1 2 The Abell Report Published by the Abell Foundation June 2015 Volume 28, Number 3 Is The Texas Tribune’s NonProfit Digital Newsroom the future of Journalism? By Ted Venetoulis May 2015 Introduction robust period for news coverage. The News American provided feisty competition to the The decline of the American newspaper prompted Morning Sun and Evening Sun whose local a vigorous search for the next new newsroom owners did not hesitate to invest in veteran model. This report profiles one of those potential reporters, national and foreign bureaus, prototypes, The Texas Tribune, a nonprofit, and editors whose thoughtful commentary nonpartisan, digital news organization. exercised considerable influence over state policy and political behavior. In 2013, four years after its inception, the Knight Foundation called the Tribune “one of Television knocked off most of the evening the nonprofit news sector’s runaway success papers, leaving dozens of cities with monopoly stories.”1 Since its launch in 2009, the Tribune morning papers producing a handsome 25 has survived the start-up struggle, expanded its percent to 30 percent return for their owners. content and digital service, reached profitability, This prosperity made newspapers targets for and built a publishing business that is the envy investors who used leveraged debt to offer the of most for-profit legacy newspapers. It has won families or corporate owners extraordinary international acclaim and numerous honors, sums for their properties and then including nine Edward R. Murrow Awards from consolidated local papers into large chains. Eli the Radio Television Digital News Association. Noam, in his study of media acquisitions and mergers, calculated that by 2006, while the This is a brief examination of one of the most number of cities with competing newspapers formidable organizational alternatives to the slowly dropped from 181 to 38, the number of retrenchment and declining presence of the daily newspaper chains more than doubled from 60 2 print newspaper. to 129. The Decline of Print Journalism Newspaper values skyrocketed. In 1993, The New York Times paid $1.1 billion to buy the Some may remember when three daily assets of The Boston Globe. In 1996, the Times newspapers served this region: the Hearst- Mirror Company, owner of the Los Angeles owned Baltimore News American, and the locally Times, bought The Baltimore Sun for $600 owned Baltimore Morning Sun and its afternoon million, ending local ownership. Four years counterpart, the Baltimore Evening Sun. It was a later, the Tribune Company bought the Times Abell Foundation www.abell.org @abellfoundation P: 410-547-1300 June 2015 2 Recognizing their profession needed to establish a different newspaper model, many journalists began collaborating with strategic partners. Across the country, full-scale online journalism experiments funded by a variety of philanthropic investors, venture capitalists, universities, and foundations began to emerge. Mirror Company for $8 billion. And in 2006, in its wake The Baltimore Sun stripped of its real estate magnate Sam Zell purchased the veteran reporters, its foreign bureaus, and Tribune Company, including The Baltimore Sun, its circulation and advertising base. Valued for $13 billion, most of it in debt. once at $500 million, The Baltimore Sun had dropped to $25 million in value, even before While these highly leveraged acquisitions the bankruptcy.3 and mergers accelerated, the Internet’s disruption of the newspaper business went Finally, a decade too late, publishers realized mostly unnoticed. Operating profits began a that giving away content for free online was slow slide from double-digit status. By 2007, madness. Newspapers scurried to make the newspaper values sunk as rapidly as they had digital transition by launching their own online advanced. Publishers allowed Internet users sites. Yet no matter how they experimented free access to their content and assumed that with pay walls and premium offerings, these the growing Internet traffic would increase print/digital hybrids could not reverse the readership and advertising. They gave away decline in print advertising and dwindling the content they were paying millions of subscribers. Revenues continued to decline. dollars to distribute. For every dollar gained in digital revenue, a report for the Pew Research Center showed, And newspaper publishers paid a price. newspapers were losing $7 in print revenue.4 Wrestling with debt and a declining business model, they struggled to combat this alien Journalists, many now out of jobs, created their force. They reduced staff and closed bureaus. own blogs, but without a business plan to fund Some shut down, cut circulation, or sold off the content, most of the blogs simply