To The Foundation

Here’s another interesting one:

Peoria Newspaper Guild official Jennifer Towery will describe for
Licata’s committee how a community coalition is pushing legislation to
turn her city’s struggling privately owned paper into a “low profit”
L3C community-owned operation.

That’s a tax term for a new hybrid business model that meets the
IRS’s definition of a charity, but operates like a for-profit
corporation. Vermont became the first state to authorize L3Cs last
year, and Michigan and North Carolina are moving toward their own
versions of the model. Vermont’s Secretary of State’s office offers
this description: “The basic purpose of the L3C is to signal to
foundations and donor-directed funds that entities formed under this
provision intend to conduct their activities in a way that would
qualify as program-related investments.”

In other words, donating to an L3C would enable private foundations
to meet the IRS’s charitable-giving requirements. The Seattle area is
awash with this sort of private foundation. An L3C could raise cash
from such groups to repair a historic building that can’t generate
enough profit from rent to pay for the renovations. Or, says newspaper
industry consultant Lee Egerstrom, a newspaper “with stakeholders that
include the community that depends on reliable media as well as the
paper’s unions” could use its L3C status to tap non-profit donors. When
Egerstrom pitched the L3C idea at a Newspaper Guild conference earlier
this month in Maryland, union representatives from the Seattle Times
Co.’s struggling Blethen Maine papers showed up to listen.

Via Romenesko.

I’m sorry it’s taken this many papers getting this close to the edge for people to start listening to what people on the ground in the newsrooms have been saying for years: It’s the profit margins, stupid. It’s not redesigns and readership and focus groups and the length of stories and all the other crap people tweak because it can be tweaked, because reporters have a sense of mission and will do whatever it takes to get the job done if they’re told this is the job.

This is hard to work out to anybody who hasn’t been there, but you get indoctrinated with this “whatever, I’ll sleep later, the job is its reward, do what you have to do to get the win” mentality in a newsroom, and management takes advantage of that by telling you it’s you, change what you’re writing, change how you’re writing, get the job done for us, save the newspaper the way you saved the day by getting that story last week.

I’m sorry it’s taken us this long to get to the point where people are finally ready to talk about the money and where it’s been going and where it should go. And how much of it we can realistically expect.

A.

5 thoughts on “To The Foundation

  1. RAM says:

    I come out of the weekly newspaper biz, not the daily, and I don’t pretend to understand the financial imperatives of the daily world. But I’m retired now, and so I don’t feel bad about giving my daily compatriots some free advice, even if I still feel a little funny trying to help the competition.
    Our Chicago suburban weekly, until the recent GOP-created economic unpleasantness, was growing in circulation by an average of 6 percent per year. Our main daily competition, at the same time, was slowly and steadily losing circulation, this in one of the fastest growing areas of the nation. I pondered this situation long and hard, and came up with a few ideas about what happened and why.
    First, our “local” daily, which is actually a regional paper covering all or more of three counties, lost its true local focus, that is, the town in which it is published. In order to provide an increasingly thin gruel of regional coverage, it stole from its base coverage. People living in its home city were deprived of beat reporters closely covering the city council, county government, and the school districts an other taxing bodies serving the paper’s community. Newspapers exist to provide news coverage, not feature stories or astrology charts or Dear Abby columns; news ought to ALWAYS be first. When Chicago papers were regularly scooping the local daily on local news, from the schools to the business community, alarm bells should have been going off all over the place, but they weren’t.
    Second, the local daily used to be an afternoon paper. Several years ago, for reasons never adequately explained (other than to “better serve readers”) the paper went to mornings, where it competed directly with the two remaining Chicago dailies. Since their deadlines were so much earlier, they‘re coverage of local government and, especially, elections, was delayed for a full day. That meant us weekly folks could usually at least tie them in getting the news to readers, a stupid situation if there ever was one.
    Third by going to mornings, they had to eliminate their corps of local newspaper delivery people. Instead of the paper boy or girl throwing the paper up on the front porch or tucked into the screen door, papers were dropped off on the curb in a plastic bag. That might work in Florida; in northern Illinois in the winter, papers get covered with snow, frozen to the ground, and run over. The paper lost about 10 percent of its circulation within two years as senior citizens decided they could live without their daily dose of obits and crossword puzzles if it meant they didn’t have to go out and dig their papers out of the snow and ice.
    Fourth, the cost of subscriptions is too high for the people who provide the bulk of newspaper readership: Families with kids who want to see their names and pictures in school and sports news; and those seniors who monitor obits to make sure their name isn’t there. Hearst and the rest of the Yellow Press got rich by selling lots of cheap papers. I keep waiting for some bold paper to drastically reduce their subscription price in an effort to lure readers back. With a robust increase in circulation, the folks in advertising could if not boost rates, at least sell more ads by pointing to a growing number of readers. I’ve come to believe this is a key move that needs to be made, but with bean counters and not news people in charge these days, that’s unfortunately extremely unlikely to happen.
    Our small independent weekly chain is a money-maker, just like virtually small weekly chains in areas that are either growing or have at least a stable population base. But over the years, we’ve seen independent chain after independent chain bought out by the big boys, who come in and immediately cut out the things people buy local papers for: Local news coverage, particularly how property tax dollars are spent, which means heavy school and municipal government coverage. After homogenizing the product into some sort of vanilla mess of features and canned columns, they profess to be surprised when the moneymaker they bought starts bleeding red ink and eventually has to be closed down.
    So my suggestions: Provide comprehensive local news coverage first and foremost (and that doesn’t mean hiring consultants and their focus groups to tell you what local news is; if you don’t already know what needs to be covered and reported, you’re in the wrong business); offer subscriptions at low rates; make an effort to get your paper to readers the way they want it; and be content with profits that might not match those of some bogus software start-up, but which are enough to keep things moving ahead to long-term success and profits.

