Can A New Business Model Save Small-Town Papers? GateHouse Media is thriving in the beleaguered newspaper industry. Critics say GateHouse makes money by decimating news operations. The company says it's saving newspapers with efficiencies of scale.
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Can A New Business Model Save Small-Town Papers?

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Can A New Business Model Save Small-Town Papers?

Can A New Business Model Save Small-Town Papers?

Can A New Business Model Save Small-Town Papers?

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GateHouse Media is thriving in the beleaguered newspaper industry. Critics say GateHouse makes money by decimating news operations. The company says it's saving newspapers with efficiencies of scale.

STEVE INSKEEP, HOST:

Roughly 2,000 newspapers have closed or merged across the United States in the last 15 years - 2,000 - which makes the newspaper buying spree of New York-based hedge fund GateHouse Media all the more surprising. It is now the largest newspaper owner in this country, although some warn that its business model is damaging to journalism. Here's Frank Morris of our member station KCUR.

FRANK MORRIS, BYLINE: Whether GateHouse Media is saving small-town journalism or eviscerating it depends on who you ask. In Columbia, Mo., the Daily Tribune was a proud, civic-minded, family-owned paper that prospered for generations. But in the fall of 2016, Jodie Jackson and another reporter joined a nervous scrum in the company gym to hear a GateHouse Media executive announce that 115 years of local ownership was over.

JODIE JACKSON: He said, don't worry. Everybody's going to have a job day one. And she and I looked at each other and said at the same time, what about day two?

MORRIS: Within the year, most of the new staff was gone. And that's what often happens when Gatehouse takes over a paper. John Darkow, the Tribune's cartoonist for nearly 20 years, accuses GateHouse of gutting newsrooms for profit.

JOHN DARKOW: They see the newspaper not as journalism but as dollar signs.

MIKE REED: That's garbage. It's garbage. Yeah, it's just the opposite.

MORRIS: That's Mike Reed, CEO of New Media Investment Group, which runs GateHouse. He argues that imposing corporate efficiencies on small-town papers is breathing life into them.

REED: So we do the editing of our newspapers in one place - Austin, Texas.

MORRIS: GateHouse shares content across its papers, and Reed says the company is poised to buy a lot more of them.

REED: We see an opportunity to acquire them at relatively inexpensive prices because nobody likes them and to reinvent the business model, moving it from advertising to services.

MORRIS: This is a big shift. Reed's talking about newspapers selling marketing services, mobile apps, even loans, exploiting century-old newspaper brands to market modern back-office work to small-town companies. And that part of the business is booming.

REED: And the side benefit of that is we think we will have longevity in the newsrooms for our journalists.

MORRIS: But he measures longevity in years, not decades. Meantime, Penelope Muse Abernathy, who teaches journalism at the University of North Carolina, says the number of working journalists in the U.S. has plunged to about half what it was 15 years ago.

PENELOPE MUSE ABERNATHY: This is a problem for our democracy.

MORRIS: Abernathy tracks the spread of what she calls news deserts sprawling across rural America. She says having a newspaper in a town doesn't matter much if it's what she calls a ghost paper - one just regurgitating stories written elsewhere. Abernathy argues that while companies like GateHouse didn't initiate the decline in local journalism, they are exacerbating it.

ABERNATHY: So there is a very strong emphasis in these new media barons on return to shareholders versus a commitment to what has historically been the mission of newspapers, which is to contribute the news that feeds our democracy, even at the grassroots level.

MORRIS: Though feeding our democracy doesn't always pay the bills. And while companies like GateHouse may manage to squeeze the business value from time-worn newspapers, figuring out how to get community journalism to turn a profit in the digital age remains a huge challenge. For NPR News, I'm Frank Morris.

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