In cities from Salt Lake to Minneapolis, Las Vegas to Boston and Washington, billionaires have bought local newspapers. This has been seen as a major benefit to the industry in which many urban dailies either lose money or are very modestly profitable. Some of these billionaires have either run out of money or patience, as two have begun major layoffs.
The layoffs are ominous. Based on the performance of several publicly traded newspaper publishers, their revenue has fallen about 10% year over previous year in the first quarter. That drop shows no sign of arresting. The pessimism about recovery is spreading.
Among the experiments of billionaire ownership is Jeff Bezos’s buyout of The Washington Post. He has, according to insiders, fostered a culture of innovation and made sure that the paper has plenty of “runaway” to build a strong business. The paper’s management says it is profitable.
Recently, the Salt Lake Tribune laid off 34 newsroom employees from a staff of 90. The move has to wreck the paper’s ability to cover the same subjects it has in the past. The layoffs were made by owner Paul Huntsman, one of the richest men in the country. He blamed the downturn in revenue, which was more rapid than anticipated. Instead of giving the paper runway, he undermined its ability to continue to create a strong product to draw both readers and advertisers.
Billionaire hedge fund investor John Henry bought the Boston Globe in 2013 for $70 million. The deal also included some smaller papers. The Globe is considered one of the best newspapers in the country, editorially, so the billionaire took over a property that had a better than average chance of prospering. It may have helped that the Boston population is relatively well to do and well educated.
Recently, the Globe laid off some “non-newsroom” employees. A few senior management people have left. And, apparently, the Globe plans another set of buyouts. Henry, for whatever reason, has decided to shorten the paper’s runway as well.
In the case of both Henry and Huntsman, presumably they had the ability to bear losses in hopes that their papers could find formulas to improve profitability. Each has started to give up. A weakened paper is not a turnaround candidate.