Gannett and the last great local hope

The central area of the newsroom at USA Today in McLean, Virginia. on March 8, 2017. (Photo by Greg Kahn)

Imagine a great pyramid, its foundations spanning the nation. The base of the USA Today Network’s structure rests on the shoulders of more than 3,000 journalists, organized primarily into 109 local newspapers whose coverage areas pepper the countryside. Editors at each of these outposts try to anchor it to its local roots, while also funneling its energy into subsequent levels of the superstructure reaching upward. The tip of the framework leads to Gannett’s corporate headquarters in McLean, Virginia, where Joanne Lipman is trying to hold the whole thing together.

“We have boots on the ground across the country, in red states and in blue states, in big cities and small towns and rural areas,” says Lipman, Gannett’s chief content officer, who took on the additional role of editor in chief of USA Today in March. “To me, that’s incredibly exciting because it’s so different than the major national news organizations.”

The broader strategy—gobbling up new properties and folding them into the existing organization—makes for a new variation on an old formula for the country’s largest newspaper publisher. But the local media environment is increasingly uninhabitable, even for giants. It’s not at all clear whether being the biggest player in a dying business protects you from the fact that your business is dying.

Gannett’s stock price has tumbled 50 percent in the year before this story went to press, in April, from a high above $17.50 to between $8 and $9. Some of that decline can be traced to lingering disappointment at Gannett’s failure to acquire the company formerly known as Tribune Publishing.

But the core business is also under strain. Adjusted for inflation, Gannett’s newspaper ad revenue fell from more than $6 billion in 2005 to $1.6 billion in 2016. That latter total represents a 13 percent drop from the previous year, not including acquisitions.

The company’s water-treading is particularly glaring set against the post-election revivals at The Washington Post and The New York Times, both emboldened by forward-thinking ownership and meaningful digital gains. The USA Today Network hasn’t historically been in their league journalistically, and Lipman has spent much of her time working to convince people otherwise. The company needs to continue growing its audience and improving its journalism despite shrinking resources, all while investing in a digital business with so far lackluster returns.

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“The elephant in the room here is that, for all these efforts, it typically doesn’t come very close right now to adding up to as much revenue as is falling away with print advertising,” says Rick Edmonds, a media business analyst at the nonprofit Poynter Institute. SEC filings show almost three-quarters of Gannett’s revenue is still tied to print products.

Given those sobering business dynamics, it’s possible, even likely, that Lipman & Co. has no choice but to transform what was historically a holding company into a more unified national news organization. This change holds the potential to scale up the advantages of Gannett journalists’ proximity to their communities. It offers local newspapers the support and reach of regional dailies and, in turn, a national flagship. To put it less euphemistically, it may help the company’s papers to collectively do more with less.

Lipman brings with her a pedigree from The Wall Street Journal and Condé Nast.

Lipman brings with her a pedigree from The Wall Street Journal and Condé Nast. (Photo by Greg Kahn)

While the concept is appealing in its simplicity, the execution is tricky. It starts with coordinating responses to regional or national breaking news. Then there’s collaboration on labor-intensive investigations from outlets that span 34 states and Guam. (Gannett also owns a separate chain of newspapers in the UK.) Newsrooms varying by size and sophistication cover communities with widely different demographics and styles of governance, from Phoenix and Detroit, to Burlington, Vermont, and Palm Springs, California. The variables are endless.

“It’s all about elevating the journalism,” Lipman says, “and making sure our journalism is reaching the audience where the audience is, in the form that the audience is consuming content right now, and then thinking about what comes next.” (Disclosure: Steve Coll, dean of the Columbia Journalism School, is on the Gannett board.)

Such daily challenges of logistics and execution come in addition to larger fault lines. Foremost among them: How local local properties remain as they share content and aim for digital reach. Coverage of school board meetings provides few opportunities for cross-publication, let alone virality or virtual reality. Each quarterly earnings report also brings with it the prospect of more cuts—more erosion of journalistic value—in newsrooms keeping watch over more than 100 locales.

It’s a better drawn-out version of the Hail Mary play a number of atrophied media titans have called. The difference from the likes of Gatehouse or Digital First Media is that if Gannett fails, it’ll bring down more local media, and more local readers, along with it. In a worst-case scenario, the experiment designed to save local journalism could accelerate its decline.

