The New News Barons: Investment Ownership Reduces Newspaper Reporting Capacity

• Published date: 01 May 2023
• DOI: http://doi.org/10.1177/00027162231211426
• Author: Erik Peterson,Johanna Dunaway
• Date: 01 May 2023
• Subject Matter: Part II: Supply

74 ANNALS, AAPSS, 707, May 2023

DOI: 10.1177/00027162231211426

The New News

Barons:

Investment

Ownership

Reduces

Newspaper

Reporting

Capacity

By

ERIK PETERSON

and

JOHANNA DUNAWAY

1211426ANN THE ANNALS OF THE AMERICAN ACADEMYTHE NEW NEWS BARONS

research-article2023

In recent years, local media in the U.S. have faced

increasing economic precarity, and many newspapers

have been purchased by hedge funds and private equity

firms. How do investment owners shape the newspa-

pers they acquire? We document the shift in ownership

and its impact on the number and type of journalists

that local newsrooms employ. Using over 13,000 digi-

tized media directory pages, we measure the news-

rooms of 211 major newspapers from 2005 to 2022. We

estimate that the acquisition of a newspaper by an

investment owner reduced the paper’s newsroom by

nine reporters and editors compared to newspapers

that remained under other ownership, a cut equivalent

to 14 percent of the average newspaper’s staff. These

cuts were concentrated among positions focused on

general assignment and political reporting. Our find-

ings indicate the rise of investment owners has acceler-

ated the decline of local newspapers.

Keywords: media ownership; consolidation; local

news; media decline; reporting capacity;

news investment; hedge fund

Diminished advertising revenue and the

movement of audiences away from legacy

media are contributing to a local news crisis in

Correspondence: erik.peterson@rice.edu

Erik Peterson is an assistant professor of political sci-

ence at Rice University. His research considers political

communication in American politics with a focus on the

political consequences of the decline of local media and

the growth of online news consumption.

Johanna Dunaway is a professor of political science in

the Maxwell School of Citizenship and Public Affairs at

Syracuse University and the research director of the

Syracuse University Institute for Democracy, Citizenship,

and Journalism in Washington, DC. Her areas of

research include news media, democracy, political atti-

tudes, and behavior.

NOTE: The authors thank Josh Darr, Nikki Usher, Phil

Napoli, Sean Fischer, and Michael Wagner for helpful

feedback, along with the other participants at the 2023

Social Science Research Council meeting in San Diego.

We also thank Leon Kockaya, Joon Hwa Kim, and Nicole

Ruopp for research assistance and Jessica Mahone and

the University of North Carolina’s Center for Innovation

and Sustainability in Local Media for sharing data.

THE NEW NEWS BARONS 75

the U.S. Much recent research examines the decline of local media and its civic

consequences (Darr, Hitt, and Dunaway 2021; Hayes and Lawless 2021; Hopkins

2018; Mahone et al. 2019; Peterson 2021a; Usher 2021). Here we address a new

manifestation of the struggles facing the local news industry—the acquisition of

newspapers by hedge funds, private equity firms, and owners with investment

backgrounds. The rapid expansion of this new class of media owner is alarming

observers. A New York Times headline about the 2019 merger between Gannett

and GateHouse, a large investment chain, is a telling example: “Hedge Fund

Called ‘Destroyer of Newspapers’ Bids for USA Today Owner Gannett” (Lee and

Hsu 2019). As of January 2022, investment owners controlled 55 of the 100 larg-

est newspapers in the United States, a notable increase from 2005, when only one

of these same newspapers was investment owned.

Media ownership can affect newsroom investments, the news production pro-

cess, and the coverage a media outlet provides (Archer and Clinton 2015; C. E.

Baker 2006; Gentzkow and Shapiro 2010; Hamilton 2004). Research links the

consolidation of media to decreases in the volume of local news coverage

(Dunaway 2013; Martin and McCrain 2019; Napoli 2003) and finds that some

ownership types, such as publicly traded shareholder-controlled newspaper com-

panies, focus on profit more than other owner types and invest less in the news-

rooms of outlets they control (Dunaway 2008; Hamilton 2004). While this

research establishes important distinctions among owners with long-standing

media industry ties, it does not address the entry of investment owners, a recent

development that has received more media attention but relatively less scholarly

attention (but see Ewens, Gupta, and Howell 2022).

How do investment owners shape the newspapers they acquire? We focus on

the consequences of their ownership for a particular type of newsroom invest-

ment: the number of editors and reporters a newspaper employs. It is important

to understand any effects these owners have on newsrooms. Ethnographic

accounts emphasize that producing local news is a labor-intensive process reliant,

in part, on well-staffed newsrooms (Fishman 1980; Kaniss 1991); and quantita-

tive studies link the size of a newspaper’s staff to the amount and quality of the

political coverage it produces (Darr 2016; Dunaway 2008; Peterson 2021b). The

health of newspapers also has broader implications; newspaper journalists still

conduct much of the original news gathering about local politics. Local television

and radio stations still often rely on newspaper reporting to inform their own

(Mahone et al. 2019; Mondak 1995; Nielsen 2015; Vinson 2003).

We assess whether the rise of investment owners caused a decline in newspa-

per-reporting capacity. Describing the distinguishing features of these new own-

ers, Abernathy (2016, 19) writes, “Unlike the local owners of the past who had a

stake in their communities, or the professional managers who ran those large

20th-century chains, the se new newspaper owners focus almost exclusively on driv-

ing the performance of their holdings, of which newspapers are often a small and

expendable part.” Investment owners may engage in more severe newsroom cuts

than do traditional media owners due to a greater focus on profit and less attach-

ment to the civic mission of newspapers. This expectation is also supported by

evidence from other economic sectors where investment owners are distinguished