Why Buy a Yacht When You Can Buy a Newspaper?

Billionaires aren’t usually cast as saviors of democracy. But one way they are winning plaudits for civic-minded endeavors is by funding the Fourth Estate.,

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Billionaires have had a pretty good pandemic. There are more of them than there were a year ago, even as the crisis has exacerbated inequality. But scrutiny has followed these ballooning fortunes. Policymakers are debating new taxes on corporations and wealthy individuals. Even their philanthropy has come under increasing criticism as an exercise of power as much as generosity.

One arena in which the billionaires can still win plaudits as civic-minded saviors is buying the metropolitan daily newspaper.

The local business leader might not have seemed like such a salvation a quarter century ago, before Craigslist, Google and Facebook began divvying up newspapers’ fat ad revenues. Generally, the neighborhood billionaires are considered worth a careful look by the paper’s investigative unit. But a lot of papers don’t even have an investigative unit anymore, and the priority is survival.

This media landscape nudged newspaper ownership from the vanity column toward the philanthropy side of the ledger. Paying for a few more reporters and to fix the coffee machine can earn you acclaim for a lot less effort than, say, spending two decades building the Bill and Melinda Gates Foundation.

The latest example comes in the form of a $680 million bid by Hansjorg Wyss, a little-known Swiss billionaire, and Stewart W. Bainum Jr., a Maryland hotel magnate, for Tribune Publishing and its roster of storied broadsheets and tabloids like The Chicago Tribune, The Daily News and The Baltimore Sun.

Should Mr. Wyss and Mr. Bainum succeed in snatching Tribune away from Alden Global Capital, whose bid for the company had already won the backing of Tribune’s board, the purchase will represent the latest example of a more than decade-long quest by some of America’s ultrawealthy to prop up a crumbling pillar of democracy.

If there was a signal year in this development, it came in 2013. That is when Amazon founder Jeff Bezos bought The Washington Post and the Red Sox’ owner, John Henry, bought The Boston Globe.

“I invested in The Globe because I believe deeply in the future of this great community, and The Globe should play a vital role in determining that future,” Mr. Henry wrote at the time.

Mr. Bezos and Marty Baron, the recently retired editor of The Post, famously led a revival of the paper to its former glory. And after a somewhat rockier start, experts said that Mr. Henry and his wife, Linda Pizzuti Henry, the chief executive officer of Boston Globe Media Partners, have gone a long way toward restoring that paper as well.

ImageDr. Patrick Soon-Shiong, a physician and billionaire, bought The Los Angeles Times in 2018. And while it hasn’t always gone smoothly, few prefer the alternative of hedge-fund ownership.
Dr. Patrick Soon-Shiong, a physician and billionaire, bought The Los Angeles Times in 2018. And while it hasn’t always gone smoothly, few prefer the alternative of hedge-fund ownership.Credit…Alex Welsh for The New York Times

Across the country, for Dr. Patrick Soon-Shiong, the physician and billionaire who bought The Los Angeles Times in 2018, it hasn’t always gone smoothly. But few prefer the alternative of hedge-fund ownership.

“There’s not a doubt in my mind that The Los Angeles Times is in a better place today than if Tribune had held on to it these last three years or so,” said Norman Pearlstine, who served as executive editor for two years after Dr. Soon-Shiong’s purchase and still serves as a senior adviser. “I don’t think that’s open to debate or dispute.”

From Utah to Minnesota and from Long Island to the Berkshires, local grandees have decided that a newspaper is an essential part of the civic fabric. Their track records as owners are somewhat mixed, but mixed in this case is better than the alternative.

Researchers at the University of North Carolina at Chapel Hill released a report last year showing that in the previous 15 years, more than a quarter of American newspapers disappeared, leaving behind what they called “news deserts.” The 2020 report was an update of a similar one from 2018, but just in those two years another 300 newspapers died, taking 6,000 journalism jobs with them.

“I don’t think anybody in the news business even has rose colored glasses anymore,” said Tom Rosenstiel, executive director of the American Press Institute, a nonprofit journalism advocacy group. “They took them off a few years ago, and they don’t know where they are.”

“The advantage of a local owner who cares about the community is that they in theory can give you runway and also say, ‘Operate at break-even on a cash-flow basis and you’re good,'” said Mr. Rosenstiel.

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Glen Taylor, a Minnesota billionaire who owns The Minneapolis Star Tribune, expects the paper to be self-sufficient, according to the paper’s publisher and chief executive.Credit…David Sherman/NBAE

For instance, Glen Taylor, a Minnesota billionaire who owns the Minneapolis Star Tribune, is not showering the newsroom with money, said Michael Klingensmith, publisher and chief executive of the paper. “The understanding we have with Glen is that if we generate cash, it’s ours to keep but he’s not interested in investing more,” he said. “He expects the business to be completely self-sufficient.”

