By Tench Phillips, Co-Owner Naro Expanded Cinema 

“I think it would be fun to run a newspaper.” – Orson Welles in ‘Citizen Kane’

 

The golden days of daily newspaper publishing are long gone – the era that was celebrated in the classic 1941 film ‘Citizen Kane’ whose character played by Orson Welles was based on newspaper magnate William Randolph Hearst. The iconic film happens to be featured in Mal Vincent’s Summer Classics series at the Naro and shows on Monday, August 13.

Today’s digital world stands in stark contrast to the analogue age of Hearst’s prosperous print empire. In our modern times, it’s decidedly not fun to be running a newspaper. The business has suffered a long downward spiral of contracting audiences and diminishing returns. In just the seven years since 2011, average total daily newspaper readership has shrank 40% while ad revenue has fallen 60%. Newspapers are just the most recent example of an industry disrupted by the loss of customers who have migrated to the web for consuming music, movies, information, and retail purchases. We’ve seen the demise of book stores, video stores, and all kinds of specialty retailing. 

Due to the loss of ad revenue, local newspapers have dismissed reporters at a precipitous rate. The shrinking numbers are reflected in the Pilot Media workforce. Layoffs and employee buy-outs have occurred regularly over the last ten years even though the Sunday circulation of 130,000 is still the largest in the state. In 2008, there were 1,260 employees at Pilot Media compared to todays’s staff of around 475 before the sale. Many of these employees are new hires and are younger, less experienced journalists who are having to do more with less. Area writers, some of whom were previously on the Pilot staff, make up the slack. As independent contractors, they receive no employee benefits from the Pilot.

The business model for the independently-owned, for-profit daily newspaper publication is no longer viable. Over the years, Wall Street public syndicates like Tronc, Gannett, and Digital Media have been attracting investors so as to buy up small-town newspapers and squeeze out profits. But after years of cutting staff and expenses, those profits are getting harder to find.

Let’s look at the operations of several large newspaper syndicates. The predatory nature of global finance capitalism isn’t very pretty. We’ve heard about the all-out rebellion by the editors of the Denver Post against their parent company, Digital First Media, the country’s 2nd largest newspaper chain with almost 100 community newspapers based mainly in California and the western states. Recent editorials in the Denver Post have outed the majority owner of the paper, the president of hedge fund Alden Global Capital, Heath Freeman. In the last few years he has gutted out an award-winning newsroom by about two-thirds. But even that wasn’t enough cost-cutting for the vulture hedge fund owners, and they demanded more firings. The editorial page editor wrote a brave editorial deploring the mismanagement of his bosses. It’s no surprise that he was soon censored and had to resign. 

A number of other editors have also departed in protest at The Denver Post and other Digital First Media papers. The fight in Denver is the same one that’s happening at their papers in Salt Lake City and Detroit and all around the country. Many of these Digital First Media newspapers remain profitable like the Denver Post and some are still producing Pulitzer Prize-worthy coverage. Yet their owners, far removed from the communities these papers serve, continue to slash budgets and staff. 

The press coverage of the recent buyout of the Virginian-Pilot by Tronc, the Chicago-based company formed two years ago by investors of the Tribune Company, has diverted public attention away from all the bad press the company has recently generated. (Note: although the hipster Tronc logo depicts the company name in all lower-case letters, I’ll respect the tradition of capitalizing the first letter of a proper noun.) The consolidation of so many local newspapers across the country whose core business continues to erode has unsurprisingly resulted in financial deficits and staff problems. The rosy veneer that the newspaper conglomerate presents to Wall Street is wearing rather thin these days.

Tronc owns nine major newspapers including The Chicago Tribune, New York Daily News, Baltimore Sun, Orlando Sentinel, The Los Angeles Times, and The Daily Press on the Peninsula with their affiliates The Virginia Gazette in Williamsburg, and The Tidewater Review in West Point. Some local pundits have speculated that Tronc may want to combine all their local papers into one area newspaper for economies of scale.

These days no one goes into journalism to get rich – only if they have a genuine calling. Young employees are actually willing to accept poor salaries in their pursuit of truth and factual reporting. Their integrity is more important than ever in the age of Trump and his perverted accusations of “fake news”. If young journalists are able to find full-time employment, they may start off around $30,000 a year, and that salary may double after many years of experience. 

In contrast, Tronc executive pay is well into the seven figures. According to SEC filings that were made public in April, Ross Levinsohn, who was the previous publisher and CEO of the L.A. Times, earned $6.9 million in his compensation package in 2017. But Levinson left the paper in January after creating much turmoil and resentment at the paper. That’s not a bad paycheck for such a dismal record.

Tronc mismanagement at the L.A. Times created such a public relations nightmare that Tronc executives decided to cut their losses and run. A deal was made with the Los Angeles pharmaceutical billionaire Patrick Soon-Shiong to sell The L.A. Times along with The San Diego Union-Tribune for the sum of $500 million and accrued debt. Although the deal was to be completed by April, the sale has yet to be finalized. Is it an indication that Soon-Shiong is stalling or perhaps backing out of the deal? It’s a lot of money in comparison to the Pilot deal for $34 million or even the amount that Jeff Bezos paid for The Washington Post a few years ago. The parties have until August to work it out.

During the ongoing struggles between The L.A. Times and Tronc, the newspaper staff chose to unionize in the face of strong resistance by management. Tronc is vehemently anti-union and yet it has also lost a battle to squelch unionizing efforts by employees at The Baltimore Sun. Out of desperation, the staffs of other non-union papers are looking to organize in the face of fierce opposition from Tronc.

Additional problems continue to dog the company. Executive Chairman Michael Ferro abruptly left the company in March when a Fortune Magazine investigation revealed complaints of sexual harassment against Ferro. As the majority investor of Tronc , he created much ill-will at the company. And now he wants out. His $200 million majority share of Tronc had recently been agreed to be acquired by investor group McCormick Media for a premium over its current deflated stock price. But nothing seems to go as planned in the land of Tronc. As of this writing, the deal between Ferro and McCormick has just fallen apart.

The high finance shenanigans by Tronc executives are like a game of musical chairs. Their ongoing scheme has been to lure big financial bets from investors so as to buy up underperforming newspaper companies at a discount. But there’s a limit to the profits that can be sucked out of these papers by executives whose main concerns are quarterly reports and their annual bonuses. Only so much staff can be laid off and so many expenses cut before the journalistic quality and worthiness of a newspaper becomes circumspect in the eyes of the public. The lack of allegiance to the community by absentee owners becomes all too obvious and readership plunges. The house of cards that’s been built on debt and borrowed money becomes overextended and collapses.

But company executives have planned well for their own future. In a SEC filing in April, the five top Tronc executives filed an updated ‘Estimated Payments Upon Termination or Change in Control’. The corporate officers have itemized what they will receive if the company is sold or otherwise experiences a change of ownership. Their potential total payout is $23.5 million, a combination of severance and accelerated contractually owned compensation regardless of the company’s operating income or profit. For a few people at the top, a “change of control” would mean newfound wealth. Of course, no other Tronc employees would receive guaranteed compensation, and many could loose their jobs. 

And now Wall Street is calling for a break up of Tronc’s various papers and holdings. It would be a win for investment bankers and deal-makers. It might even be a win for Tronc’s various newspapers, which have been shuttled between various owners and publishers. Perhaps the best path to sustainability for this collection of newspapers is to once again separate them. The alternative would be a buyout by a larger company. The country’s largest newspaper chain, the Gannett Company made an offer in 2016 to buy Tronc but the bankers balked at the high valuation and the deal ended up falling through. Now the lure of a better deal has once again brought the company courting.

It’s quite incredible, isn’t it? That this rogue cabal of financiers has been selected by Landmark Media to protect their fragile family business and steward our community newspaper into a sustainable future. And what will Landmark walk away with? A modest sum of $34 million for all their local holdings and properties. Small potatoes in comparison to their sale of The Weather Channel a few years ago for $3.5 billion dollars! 

Included in the sale to Tronc is the iconic Virginian-Pilot art-deco building on Brambleton Avenue. But it may not be the location of the paper’s headquarters for long. Past cost-cutting strategies at Tronc have included the relocation of the headquarters of both The L.A. Times and The Chicago Tribune from their central downtown properties to less expensive buildings in the suburbs. Why would Tronc executives treat the Norfolk headquarters any differently? They could find a cheaper building to move to in Chesapeake or Suffolk.

Landmark did us no favors in their selection of an investor syndicate like Tronc instead of a buyer more focused on quality journalism. Maybe a billionaire like Warren Buffett whose company BH Media owns both The Richmond Times-Dispatch and the The Daily Progress in Charlottesville or Jeff Bezos, who owns The Washington Post. But perhaps these self-proclaimed defenders of a vital free press have lost their appetite for acquiring more papers and more problems.

In holding out for the best deal over the years, the Pilot ownership may have waited too long to sell. The outlook for the newspaper business continues to erode, and Tronc may be bluffing in their high-stakes poker game. Without the necessary cash infusions from Tronc investors, could the deal with the Pilot fall through? Then it’s back to Wall Street for Tronc, to lure more wealthy vulture capitalists to fund the company. Tronc could be forced to pursue the strategies of rival newspaper conglomerate Digital First Media. In the short-term it means bleeding the profits out of their papers with drastic cost-cutting and more staff firings. When investor money dries up, they’ll flip the companies to new owners. It’s a downward spiral in a race to the bottom. The ownership of the local newspaper becomes the biggest threat to the continued existence of watchdog journalism.

Ok, so what’s the alternative? Examples of non-profit grassroots community journalism are springing up around the country as an alternative to legacy media. Online community journalism has mushroomed over the years as many smaller communities have had to migrate away from newspaper hard copy and move over to the web. LION, the acronym stands for Local Independent Online News, supports and networks community publishers and now has 150 members in 37 states.

Our very own Veer Magazine has proven that a small publisher with a big vision can still be successful. After Jeff Maisey was laid off from Landmark in 2009 as an editor of the now shuttered Portfolio Weekly, he saw an opportunity to create an independent arts and opinion publication. Although he was repeatedly warned that hard copy community news was finished, he soon published the first issue of Veer. Nine years later, he has achieved great results with a circulation of 30,000. So much so that the Pilot advertising department has tried for years to siphon off Veer advertisers and lure them away to Pilot publications. Jeff has a small team of progressive opinion writers led by Tom Robotham, who had been the editor-in-chief for Portfolio Weekly before his untimely dismissal.

It’s been suggested for some years that Landmark Media, the privately-held family business that has owned the Pilot could save local quality journalism by endowing their newsroom so as to keep a healthy number of journalists covering our community and to maintain high-morale. It’s been done before; a family trust funded the international newspaper, The Guardian, so that business decisions at the paper are not just based on revenue and expenses – but on sustaining good journalism. Just think what the Pilot owners could have done by re-investing their profits in the newspaper and keeping their money local rather than selling out to an absentee financial group.

A good example of a business that has transitioned to a non-profit is Naro Video. Its business had been eroding for years as streaming on the internet captured more audience and shrank the number of people who rent DVDs and BluRays. Instead of closing the store and extinguishing the vibrant community that has grown up over the years on Colley Avenue, the business owners relinquished control to a non-profit board and bequeathed the new Naro Video Archive with their giant video inventory containing 45,000 titles worth more than a quarter million. A kick-starter campaign raised more than $50,000 last year from donations by loyal store patrons. Naro Video is now the largest store operating in the Mid-Atlantic states. The morale of the staff and their patrons has brightened considerably as a result of their shared community vision.

In contrast, a dark cloud has hung over the Pilot newsroom over the last few years of continued employee buyouts and layoffs. The news of the recent Pilot’s sale was not even announced to the staff until after it had been reported on the wire services. Although the Battens and the board may not have had an allegiance to the future of local quality journalism, their readers have remained loyal to the paper. That’s in spite of the newer, slimmed-down Pilot, and the public’s common knowledge about the ongoing efforts to sell the paper.

There is an inherent conflict of interest between the duties of the fourth estate in a democratic society to monitor the activities of  government and business – and the profit motive of corporate media. Quality journalism takes a back seat to the financial goal of short-term profits for Wall Street investors. The layoffs of newsroom staff over the years is a futile attempt to prop up an antiquated business model. It’s a self-fulfilling prophesy for failure.

There are some areas of our society that should be walled-off from the opportunistic and monopolistic practices of big business. The Battens could have treated the Pilot differently than just another of their businesses. The newspaper is much more important than that for our community. Without investigative journalism to keep the big boys honest, corrupt politicians and crony capitalism thrive unchecked. I don’t know if the Pilot board really appreciates what our loyal community has given them – the untold profits that they reaped from local advertisers and subscribers that funded their operations and gave them great returns on their investment.

Who stands to benefit from the sale of the Pilot? Well, the Batten board will now relieve themselves of nagging business problems seemingly devoid of solutions. But beyond that at the Pilot, there’s much uncertainty for the remaining staff. We can only hope that good local reporting can continue. Otherwise it’s hard to see how our community of readers will realize any real benefit. And at Tronc, there’s too many balls in the air and not enough transparency to be able to make a good prediction. There’s only one thing we know for sure – Tronc executives will profit handsomely regardless of the outcome for their company and our local newspaper.

Upcoming Film Events at Naro Cinema

AMERICAN SOCIALIST: The Life and Times of Eugene Victor Debs 

Bernie Sanders inspired a generation – but who inspired him? The groundwork was laid for our current activism income inequality began over 100 years ago with Debs. In doing so, his film traces the history of American populism with the man who inspired progressive ideas – from FDR’s New Deal to Bernie’s presidential campaign. Here is an objective but passionate history of the movement as founded and championed by Debs, a movement that continues to have an impact on our lives today. Shows Wed, June 20 with speakers and discussion.

THE GOSPEL ACCORDING TO ANDRE  

André Leon Tally has been a fixture in the world of fashion for so long that it’s difficult to imagine a time when he wasn’t defining the boundaries of great style. Kate Novack’s intimate portrait, takes viewers on an emotional journey from André’s roots growing up in the segregated Jim Crow South to become one of the most influential tastemakers and fashion curators of our times. Shows Tuesday, June 26 with speakers and discussion.

MANTRA : Sounds into Silence  

Kirtan is a participatory, call and response Eastern form of chanting and singing mantras. It has gained popularity as westerners have discovered its uplifting and healing effects. Featuring the best world kirtan musicians including Krishna Das, Snatam Kaur, Deva Primal, Miten, Lama Gyurme, Jai Uttal and MC Yogi. Shows Wed, June 27 with introduction.

POPE FRANCIS: A MAN OF HIS WORD  

On March 13th, 2013, the Cardinal of Buenos Aires, Jorge Mario Bergoglio, became the 266th Pope and the first Pope from Latin America. Filmmaker Wim Wenders has worked in partnership with the Vatican to create a film that’s more than a biography. The production allows Pope Francis to directly address audiences and share his vision and mission for social, environmental, and economic reform. Shows Tuesday, July 3 with speakers and discussion.

YELLOW SUBMARINE 

This is the 50th Anniversary Showing of The Beatles visionary 1968 animated film, with newly restored digital sight and remixed 5.1 Stereo Surround Sound. The story of how The Beatles battle the music-hating Blue Meanies armed only with the power of love and music. Featuring some of the most-loved songs from the world’s greatest band, including Lucy In The Sky With Diamonds, Nowhere Man, Eleanor Rigby, and All You Need Is Love. Shows Sunday, July 8.

MAL VINCENT’S SUMMER CLASSICS 

For this 15th season at the Naro, Virginian-Pilot critic and columnist Mal Vincent has programmed a festival of notable films – including ‘Citizen Kane’ – that he’ll introduce and embellish with personal stories about the Hollywood legends. Every Monday evening for 7 weeks beginning July 9 with ‘The Maltese Falcon’.

EATING ANIMALS  

Based on the bestselling book by Jonathan Safran Foer and narrated by co-producer Natalie Portman, this new food documentary shows how farming over the decades has gone from local and sustainable to a corporate Frankenstein monster that offers cheap food at a steep cost: the exploitation of animals; the risky use of antibiotics and hormones; and the pollution of our air, soil, and water. Shows Wed, July 11 with speakers and discussion.