Monday, January 25, 2010

New Financial Models Part of Newspaper Future

New Financial Models Part of Newspaper Future
Web News Operations Expanding Beyond Digital Newspaper Component
Nov 29, 2009 John Seidenberg
Newspapers are facing changes beyond their print and Web versions. Competing non-profit online news sites are being created, sometimes with unique sources of funding.
The online presence of news operations is expanding beyond a digital component for newspapers. With the decline of many papers and their reporting resources, new financial models are being employed to establish, or in other cases revive, news enterprises.
Among fledgling examples of new non-commercial journalism through the creation of non-profit news sites are the New York Times joining with the Chicago News Cooperative, a non-profit news organization made up of several former Chicago Tribune staff to provide content for the Times’ local Chicago edition.
Texas Tribune Established as Non-Profit News Site Accepting No Advertising Revenue
The Texas Tribune is a new Texas-based non-profit journalism Web site which Texas venture capitalist John Thornton founded and is being run by Evan Smith, longtime editor of Texas Monthly magazine. The site plans to cover the entire state with its own reporting, columns, and blogs assembling content from other news sources, as well as original audio and original video content. Texas newspapers and television stations, if they wish, may use any of the material without charge.
It “is designed to fill the gap left by the shrinking number of newspaper reporters at the state capitol in Austin,” Howard Kurtz wrote in “Texas-size test,” in the November 2, 2009 Washington Post. Thornton decided to start the operation instead of purchasing existing troubled newspapers.
“The Texas Tribune, which won’t accept advertising, is being underwritten with tax-deductible donations from the likes of former lieutenant governors Ben Barnes ($100,000) and Bill Hobby ($50,000), and oilman T. Boone Pickens ($150,000),” Kurtz said. “There are 50 corporate sponsors, including AT&T, JP Morgan Chase and the Texas Association of Business.”
Coming Challenge to Washington Post on Local News Coverage From New Web Site
Another front on which digital news operations are challenging newspaper is local news coverage. Robert Allbritton, publisher of Politico and, whose family once owned the now defunct Washington Star newspaper, hired Jim Brady, a veteran Washington Post staffer who helped start the Post's Web site, to establish a new online news site.
"Politico challenged the Post's command of national politics: the new venture will take on the Post's coverage of local news," Harry Jaffe noted in "Allbritton and Politico Attack the Post on a Second Front," in the October 29, 2009 Washingtonian magazine. The Web sites of the two Washington television stations Allbritton owns, one on cable and the other the local ABC affiliate, will become part of the new operation.
"The real challenge will be paying for the new new journalism," Jaffe wrote. "Politico might hype its Web site, but its big revenues come from the print newspaper distributed on Capitol Hill and mostly funded by lobbyists."
In addition, the Wall Street Journal is assembling a local news staff in New York for a New York-only news section, in continuing to go beyond its traditional coverage of business news by adding customary city desk beats such as courthouses, City Hall, and the state capital.
New Hampshire Government Guarantees Bank Loan to Newspaper in State
Citing prospective job creation, the government of New Hampshire agreed to provide specific aid to a struggling newspaper in the state, the Eagle Times of Claremont. The state is guaranteeing 75% of a $250,000 loan from the Claremont-based Connecticut River Bank to the new owner of the paper.
Under the agreement, the New Hampshire Business Finance Authority and the state would be liable up to $187,000 if Egale Printing & Publishing LLC, a Pennsylvania newspaper chain which bought the Eagle Times, defaulted on the loan.
"The loan itself is secured by business assets at the Eagle, including inventory and accounts receivable, and is also backed by 'the unlimited personal guarantee of George Sample,' the managing member of the newly formed Eage Printing & Publishing and the publisher of Sample News Group in Pennsylvania, according to the BFA document," John Gregg wrote in "State to fund loan to save ailing newspaper," in the Nashua Telegraph of November 10, 2009.
The paper filed for bankruptcy and ceased publication in July, ending employment for 66 full-time and 29 part-time workers. Under its new ownership the Eagle Times resumed publishing in October with approximately 25 full-time employees, the Nashua Telegraph reported.
However, this precedent of a state backing a loan to a privately owned newspaper generated criticism over the paper becoming beholden to government-supported financing and the strong appearance of a conflict in its coverage of the state's government.
Use of government in any capacity to subsidize print or online reporting operations may seem to put it in the position of propping up news enterprises that might not be able to function on their own. "Noncommercial news ventures sprouting around the country are feeling some blowback from their for-profit cousins, who don't seem inspired by the new journalism paternalism," Dirk Smillie wrote in "The New Front Page," in the November 2, 2009 more at Suite101: New Financial Models Part of Newspaper Future: Web News Operations Expanding Beyond Digital Newspaper Component

1 comment:

  1. A huge issue here is the government bailout of a privately owned paper. Is this the beginning of a trend or an isolated incident? I believe most papers view today's media climate as one they can no longer compete in and are ultimately hoping the government will implement a large-scale bailout similar to what the auto industry received.