The big money behind the big cuts in local news
And the big trouble it's causing for all of us.
Beginning in 2008, in town after town, on topic after topic, news in Palm Beach County simply went dark.
It wasn’t an accident.
Traditionally, daily papers have played an outsized role in local news coverage, in large part because they had more reporters covering more towns and topics than local broadcasters or newsweeklies.
Many also held a virtual monopoly on certain types of advertising. Profit margins of 40 or even 50 percent were not rare.
Heading into the Great Recession, Post Beach Newspapers Inc. was profitable enough to support more than 1,300 employees, including 300 newsroom employees.
Today, after years of layoffs and buyouts, the combined editorial staff for The Palm Beach Post and the Palm Beach Daily News is less than 50.
The staff still wins awards. They still break major stories.
They have also launched a small revolution.
In 2020, they unionized.
On Monday, after almost three years of contract negotiations, The Post and Daily News staff staged a one-day strike.
It would be hard to overstate the rarity of newsroom unionization. True, newspapers such as the Detroit Free Press and others in northern cities with long histories of unionization banded together. But south of the Mason-Dixon line, including right-to-work Florida, the idea rarely surfaced.
Until, starting in 2016, it did. Like falling dominoes, Florida paper after Florida paper began unionizing: Two in 2016, two in 2018, The Miami Herald and El Nuevo Herald in 2019 and then, in 2020, the Naples Daily News, The Banner, Marco Island Eagle, The Fort. Myers News-Press, the Bradenton Herald, Palm Beach Daily News and The Palm Beach Post.
All three Stet co-founders – myself, Carolyn DiPaolo and Joel Engelhardt – had a ringside seat.
None of us could vote on unionizing. Joel was an investigations editor. Carolyn was a top newsroom leader. And while I was at The Post, I worked for a statewide investigations team.
But none of us ignored it, either. For me, it started the day a longtime Post friend was asked to go to lunch at the nearby Dontee’s Diner – and found reporter union-organizers waiting for her there, smiling like Cheshire cats. Sonja Isger became one of the union leaders.
A casual conversation about salary appears to have lighted the fuse. But the trickle-down cost-cutting by three owners has done more than freeze reporters’ salaries.
It has undercut coverage of issues crucial to Palm Beach County and effectively erased coverage in more than two dozen towns and cities.
Studies link such news deserts to decreased voting and declines in civic engagement. Government spending can increase because no one is watching budgets.
And it deepens political polarization: Without local news, people turn to national cable news networks for information. Opinion-heavy cable offerings fuel political polarization at the local level, while providing little or no information needed for fact-based civic engagement.
Deep staffing cuts mean that today in Palm Beach County, citizens know less about their communities than they did 10 years ago. They know less about how to solve problems – or even that solvable problems exist.
That helps explain why union mission statements specifically address the crisis of local coverage. Florida State University Professor Jennifer Proffitt told the Poynter Institute in 2021.
“I think that from my interviews with journalists and what I’ve read, this is journalists’ way to try to stop the bleeding.”
Many masters, wielding axes
For years, an industry joke about Post-owner Cox Enterprises made the rounds: It didn’t know how to fire people.
The company was known for job security accompanied by comfortable salaries and generous benefits. Many had spent decades at The Post, considered one of the fatter of the Cox papers. It had bestselling author Scott Eyman writing book reviews, a dedicated Washington, D.C., reporter and its own TV, movie and music columnists.
The Great Recession, though, led to massive buyouts as real estate ads began disappearing and Craigslist started hoovering up lucrative classified listings.
A Cox executive took editors to lunch, one at a time. Newsrooms have long thought they were special, he explained. Exempt from layoffs. But newsrooms are not special, he said.
One editor wrote back: “Maybe we are not special.”
“But what we do is.”
Buyouts followed, anyway, accompanied by the threat of firings if enough people did not voluntarily leave. That year, 300 staff members from The Palm Beach Post and Palm Beach Daily News left. Three hundred more transportation, mailroom and production employees were laid off.
Even after the local economy stabilized, The Post’s owners scrambled to find their footing. Cox turned to consultants.
Citing focus group findings, consultants strongly recommended less court coverage.
The sports department covered the Olympics, and readers closely followed Miami Dolphins and the Heat, but sports stories were banned from the front page.
The Post photo department had won a Pulitzer Prize for features photography in 1970 and was a finalist for its hurricane images, but a Cox executive said the quality of a photo was irrelevant to readers.
To drive revenue, the paper focused its diminished reporting resources on suburbs and bedroom communities such as Palm Beach Gardens and Wellington. Regular coverage in primarily minority towns such as Riviera Beach and the Glades all but disappeared.
Finally, in 2017, Cox put The Post up for sale.
