It’s been a calamitous time in the news business of late, with massive buyouts or layoffs seemingly everywhere you look.
The root cause of this misery is generally said to be “economic headwinds” and “lack of effective business models” (or, in the case of The Messenger, clueless dunderheads who were doomed from the get-go.)
But the three most troubling newspaper slash-and-burns of the past few months – at the Washington Post, the Los Angeles Times, and the Wall Street Journal – all came at newspapers owned by billionaires: Jeff Bezos, Patrick Soon-Shiong, and Rupert Murdoch, respectively.
So what I see as the root cause of much of this misery is “cheap billionaires.”
I mean think about it for a minute.
Imagine you have a few billion dollars lying around that you don’t know what to do with.
Imagine you decide to buy a newspaper.
Fun! And you’re doing a great public service, too. What a magnanimous gesture to your community!
Why in God’s name would you want to squeeze it dry? For the equivalent (to you) of chump change?
That’s what I don’t get.
These cuts have caused enormous pain, robbed readers of valuable information, and reduced morale among the remaining staff. And for what? A few measly million dollars?
Do the Math
Back of the envelope math: Let’s say that cutting staff by 240 people, like the Washington Post did, saves you about $50 million a year in salary and benefits. And let’s say you’re worth about $194 billion, like Bezos is.
You’re saving about .03 percent of your net worth.
For someone who has a million dollars, that would be like saving 257 bucks.
Or in Soon-Shiong’s case, let’s say that laying off 120 people at the L.A. Times saves about $25 million out of his estimated $11 billion fortune.
For someone who has a million dollars, that would be like saving $2,237.
I mean, what’s the point? Why not take the hit?
Foundations Are Being Cheap, Too
And you know who else is being cheap? Foundations that invest their multi-billion dollar endowments in in stocks and bonds and hedge funds instead of buying newspapers.
Maybe buying newspapers isn’t the world’s greatest investment, but it’s not the worst, and so what if the foundations lose a tiny bit of their principal. Big deal! They’d have plenty left.
I’m particularly peeved at those foundations whose fortunes were made in the news business. They should be buying newspapers now that they’re both underpriced and in need of investment.
The Knight Foundation, in particular, should have bought McClatchy Newspapers when it was for sale in 2020. McClatchy had bought Knight-Ridder in 2006 for $4.5 billion plus the assumption of $2 billion in debt. McClatchy (including Knight-Ridder) was sold in 2020 for $312 million – to a rapacious hedge fund that makes its money wringing newspapers to death. Knight could have snatched it up and saved it.
For the equivalent of chump change (to them) billionaires and billionaire foundations could regale in hiring and keeping top talent, putting out a great product, informing the community, protecting democracy and spreading the message of pluralism and fair play.
Bezos, when he bought the Washington Post, made a solemn vow that “The paper’s duty will remain to its readers and not to the private interests of its owners.”
How does lopping off 20 percent of the staff do that, exactly?
When billionaires buy a newspaper, they are taking custody of a public trust, and they should behave that way. In fact, ideally, it would be temporary custody – what they really should do is fund the newsrooms lavishly, endow them, and turn them over to a nonprofit corporation led by responsible, respected journalists and community members.
With a tiny fraction of their fortunes, they would be ensuring a great public service for eternity. (What happens if Bezos dies next week? Who knows?)
Think about the Carnegie Libraries as a model. The 19th-century industrialist Andrew Carnegie made a seminal contribution to the free exchange of information by building more than 1,600 public libraries for communities across the United States. He didn’t try to run them. He gave them away.
And the MacArthur Foundation is taking a major step in the right direction, realizing that local news is so crucial to our democracy’s wellbeing that it’s pledging $500 million over five years to help local newsrooms.
But why doesn’t it invest in some as well?
The MacArthur Foundation’s endowment is over $8 billion. The Ford Foundation’s endowment is $16 billion. (Yes, Bezos is worth 12 times as much as the Ford Foundation.) The Knight Foundation – which made its money from newspapers – has a $2.3 billion endowment. Any of them could buy a lot of bargain-basement newspapers and still have tons left over.
So I’m left scratching my head over why these billionaires are pinching (for them) pennies. If you have billions of dollars, yes, buy a struggling newspaper. Help it out. Make it great. And don’t be cheap about it.