News

The Other Reason Billionaires Should Stay Out of Local News

It's not just their whims we should worry about.
The Other Reason Billionaires Should Stay Out of Local News
Joe Ricketts in DC in 2011. (AP Photo/Alex Brandon)

Many journalists fantasize about a wealthy owner swooping in to save their newsroom. Who wouldn’t want to work for the 2017 version of a knight in shining armor: a benevolent billionaire who cares only about the social good of local journalism instead of profits?

Ask people who worked for DNAinfo and the Gothamist network of sites (including DCist) about that.

Joe Ricketts, the super-rich owner of DNAinfo and Gothamist, seemed sincere in his desire to fund local news reporting despite reportedly racking up losses year after year. Ricketts is a prominent donor to conservative causes, yet—unlike some others who have entered the local news biz with an agenda—his politics were absent from his sites, which produced great local journalism for years. But then his New York staff unionized and, sure enough, Ricketts’s reaction was swift. Earlier this month, he closed all the sites, even those that did not unionize, without warning.

One wonders how long he’d have wanted to keep funding the sites at a loss anyway. Local news is in a fight for survival, with ad revenue plummeting and Google and Facebook lapping up nearly all of the growth in online advertising. At print and online outlets, job losses abound. It’s not unthinkable to ask whether local news can even survive as a business.

So why would an accomplished rich person step into such a landscape? Simply because they believe in local news? Or perhaps they have ulterior motives: power, politics, or simply owning something they can use to bludgeon other rich people with whom they have a grudge.

But short attention spans and hidden motivations aside, there’s a more compelling reason that even the most altruistic wealthy people should avoid the local news space, and it is something they should be well-equipped to understand. The mere act of running a local news outlet at a significant loss produces a market distortion. That’s right: A rich person running a news site with no worry about profit can prevent other entrepreneurs from jumping into the business and building something new and–more important–sustainable. How much of your savings would you invest in a plan to take on a well-resourced competitor who doesn’t even care about making money?

Even worse, well-heeled owners tend to hire as their guides to this new terrain veterans of a very different era in local journalism with fixed ideas about how to organize their newsrooms–basically, by recreating the local news models of the past, with their patron’s capital replacing ad revenue. This is a glory play, when what makes more sense is the drudgery of building a sustainable online business model one employee at a time. Local news will not be saved by the largess of the super rich–nor by impatient capital, for that matter.

For the record, I strongly believe that local news will survive as a business, but it will only be saved by people who solve the economic problems that threaten it. That takes founders with their boots on the ground and, most important, support from advertisers and/or subscribers.

I run two local news websites, and they don’t much look like the publications that came before us. In fact, I’m a member of a group called Local Independent Online News Publishers, whose members range from tiny, one-person hyperlocal blogs to larger, city-wide sites with offices and a few full-time employees. But even the mightiest among us is more a green shoot than an oak tree. Local news is a fragile thing, and it doesn’t take much to stunt its growth or make it wilt and die. Given enough time and support–and no rich guys tossing around feel-good dollars to compete against–these green shoots of local news will have the opportunity to grow and thrive.

If you are a billionaire and are reading this, thank you for your concern. But please avoid lacing up your local news boots and trampling us green shoots. I am pretty sure you would get tired of the uphill climb anyhow.

The author is the founder and CEO of Arlington-based Local News Now, which publishes local news websites ARLnow.com and RestonNow.com.

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Scott Brodbeck
scottbrodbeck