But at 240 staffers, the newsroom is as big as it was when Mr. Klingensmith arrived in 2010, something relatively few papers can boast of over the same period. The Star Tribune’s goal was to reach 100,000 digital subscribers by the end of last year, and it hit that mark by May. And the paper just won a prestigious Polk Award for its coverage of the killing of George Floyd and the aftermath.

“The communities that have papers owned by very wealthy people in general have fared much better because they stayed the course with large newsrooms,” said Ken Doctor, on hiatus as a media industry analyst to work as C.E.O. and founder of Lookout Local, which is trying to revive the local news business in smaller markets, starting in Santa Cruz, Calif. Hedge funds, by contrast, have expected as much as 20 percent of revenue a year from their properties, which can often be achieved only by stripping papers of reporters and editors for short-term gain.

Alden has made deep cuts at many of its MediaNews Group publications, including The Denver Post and The San Jose Mercury News. Alden argues that it is rescuing papers that might otherwise have gone out of business in the past two decades.

And a billionaire buyer is far from a panacea for the industry’s ills. “It’s not just, go find yourself a rich guy. It’s the right rich person. There are lots of people with lots of money. A lot of them shouldn’t run newspaper companies,” said Ann Marie Lipinski, curator of the Nieman Foundation for Journalism at Harvard and the former editor of The Chicago Tribune. “Sam Zell is Exhibit A. So be careful who you ask.”

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Sam Zell, a real estate billionaire known as “the grave dancer,” took Tribune Publishing private in 2007.Credit…Joe Buglewicz/Bloomberg

Mr. Zell, the real estate maverick and billionaire whose nickname is “the grave dancer,” took Tribune Publishing private in a leveraged buyout in 2007. The company filed for bankruptcy the next year. His brief tenure helped set in motion the events leading to the Alden Capital bid.

Other rescuers have come and gone. There was a time when Warren Buffett looked like a potential savior for newspapers, investing in them through his company, Berkshire Hathaway. He has since beaten a retreat from the industry. And there have even been reports that Dr. Soon-Shiong has explored a sale of The Los Angeles Times (which he has denied).

“The great fear of every billionaire is that by owning a newspaper they will become a millionaire,” said Mr. Rosenstiel.

Elizabeth Green, co-founder and chief executive at Chalkbeat, a nonprofit education news organization with 30 reporters in eight cities around the country, said that rescuing a dozen metro dailies that are “obviously shells of their former selves” was never going to be enough to turn around the local news business.

“Even these attempts are still preserving institutions that were always flawed and not leaning into the new information economy and how we all consume and learn and pay for things,” said Ms. Green, who also co-founded the American Journalism Project, which is working to create a network of nonprofit outlets.

Ms. Green is not alone in her belief that the future of American journalism lies in new forms of journalism, often as nonprofits. The American Journalism Project received funding from the Houston philanthropists Laura and John Arnold, the Craigslist founder Craig Newmark and Laurene Powell Jobs’s Emerson Collective, which also bought The Atlantic. Herbert and Marion Sandler, who built one of the country’s largest savings and loans, gave money to start ProPublica.

“We’re seeing a lot of growth of relatively small nonprofits that are now part of what I would call the philanthropic journalistic complex,” said Mr. Doctor. “The question really isn’t corporate structure, nonprofit or profit, the question is money and time.”

The scion of a wealthy Utah family, Paul Huntsman, bought The Salt Lake Tribune in Utah from a hedge fund in 2016. Circulation fell by half, ad revenue plummeted and he cut more than a third of the journalists. He has since turned it into the first metropolitan daily operating as a nonprofit.

After the cable television entrepreneur H.F. (Gerry) Lenfest bought The Philadelphia Inquirer, he set up a hybrid structure. The paper is run as a for-profit, public benefit corporation, but it belongs to a nonprofit called the Lenfest Institute. The complex structure is meant to maintain editorial independence and maximum flexibility to run as a business while also encouraging philanthropic support.

Of the $7 million that Lenfest gave to supplement The Inquirer’s revenue from subscribers and advertisers in 2020, only $2 million of it came from the institute, while the remaining $5 million came from a broad array of national, local, institutional and independent donors, said Jim Friedlich, executive director and chief executive of Lenfest.

“I think philosophically, we’ve long accepted that we have no museums or opera houses without philanthropic support,” said Ms. Lipinski. “I think journalism deserves the same consideration.”

Mr. Bainum has said he plans to establish a nonprofit group that would buy The Sun and two other Tribune-owned Maryland newspapers if he and Mr. Wyss succeed in their bid.

“These buyers range across the political spectrum, and on the surface have little in common except their wealth,” said Mr. Friedlich. “Each seems to feel that American democracy is sailing through choppy waters, and they’ve decided to buy a newspaper instead of a yacht.”

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