A future without local newspapers is by now a familiar prospect in America. The 2016 presidential campaign, which exposed the distance between citizens and the national press, only brought the implications of that potential future into greater focus. Gannett is attempting to rewrite that plotline—and dispel the notion, pervasive in many media circles, that it’s already too late.

 

Chicken Little first came screaming for newspapers about a decade ago, when the financial collapse and cratering of classified advertising walloped a complacent industry. While declines in print ads moderated somewhat afterward, a disastrous 2016 took a double-digit bite out of that business at many companies. The sky is falling once again, according to a March report by Moody’s, which predicts such drops to continue “faster than publishers can cut costs and boost digital ad sales.”

The glacial pace of newspaper companies retooling their business offerings has slowly accelerated. And desperate times have prompted companies that had been fierce competitors to work together, selling national ad campaigns across their various markets.

The headwinds also pushed Gannett toward its network model, an effort thrown into high gear following the 2015 divorce of its publishing and broadcast assets. (The latter became the guttural-sounding TEGNA.) As Gannett began shoring up the newly minted USA Today Network the following year, it also spent hundreds of millions of dollars in a buying spree to gain yet more scale and opportunities for consolidation.

It acquired the Journal Media Group, owner of the Milwaukee Journal Sentinel, though it failed in adding the journalistic jewels of the Tronc empire, namely the Los Angeles Times and Chicago Tribune. Those properties would have not only given Gannett a beachhead for doing business in America’s second- and third-largest cities, but also provided journalistic firepower to create a true national newspaper chain.

 

It’s a version of the Hail Mary play a number of atrophied media titans have called.

 

Undeterred, Gannett’s purchases of Golfweek and the North Jersey Media Group, home to The Record in Bergen County, made for second-tier consolation prizes. It also bought ReachLocal, a marketing services firm expected to expand Gannett’s digital customer base in its disparate local markets.

“We feel we have a key, unique differentiator in the marketplace, and that really stems from our deep local roots in so many communities across the country,” says Chief Transformation Officer Maribel Wadsworth, who joined Gannett’s executive suite in 2009 after more than a decade in newsrooms. “That’s very true from a journalism perspective. It’s equally true from a marketing side.”

Along with supplying local businesses with digital know-how in SEO or social media, Wadsworth points to native advertising as holding the potential for “more dollar-for-dollar” transitions from print to digital revenue. Gannett’s in-house studio, GET Creative, puts extra emphasis on virtual reality video, which has attracted big-ticket ad buys from national and multinational companies like Honda. “It’s absolutely where we see that we can move the needle,” Wadsworth says.

Despite those gains, digital advertising revenue, which grew 7 percent in 2016, accounts for just a quarter of total ad revenue. Its growth rate isn’t fast enough to offset the overall ad declines at Gannett.

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Circulation revenue, meanwhile, hasn’t filled the gap. Online access to USA Today remains free. Gannett reported in February that it finished 2016 with 182,000 digital-only subscribers across all of its other properties, excluding acquisitions, a 71 percent increase over the previous year. Still, circulation revenue among those titles actually decreased 4 percent in 2016, to just over $1 billion.

By way of comparison, The New York Times, a single title that employs fewer than half the number of journalists as Gannett, netted 276,000 new digital subscriptions in the last three months of 2016. It now counts $881 million in circulation revenue.

“I don’t know how much we can think about building a business model on surges of partisan polarization,” Wadsworth says of the post-election subscription bumps seen at national publications. New York Times staffers might argue that its subscription business stems more from safeguarding newsroom talent and investing in high-caliber journalism—two areas where Gannett’s track record, especially pre-Lipman, has been mixed.

“It speaks to the larger question: With all the cuts they’ve made in their newsrooms, and the talent they’ve lost, are they sufficiently engaging with their local readers so that they’ll continue to subscribe?” media analyst Ken Doctor says. “If the answer is not yes, they’re not going in the right direction. That’s the game you have to win.”

 

Command and control for Gannett is a standing desk in a corner office overlooking a highway cutting through a vanilla suburb about 10 miles northwest of downtown Washington, DC. Lipman’s workday starts with an 8:30 am USA Today news meeting, but from there it morphs, from devising strategies on combating comment-section trolls to hopping onto calls with artificial intelligence firms to talking through stories with top editors. “It varies a lot,” she says, “but I will always be attached to the journalism.”