Gatehouse Media took the prize.
A colleague at The Miami Herald called me.
“I just heard,” she said. “I am so, so, sorry.”
Gateways to debt
When Gatehouse Media came courting, it was already publishing more than 100 daily papers.
Given its reputation for penny-pinching – and layoffs – some were surprised it forked over $49 million for The Post and Daily News.
Two local investors had tested the waters and come away believing $40 million – or less – was a more realistic valuation.
Also, only five years earlier, Gatehouse was in bankruptcy court, restructuring more than a $1 billion in debt. In 2008, its stock price fell roughly 95 percent and it was delisted by the New York Stock Exchange.
It emerged from bankruptcy within a few months, however, and immediately began snapping up newspapers.
While the bankruptcy filing may have been propelled by debt, Gatehouse was not afraid to take on more red ink: Just 17 months after employees were called into the first-floor auditorium and told the papers were being sold to Gatehouse, they were called into the auditorium again.
Technically, The Post was not being sold a second time. Gatehouse was acquiring the more prestigious Gannett newspaper chain, owner of USA Today. It would retain the Gannett name with Gatehouse leadership.
There was another technical point.
To create the nation’s largest newspaper company, Gatehouse needed to borrow money.
Apollo Global Management came through.
Apollo was led by Leon Black, who both counted Palm Beach sex trafficker Jeffrey Epstein among his close friends and paid Epstein millions for financial advice.
Apollo agreed to lend $1.8 billion. But it came with a staggering 11.5 percent interest rate.
English-major reporters are not always interested in math. But Post data reporter Mike Stucka sat down at his desk, calculated the interest, the debt, the revenue and came up with his own back-of-the-envelope prediction: These numbers were never, ever going to work.
Gatehouse CEO and former paperboy Mike Reed brushed off the Cassandra warnings. In an interview with The New York Times in late 2019, Reed insisted that the merged companies had plenty of fat to cut without seriously touching newsrooms.
Paul Bascobert, who would be named operating CEO for the merged company, added that the company would “connect, protect and celebrate local communities” with “great local journalism.”
That was 2019. By the end of 2022, Gannett had erased more than half of the merged companies’ total workforce, Joshua Benton wrote in NiemanLab in March: “It’s as if, instead of merging America’s two largest newspaper chains, one of them was simply wiped off the face of the earth.”
At The Post, salaries were frozen. Positions were left unfilled. Reporters were paid below-rock-bottom wages.
And while buyouts and layoffs never rose to the scale of the 2008 cuts, they could be swift and cold. In one such corporate directive, editors were simply ordered to turn over three names. Immediately.
Nontrivial pursuits
Trivia Night at O’Shea’s Irish Pub in downtown West Palm attracted a crew of Post regulars. Newsroom veterans Andrew Marra and Wayne Washington were there; so were early career reporters Chris Persaud, Lulu Ramadan and two Hannahs: Winston and Morse.
The finalized merger with Gannett was still a few months away when someone mentioned that The Miami Herald was unionizing.
Union talk shifted to salary talk.
Few people stay in journalism for the money. For one thing, there isn’t enough of it to offset the demands: Christmases and other holidays away from family are frequent; weekend work and late-night hours are the norm.
Reporters do not evacuate during hurricanes or flee the site of mass shootings; they are expected to run toward them. Deadline stress is constant, PTSD is common and, increasingly, so are threats to personal safety.
It is important to be paid for the work, for the same reasons everyone needs to be paid for the work: A roof over your head, groceries on the table. But a living wage for reporters also allows them to keep doing the work. And despite a litany of drawbacks to a life in journalism, most want to do just that.
When Trivia Night talk turned to salaries, reporters got a hard look at what years of corporate cost-cutting had already done.
For one thing, it was creating a two-tiered newsroom. People hired before the 2008 buyouts were for the most part pulling down a living wage.
But early career reporters hired after 2008 were struggling.
Some newsroom staff were making less than $40,000, a union salary study found.
The 2020 median Post beginning reporter salary was $38,000. CEO Mike Reed’s 2021 compensation was roughly $7.7 million, a ratio of roughly 200:1.
That doesn’t mean reporters automatically bought into unionizing.
Younger reporters seemed to more quickly come on board. Some older journalists were reluctant. They did not want to be seen as betraying editors who they liked and respected. And there weren’t enough supporters in sales to bring that department into the union.
When presented with the list of Post and Daily News staffers who chose to organize, Gannett had the option of recognizing the union. Instead, it exercised its right to force a vote. But if the company leaders thought a ballot would chip away support, they were mistaken.
The vote to unionize was unanimous.
Three years later, there is still no contract, not with The Post or Daily News, and not with multiple other Gannett papers.
In that time, Gannett’s finances have been sliding.
True, coveted digital revenue rose by 15 percent in the first quarter compared to first quarter 2022. In February, it posted quarterly per-share profits 50 percent higher than Wall Street expected.
But that was the first quarterly profit in four straight quarters of losses. Gannett expects sales to drop by 5 percent through 2023.
Gannett stock started falling in 2018 and has never really recovered. Pre-merger shares trading at $18.48 that June were trading at just above $2 on June 2. That was the last trading day before union members at The Post and across the country walked out in protest over the failure to strike a contract.
Gannett stock plunged by 13.6 percent in midday trading to $1.87 before climbing back to close at $2. Over 5 million shares changed hands, far above the average number of shares bought and sold in a single day.
At Monday’s annual meeting, shareholders voted to retain Gannett’s board of directors, including Reed. Susan DeCarava, president of the NewsGuild of New York, told The New York Times the result was a “slap in the face” to the striking journalists.
"Despite the work stoppage in some of our markets, there will be no disruption to the Palm Beach Post's content or our ability to deliver trusted news,” a Gannett spokesman said in a prepared statement.
“Our goal is to preserve journalism and serve our communities across the country as we continue to bargain in good faith to finalize contracts that provide equitable wages and benefits for our valued employees."
Even if the company quickly finalizes a deal, years of cuts can’t be quickly fixed, and neither can their impact.
At least 28 of the county’s 39 towns and cities are either not covered or sporadically covered. There is no beat reporter covering the Sheriff’s office, the South Florida Water Management District, the Port of Palm Beach. There is no local political columnist and no reporter covering health full time.
Prior to 2008, The Post’s business reporting desk included a business editor, two assistant editors, a Sunday columnist, and a roster of reporters covering tech, tourism, banking, finance, utilities, real estate, retail, agriculture and more, all full time.
Of those original positions, the columnist remains. While reporters do sometimes write on business topics, there is nothing comparable to the fully staffed desk.
Gone, too, is the financial investment group that launched Gatehouse, paid Mike Reed and initially managed the newly merged Gatehouse/Gannett.
Fortress Investment Group and Gannett severed their contract in 2021. Though known for its shrewd financing, Fortress hasn’t always come up on the winning side of the dice: In one unfortunate case, it loaned fraudulent blood test company Theranos $100 million.
But Fortress investment highlights also include Brightline, the South Florida high-speed railway that is redefining commuting. It is a major local news story, footnoted by politics, environment, financing and an expansion into western states.
It’s not clear who would write it, though.
The Post’s last transportation columnist left in 2008.
👋 Hi, Pat here
What’s a reader to do?
Local news is in crisis. The news ecosystem in Palm Beach County is faltering and with it, the building blocks for fact-based civic engagement.
The good news is that readers like you can save it.
In fact, only readers like you can save it. Here’s how:
🤓 First: Read. Yes! Just do what you are already doing! Traditional sources of news revenue, and some non-traditional sources, want to know if the news being produced is solid enough to engage readers.
We want you to read Stet, of course, but until we are everywhere all at once- and we do have a plan for that - we also want you to consider great work from other local journalism outlets.
It’s why our newsletter provides links and summaries to other people’s stories.
As a public interest news site, our goal is to get the most information to the largest possible number of people.
Once you’ve read something you like, or believe to be important, or that just made you laugh uncontrollably, share liberally.
Stet has a big red share button just for that: Send it along via email, text, Facebook, Instagram, lunch talk, even Twitter (AKA BadBird).
🥇 Bonus: If local journalism boosts democracy, and readership boosts local journalism then the inevitable conclusion is that your eyeballs, judiciously applied, can save democracy.
💰 Second: Pay ….something for some local news.
How much is absolutely up to you.
Even if reporters could work for free, libel insurance was just a nicety and not a necessity and digital news platforms were all open source, local reporting costs money.
It can be a one-time donation to WLRN. It can be a subscription to the Coastal Star or The Palm Beach Post or the South Florida Business Journal.
Or: Ahem. Stet.
As a public interest news organization, our weekly newsletter will always be free. No paywall.
But about one of every five Stet subscribers offers to pay $5 a month, $60 a year or a one-time donation.
That enables us to expand our coverage to more issues and more towns.
We aren’t trying to beat The Post, emulate The Post or encourage its demise. We want it to succeed.
We are focused on issues and stories no longer being covered there, or covered only sporadically.
Like this story on Gannett’s finances, which have an outsize impact on Palm Beach County.
The Cox executive was absolutely right. The people who work in newsrooms are no more special than our readers. But what we do for our community is. With your support, we can do a lot more of it.
Editor’s note: This story was updated to correct the amount of the lowest salary for full-time newsroom employees.
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