Private equity's destructive impact on the media sector, as discussed by Megan Greenwell
In the world of media, the landscape has undergone significant changes over the past few decades. From consolidation to unionization, and the rise of nonprofit news organizations, the industry is facing challenges and opportunities alike.
In the United States, eight percent of the American workforce is employed at companies owned by private equity. This includes media companies, which have been subject to acquisitions that, according to a sobering statistic, see twenty percent of these companies enter bankruptcy within ten years of being acquired. One such instance is the private equity firm Alden's acquisition of the Denver Post, which resulted in an open revolt against its owners eight years later.
The media industry has also seen the impact of private equity on various sectors, as detailed in Greenwell's book, Bad Company. Greenwell, who was the editor in chief of Deadspin, a sports blog, in 2019, narrated the needless implosion of Deadspin in a viral blog post, three months after its acquisition by fox news. The rest of the Deadspin staff followed Greenwell's departure.
The issue of unionization in newsrooms has been a contentious one. Unionization can significantly improve workers' conditions, but the process can be demoralizing and lengthy due to companies' anti-union stances and weak enforcement mechanisms. A notable example is the union at the Indianapolis Star, which reached a contract with Gannett after three and a half years, demonstrating the importance of unions in newsrooms and the need for stronger enforcement mechanisms.
The nonprofit model has emerged as a potential solution to the local news crisis. Organizations like Mississippi Today and the Baltimore Banner have demonstrated the success of this model for local investigations. However, the model faces challenges in serving news deserts in rural areas, where the problem remains unresolved due to these communities often lacking the philanthropic infrastructure to support nonprofit news organizations.
To address the local news crisis, a series of small steps may be necessary. This includes state-level government support, as demonstrated by the imperfect bills passed in New York and California. Another potential solution could be the establishment of a successful nonprofit model in a larger city-based organization and then expanding outward.
The consolidation of major media companies like Gannett, Sinclair Broadcast Group, Nexstar Media Group, and Tribune Publishing has been a concern, with these acquisitions often leading to reduced newsroom staff, centralized content production, and concerns over diminished local news coverage and diversity.
Despite these challenges, there are people doing deep investigations through nonprofit newsrooms. Between 2004 and 2019, half of all newspaper jobs were lost and a quarter of all papers folded. However, the resilience of the industry is evident in the work being done by dedicated journalists, even in the face of adversity.
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