faded. real estate. Some filed for bankruptcy. Others Jeff Jarvis, an eminent journalism professor sold off the publications they had purchased, at the City University of New York, put it suffering staggering losses. In 2013, The New somewhat crudely: “Newspaper people don’t York Times sold off its Boston Globe holdings for know shit about business.”5 $70 million, a 93 percent loss. The Washington Post sold its iconic paper to Amazon owner The ‘Next’ New Newspaper Model Jeff Bezos for $250 million, which came out of his own pocket. And in 2007, a brief year after By 2007, it had become apparent that he bought the Tribune Company, Sam Zell, in journalism was not going to be rescued what he called “the deal from hell,” took the by bloggers or business professionals. Tribune Company into bankruptcy, leaving Recognizing their profession needed to 3 establish a different newspaper model, many Others gradually grew into public service- journalists began collaborating with strategic oriented news organizations. The Voice of partners. Across the country, full-scale online San Diego was originally envisioned as a journalism experiments funded by a variety for-profit. But when its consultant told the of philanthropic investors, venture capitalists, major funder that not a single for-profit, Web- universities, and foundations began to emerge. centered news organization was profitable, Communities across the country were sprouting the investor shifted gears. If they were news sites. The experiments came in many going to lose money, the investor said, they forms but the most promising had two major might as well go nonprofit. Concentrating ingredients: First, they would all be digital, on citizen engagement, the Voice identified which immediately eliminated the prohibitive itself as a member-based news organization, legacy costs of printing presses, newsprint, encouraging submissions from civic leaders and distribution systems; second, they would and local experts, gaining attention from be set up as nonprofits. These media pioneers The New York Times and other news outlets. considered newspapers a public service, not a By 2014, it raised $1.6 million and the site private business. So they dumped the centuries- operated at a profit. Convinced that the Voice old for-profit system, intent on operating free of showed long-term sustainability, the Knight distant ownership, debt obligations, legacy costs, Foundation awarded it $600,000 to increase and shareholder anxieties. membership. As with most experiments, there were awkward One of the most respected and successful attempts. One promising organization, the digital nonprofit organizations is the MinnPost, Chicago Cooperative, fell afoul of the IRS. West founded in 2007 by the former Minneapolis coast philanthropist Warren Heller invested Star Tribune publisher, Joel Kramer, following $5 million to start The Bay Citizen, a nonprofit the newspaper decline after its sale by the partnership between the local public broadcasting Cowles family. With a $1.1 million start-up fund station and the University of Berkeley. provided by contributions from members of Unfortunately, Heller died, and after some the Cowles family, two local foundations, and internal bickering, The Bay Citizen merged with the Knight Foundation, Kramer launched the the respected California Center for Investigative site with six full-time editors and reporters, Reporting. The St. Louis Beacon, another nonprofit and dozens of veteran freelancers. He focused experiment, took a similar route, merging after high-quality journalism on essential local six years with the St. Louis Public Radio station, issues. He organized events including the owned by the University of Missouri. The merger annual MinnPost Birthday Bash; a MinnPost integrated broadcasting and digital platforms, Book Blast; an annual MinnPost Legislative and eased the Beacon’s constant revenue search. Review; and the annual MinnPostRoast, which draws 1500 attendees and averages six-figure The Pew Foundation estimated that by 2012, there revenues. He raised money to cover specific were more than 150 nonprofit digital outlets in issues: $130,000 for environmental coverage the Unites States. Many focused on individual and another $110,000 to launch a column issues: Charlottesville Tomorrow on metropolitan covering mental health and addiction. He growth and development; Great Lakes Echo and negotiated in-kind collaborations with Google, Portland Afoot on the environment; and Boston’s Microsoft, University of Minnesota School of Open Media on social justice. Some, like the Journalism and Mass Communications, WCCO Investigative News Network, Pro-Publica, and (the local public broadcasting station), and the the Wisconsin Center for Investigative Reporting, Minnesota