven’t yet mentioned the most important Gannett paper: USA Today. In Q3 2018, USA Today reported a total daily circulation of 2,632,392. In its most recent filing, Q3 2022, that was down to 180,381.
I asked Gannett for comment on this decline, and a spokesperson sent this statement: “Gannett continues to make tremendous progress on our strategic priorities which include a focus on increasing digital growth. We have an increasingly engaged digital audience with digital-only subscription revenue growing nearly 30% year-over-year. Digital-only subscriptions grew to over 2 million during the fourth quarter of 2022. Since the second quarter of 2022, paid digital-only subscriptions have outnumbered full access or print subscriptions.”
Death by a thousand cuts
Let me finish by looking at a single Gannett paper — the one I grew up reading, The Daily Advertiser of Lafayette, Louisiana. It’s far from the company’s most important paper — No. 109 in circulation among Gannett’s dailies — but it’s important to me; I read it nearly every day. Lafayette is a city of 121,000 and the hub of a region of half a million people.
Here’s what’s happened to the Advertiser’s Sunday circulation since 2015. (Data is from Q3 of each year.)
2015: 26,885
2016: 23,773
2017: 20,177
2018: 14,670
2019: 10,389
2020: 8,592
2021: 6,528
2022: 3,996
That’s an 85% decline since 2015. Those numbers include both print and digital — but maybe the digital trend is better? Let’s see:
2015: 1,421 digital subscribers2
2016: 1,054
2017: 1,247
2018: 1,473
2019: 1,283
2020: 1,146
2021: 928
2022: 468
Yikes. All that decline has come amid round after round of Gannett budget cuts. You can debate the direction of causation: how much the cuts were driven by declining revenues, versus how much the declining revenues were driven by the cuts. But the end result is the same either way — a newspaper that is, today, an embarrassing product.
The Advertiser reported having 17 newsroom employees in 2020 and it still had a handful of people covering hard news as recently as last year. But a combination of cuts, buyouts, and escapes left it with exactly one local news reporter by January. Its staff directory is stuffed with reporters who left months ago. There are now days when zero news stories out of Lafayette are published. The copy hole is filled by stories from wires, Gannett’s one-reporter state capitol bureau, or other Gannett Louisiana papers (all of which look like thinly reskinned versions of each other). It misses obvious stories and runs press releases and error-filled copy. Its morning email is stuffed to overflowing with stories about LSU basketball, simply because Gannett actually has someone outside the Advertiser who covers LSU basketball.
The local college team in Lafayette is the Louisiana Ragin’ Cajuns, and they had a big weekend. On Monday, they won the Sun Belt men’s basketball tournament, meaning they will go on to March Madness and the NCAA tournament for the first time since 2014.
Was this mentioned in Tuesday’s newspaper? No. Was the fact they were even playing in the conference final mentioned in Monday’s newspaper? No. Probably the single biggest local sports story in the past year, and you wouldn’t know about it reading The Advertiser. (They eventually published a story online Tuesday morning — written by a sports reporter for the Gannett-owned Pensacola News-Journal, three states away.)
Speaking as a reader (and a grudging longtime digital subscriber), it’s just an abomination of a newspaper. Lafayette residents are lucky to have a few other options. The local TV stations, while nothing special, keep up with the usual TV news basics. A local nonprofit outlet named The Current does good work, but its small size means it has to pick its spots. Most importantly, the Baton Rouge paper, The Advocate, has invested in a Lafayette edition that does more Lafayette reporting than the actual Lafayette daily paper. In the five core Lafayette ZIP codes, The Advocate actually has more print subscribers than The Advertiser does (2,598 to 1,869).
But not every community is so lucky. When the local paper stops reporting, there’s often no one else to take its place. Everyone gets a little less informed about the world around them. And Gannett has increased local ignorance at a scale no other company can match. Maybe Alden Global Capital should be giving thanks for Gannett too, not just the other way around.
Source : Drudge Report