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Paper Cuts: When private equity firms control local newspapers

Chapter 1

Ownership changes accelerate declines in area newspapers

Local newspaper coverage in south-central Indiana has been in steep decline with the shift in ownership from family-owned companies to companies controlled by large private equity firms. The disintegration shows up in staffing, circulation and content that could be considered local news.

Bob Zaltsberg

Industry realities prompted some declines while family-owned Schurz Communications Inc. still owned the newspapers, but the free-fall began after SCI sold its publishing division to GateHouse Media and its private investment firm owner, New Media Investment Group.

Ownership changed on Feb. 1, 2019. And so did the newspapers’ relationship with local communities.

What are the implications?

The NYU study – “Local Journalism Under Private Equity Ownership” (PDF) – states:

“PE leads to higher digital circulation and lower chances of newspaper exit. However, the composition of news shifts away from local governance, the number of reporters and editors falls, and participation in local elections declines. The results have implications for knowledge about local policy issues and highlight trade-offs surrounding media ownership.”

The executive summary of another report, “The State of Local News” from the Northwestern University Medill School of Journalism, states:

“The loss of local journalism has been accompanied by the malignant spread of misinformation and disinformation, political polarization, eroding trust in media, and a yawning digital and economic divide among citizens. In communities without a credible source of local news, voter participation declines, corruption in both government and business increases, and local residents end up paying more in taxes and at checkout.”

Todd Schurz, president and CEO of the Indiana-based company then, said though business considerations were real and at times limiting, the company’s mission was tied to journalism and serving communities.

“It was very much journalism-based in terms of presenting facts, helping people get to the truth, and then how people can use that to make a better community, a better society, a better nation,” he said in a recent interview.

“In terms of the relationship of the communities, we always said that it's hard to have a thriving local media company in a dying community. And so, it was very important for us to be an active supporter of the community.”

He said being a “supporter” included pointing out flaws and problems.

Ownership matters, said Ryan Gunterman, a former Bloomington High School North teacher who has worked in journalism education for 20 years.

“I think it matters when it comes to their true commitment to the organization and the mission,” he said. “And when your mission is profit, and when your mission is for your stockholders to be happy, that doesn't always necessarily lead to great things.”

In recent years, academic and industry studies and articles have looked into the issue of newspaper ownership.

A research paper completed at NYU in 2022 but not yet peer reviewed noted private equity ownership rose four-fold from 2002 to 23 percent in 2019. That percentage has likely increased since GateHouse Media owner New Media Investment Group bought Gannett in November 2019.

Harvard’s NiemanLab reported by the end of 2022, Gannett owned 217 dailies and 175 weekly newspapers – down from 261 and 302 right after merging with GateHouse. There was quick evidence of the private equity profit mission. The company closed some newspapers and sold others. It fired thousands of staff members.

Gannett owns one out of six of the 1,230 dailies in the nation. And calling them “dailies” is not accurate, since many publish less than every day.

The company now owns the former Schurz newspapers. Gannett leaders wouldn’t talk to WFIU for this report.

Effects have been profound on south-central Indiana newspapers, where family ownership thrived for more than a century.

The Schurz family of South Bend, which began its company in 1872 with the South Bend Tribune, bought the Bloomington Herald-Telephone and Bedford-Times Mail in 1966. Schurz Communications Inc. owned those and multiple other southern Indiana newspapers until the sale in 2019.

At its peak, The Herald-Telephone – renamed Herald-Times by the Schurz family - had more than 31,000 paid subscribers and 51 full- or part-time employees in its newsroom.

In 2022, it reported 9,400 subscribers and now has seven newsroom employees.

The Times-Mail had more than 14,000 subscribers at one time and now has about 3,300. The Times-Mail newsroom once had more than a dozen journalists; now it has none.

Since private equity took control, two of the former Schurz newspapers – weeklies in Ellettsville and Clay City – have closed. Two in Orange County were sold to the family-owned Paxton group.

Gannett shut down printing presses in Bloomington and Bedford and sold the newspaper buildings.

Chapter 2: No journalists at Bedford Times-Mail signals a news vacuum »

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Officials at Gannett would not talk to WFIU/WTIU for these stories. They sent a statement attributed to Jill Bond, news director of The Herald-Times.

Paper Cuts The reporting is supported by a grant from the Poynter Institute, a non-profit journalism school and research organization in St. Petersburg, Fla., and the Omidyar Network.

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