Lipman makes a point of telling me she’s wearing red for International Women’s Day—“just for the record”—and she’s currently writing a book on workplace advice for men. She squeezes this in while commuting back to her home in New York on the weekends. “I need more train time,” Lipman says.

A longtime Wall Street Journal reporter and editor, Lipman led the launch of Condé Nast’s high-end but short-lived Portfolio, where internal dramas drew the attention of the New York media set while the financial collapse of 2007 virtually ensured the magazine’s demise. (CJR Editor and Publisher Kyle Pope was one of Lipman’s deputies at the magazine.) Her hire as Gannett’s chief content officer in late 2015 signaled that collaboration across its publications, pursued piecemeal in the past, would be institutionalized. She also has moved in high-profile ways to up the quality of the journalism, including bringing in the Journal’s former Page One editor for a stint as a story consultant.

Over the last few years, the USA Today mothership has built out a national news desk with a half-dozen editors who communicate with local markets regarding which of their stories may pop nationally. Producers and video editors—Gannett has a central video hub in Atlanta—add input on how to optimize stories for mobile audiences, and USA Today’s breaking news team helps tweak or rewrite local coverage for a broader reach. The company rolled out a uniform content management system to all its properties, allowing it to cross-publish stories with greater ease, and has a universal budgeting system in the works.

The infrastructure has brought more local stories to USA Today, while the network’s national desk pledges to always have content ready to plug and play in local properties as well. The digital collaboration drove a March audience that comScore pegged at 115 million unique visitors—the same ballpark as CNN—nearly two-thirds of which came on mobile devices. That’s in addition to USA Today print inserts, comprising national and international news, that have been published in dozens of Gannett papers since 2013.

“In a sense,” Lipman says, “we act very much as our own AP, where we have the stream of content that can go from the local to the national level, or vice versa, and be distributed around the network.”

To facilitate that sharing, Lipman has divided the network into 14 geographic fiefdoms, each governed by a regional editor. Their task is to create regional connections within the broader national framework. The subdivisions include Wisconsin, home to 11 Gannett dailies, southwest Florida, where there are four, and the “Atlantic Group,” which includes four titles in Pennsylvania and one each in Delaware and Maryland.

Jeff Taylor, editor of The Indianapolis Star, oversees all Gannett properties in Michigan, Indiana, and Kentucky, a tract that includes the Detroit Free Press and Louisville Courier-Journal. He holds weekly calls with editors on hiring, directing resources, and collaborating on regional issues like, say, water quality in the Great Lakes. But job one is to get and maintain buy-in from news organizations of all sizes. That, in essence, is where the journalistic success or failure of the Lipman experiment lies: pull off that cooperation and the network idea comes to life; fail to execute—either because the ideas don’t scale or the staff doesn’t have the chops to make it happen—and the whole thing comes apart.

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“When I was introducing this to our staffs, as you can imagine, this was a learning curve for them,” Taylor says. “We’ve had a huge emphasis, and rightly so, on driving our growth and business in a local market. You get really hyperfocused on Indianapolis or Detroit. And for employees in these newsrooms around the country, we had to get them to understand the network. Why should they care?”

Editors can already point to some success stories. After a damaged spillway in the Oroville Dam threatened severe flooding in California, reporters from the Desert Sun, well-versed in water issues, provided sustained coverage for their own paper and USA Today. When Dylann Roof was on trial for the Charleston Church Massacre, a reporter from the Asheville Citizen-Times, in North Carolina, stayed with the story for weeks.

Of course, gaining recognition as a national player means USA Today has to deliver when everyone else is covering the same thing. And on perhaps the biggest story of our time, the Trump administration, the USA Today Network is outmatched by its truly national competitors. (It has occasionally shown an ability to break through the daily noise from Washington, producing scoops on President Donald Trump’s lawsuits, his companies’ tangle of real-estate holdings, and Vice President Mike Pence’s private email use.)

 

Gannett has been obsessed with local since 1906.

 

The company’s competitive advantage lies in elevating top-shelf local enterprise—The Clarion-Ledger’s series on tracking down a Civil Rights-era serial killer, or The Indianapolis Star’s investigation of USA Gymnastics. Projects that stretch across state lines are another strength. Following the Flint water crisis, dozens of USA Today Network properties collaborated on an investigation that found contaminated drinking water in all 50 states.

