Are These Guys Crazy? Despite newspapers’ much-publicized woes, they continue to attract buyers
Are These Guys Crazy? | American Journalism Review
It has happened in newsrooms across the country. News breaks that somebody is buying a newspaper, undoubtedly at a deeply discounted price. Buyout-weary reporters and editors look around their own newsrooms filled with empty desks and wonder: “Who are these guys buying newspapers? Are they crazy?”
“Only a little bit,” says Aaron Kushner, the new publisher of the Orange County Register, who in July led a private equity group in its acquisition of Freedom Communications Holdings, Inc., which owns the Register and five smaller dailies. “I do happen to relish a challenge.”
If it’s a challenge he wants, Kushner and a handful of other investors across the country have picked the right industry. Many see the newspaper business, battered for years by plummeting ad revenue and circulation losses and a failure to capture young readers, as one headed for extinction. The industry was slow to react to the onset of the digital era and has yet to come up with a new business model that doesn’t depend on advertising dollars as the main source of revenue.
Still, against all odds, a handful of wealthy investors, like the members of Kushner’s Santa Ana-based 2100 Trust LLC, are willing if not eager to put their dollars into the struggling newspaper market. This diverse group of budding media barons ranges from respected investors such as Warren Buffett to politically connected local players, people more accustomed to seeing their names in the news pages than on the masthead. Toss in a few investors like Alden Global Capital that snap up distressed properties, and you have a new universe of newspaper ownership emerging. One factor fueling the trend is that the papers are available at bargain if not fire-sale prices.
Working journalists hope the new breed will succeed where others have failed, while in some cases fearing what type of change and political influence their new bosses might impose on their papers.