    Like

  2. RAM, yes yes oh god baby yes, but don’t forget about marketing. When you had a housing boom in the Chicago ‘burbs, new people moving in, you need to shove in their face that YOUR paper is now THEIR paper and they need to get it to really be a part of their new community. Newspaper marketing is one of the first things to get slashed in any budget-cutting discussions and once people no longer know about your paper or are reminded of it constantly, is it any wonder they stop subscribing?
    A.

    Like

  3. RAM says:

    Well, A, I’d like to say we had some sort of marketing strategy, but outside of doing some trades for ads with a local radio station, the usual ads in high school sports programs, and the annual community directory ad, we didn’t do any. Oh, we did try to hook up with the Welcome Wagon folks when they were still to get addresses where we sent free six month subs. And we did the same after they went belly-up by getting the addresses of property transfers from the county recorder’s office—we published them every week anyway, so that was a ready source.
    But we in the newsroom always joked that since most of our new subs came via word of mouth, it was fun working for an underground paper.
    So, yes, marketing is probably a good thing, but I really don’t have much experience with it.

    Like

  4. Kaleberg says:

    I was just in Seattle the other day. Did you know that the New York Times still has a print edition? It was almost a shock, like finding out that the Herald Tribune hadn’t folded, but you can only get it at two newsstands in Greenwich Village. I can imagine having to explain printed newspapers to my grandkids, “They’re like web sites except made out of paper. The front page is like the home page and …”
    That aside, I live in a small town of 20,000 in a county of about 80,000. The local daily newspaper has a circulation of about 10,000 and it provides pretty good local coverage. That means the county, town and some state government, local businesses and farms, local people, local sports, and a page or two of AP stuff so that you can get by without the network news which is just as well since we only get one station out here and it is Canadian.
    I get the print version of this paper because of the coverage they provide. I couldn’t get this kind of news elsewhere, though I do have a busybody friend who is great at providing deep background. If they stopped printing the paper, and it went online only, I’d pay for a subscription as I do for several other web based news sources. If they went under, or stopped their good coverage, I’d probably look into setting up an alternate, either as a private entity or a non-profit. It’s good to know that such options exist.
    P.S. The local paper still gets a fair bit of classified advertising revenue. Craigslist doesn’t work well out here. We haven’t really hit critical mass yet. Folks who can’t afford to take out classified ads tend to paint a sign on their pickup truck and park in the local Rite Aid or along a major road. One recent change is that the signs are more likely to include a price.

    Like

  5. joejoejoe says:

    I never heard of this L3C thing before this post. Here’s what I found on the Google trying to learn a bit more.
    http://www.triplepundit.com/pages/the-l3c-a-more-creative-capitalism.php

    Like

Comments are closed.

%d bloggers like this: