[helipad]

Interesting tidbit that countered my assumptions:

> None of this was inevitable: At the time of the sale to GateHouse, The Hawk Eye wasn’t struggling financially. Far from it. In the years leading up to the sale, the paper was seeing profit margins ranging from the mid-teens to the high 20s. Gannett has dedicated much of its revenue to servicing and paying off loans associated with the merger, rather than reinvesting in local journalism.

Like many of us I'm sure, my local (Gannett-owned) news website is awful. On the news page, you might get a handful of stories a week related to the actual town.

It's high school sports results, PR for new businesses (or remodeling of existing ones), some crime reports, health code violations. Granted there may not be much happening in a small town, but it's very surface level. I get the impression the journalists are told to live off a diet of aggregated reports sent to them rather than getting out to speak to anyone.

Like the linked piece suggests, it bears no relationship to what locals are talking about in Facebook and NextDoor groups. The community chats about constant flooding in certain areas, discussions related to Covid including staffing, the changing weather, personal allegations which if were true would be scandalous but go unchecked, the availability of public services.

[Sniffnoy]

This seems to be part of a more general phenomenon of businesses being run by people who don't know that area of business, and who direct all focus away from the quality of the product, doing things such as cutting costs even when the resulting lower quality makes the company less profitable, not more. (For instance, Shamus Young has written a fair bit[1] about this phenomenon in the video game industry, although there cost-cutting does not seem to be its primary manifestation.)

It's not entirely clear what's to be done about this; we generally assume that businesses might disregard others' well-being in pursuing their own interest, but what do you do when instead they're just stupidly destructive, serving nobody's interest?

(Of course part of what's going on here seems to be that, due to principal/agent problems, it's not really serving nobody's interest; the shareholders lose out, but the executives, who are paid a salary, and thus rely not on the impersonal evaluation of the market but their own ability to convince people they're doing a good job, do not seem to lose out in the same way...)

[1] For instance, here: https://www.escapistmagazine.com/eas-problem-isnt-greed/

[helipad]

To be fair I don't think the cited paper being profitable before necessarily means they are not now they've been bought out, though I take your point that in aggregate their parent company is paying off debt.

Once the papers are reduced to sources that come in via weekly feeds, you no longer need boots on the ground journalists to report the stories. You can write the stories from anywhere, predictably, with automated or offsite writers.

The end goal seems to be: look at this huge organization with a fraction of the overhead, with vast reach, that has predictable if small margins, but that's profitable across thousands of publications. That's the sort of thing that keeps shareholders happy, it just happens to be at the expense of a public good.

[WorldMaker]

I live in a relatively big city and my local (Gannett-owned) news website is just as awful in the same way you describe.

I don't even check the website. There's a daily email with maybe a dozen tops "top stories" and I find it usually contains everything of local interest that I used to expect to read almost cover-to-cover when I last had a physical paper subscription, despite how few headlines make it into the email.

> I get the impression the journalists are told to live off a diet of aggregated reports sent to them rather than getting out to speak to anyone.

I have friends that were laid off in one wave or another from the newspaper. The impression I've been given is that Gannett runs papers on local skeleton staffs that of course don't have time to do in depth journalism because after all the lay-offs there's only one or two people to cover a city of a million plus people. Gannett thinks they can coast on nationally syndicated content instead, which is why all Gannett "local" papers start to look/feel alike (and start to just resemble USA Today with a "local" rebranding/rebadging).

At least we still have a regular alt-weekly. (For now, I'm still not sure about the new owners this year and the disappearance of some Editorial content seems to indicate to me a need to watch for a similar scrubbing to a skeleton staff and nationally syndicated content pretending to be local.)

[rsj_hn]

A lot of people think that the reason why a business is bought up is because it isn't profitable, but a business is bought up when it's undervalued. If you can pay off the loan from the profit the business is earning and have something left over then you can buy the business.

This is why a business wants its share price to be high. When the share price falls, then you become vulnerable to this. It's all about opportunity cost. Thus a company will lay off people or close a division even when it is still earning a profit, as long as that profit is less than what justifies a reasonable share price - one that prevents this type of buyout. Therefore the rate of return on debt forms a baseline for the return of equity. The end doesn't have to come from not being able to pay your bills, but from being repurposed for another use. Please remember this the next time someone says "Company X didn't need to do this, it was still profitable!" or "Companies don't need to keep shareholders happy!" Please also keep this in mind when someone is insisting that low interest rates are a good thing. Low rates bid up shareprices and create a lot of churn in the business world.

[musicale]

> Gannett has dedicated much of its revenue to servicing and paying off loans associated with the merger, rather than reinvesting in local journalism

Seems to happen a lot in retail (often sinking the retailer) but it's interesting to see in newspapers.