The difficulty is to produce such work consistently, and to ensure that hit and miss local enterprise reporting is ready for the big leagues. To help, Lipman has hired Chris Davis, a top-notch investigative editor from the Tampa Bay Times, to oversee watchdog efforts across the entire organization. “It’s sort of like offering up a menu of watchdog stories and making it easier for places that might not have the same resources” as The Arizona Republic or Milwaukee Journal Sentinel, he says. “It is a bit of an organizational headache.”

When the cross-country system works well, it culminates in pieces such as the 2016 exposé on how a patchwork system for background checks has allowed abusive teachers to cross state lines and get new jobs.

“In the best-case scenario, we’re trying to develop projects that have local relevance but also have a national audience,” says Amalie Nash, executive editor overseeing seven western regions of the USA Today Network. “So the ideal is to publish work that isn’t taking away from what the local markets are doing. . . . Some days you think it’s a whack-a-mole game. Other days we’re all propelling so many projects forward.”

 

Gannett has always been obsessed with local. In 1906, Frank Gannett bought a half-interest in the Elmira Gazette in upstate New York. Over the following decades, the business added more local newspapers and radio stations throughout the northeast. After going public in 1967, it grew into a juggernaut of corporate finance.

The playbook was simple: pare down expensive newsrooms and crush competition with a relentlessly local focus. Speaking to the American Society of News Editors in 1978, Gannett Chairman Allen Neuharth said, “Coffeyville, Kansas, Muskogee, Oklahoma, they don’t give a damn; the less they hear about Washington and New York the better they feel about it.” In 1982, the company switched gears, making a colorful national play with USA Today, initially resulting in tens of millions in annual losses and sparking widespread hand-wringing over nationally standardized “McNews.”

A version of that debate now plays out in ongoing editorial decisions across the USA Today Network. Individual reporters and editors not only serve a wide array of local communities, but also feed into a single national platform.

“We really don’t have a network unless we have the components that make up that network,” says Randy Lovely, Gannett’s vice president of community news and former editor of The Arizona Republic. “So each one of the organizations has to be strong in serving its community and growing its audience. . . . How that interacts with our network concept—I’ll be honest—it’s probably a place we’ve stumbled in the past.”

Lovely spends two or three weeks a month shuttling between outlets to shore up lines of communication and transmit Gannett’s underlying editorial philosophy. The idea is to do local journalism that will resonate on a broader scale digitally.

“We need our newsrooms not to be in the weeds on commodity content that does not resonate on a high level, and make smart, selective stories that they pursue that really will get attention in their local communities and effect change,” Lovely says. “Whether you’re a reporter in a small or large city, how much time are you spending in city council meetings churning out content that really doesn’t resonate compared to connect-the-dots enterprise stories?”

Those connect-the-dot stories often have a more regional or national bent, which certainly serves the needs of the USA Today Network. Less obvious are the benefits to readers who subscribe to local newspapers for information about what’s going on down the block.

The other, far more corrosive factor to papers’ local value is also more familiar. “Nobody wants to make cuts,” Lipman says. “Unfortunately, that’s our business. And I’m not talking Gannett—I’m talking our industry.” Clearly,  Gannett has a well-earned reputation that precedes it when it enters into new markets, such as northern New Jersey.

Early last year, staffers at The Record in Bergen County suspected that its parent company, the family-owned North Jersey Media Group, was on precarious financial footing. Dedicated local owners had shielded it from the digital transition. Still, it was a paper that punched above its weight class, owning coverage of the 2013 Bridgegate scandal and earning a Pulitzer finalist nod for 2014 reporting on the local heroin epidemic.

The company is banking that the pieces of the network will create a greater whole. (Photo by Greg Kahn)

The company is banking that the pieces of the network will create a greater whole. (Photo by Greg Kahn)

A New York Post report alerted staffers in July that the family who had owned their paper for 86 years had sold it and their other media properties, including several dozen north Jersey weeklies, to Gannett. The period since has seen many of the changes typical of Gannett papers proceed at a breakneck pace: Print production has been moved to a centralized location elsewhere in the state; many of the local weeklies were consolidated, some of their newsrooms folded into The Record; the paper’s editor, a native of Bergen County and decades-long staffer, was demoted and replaced by a Gannett veteran; editorial staff, which approached 200 at The Record in early 2016, has been cut to about 130 across the North Jersey Media Group.

Nancy Meyer, the company’s new president, has retooled business operations to cater to digital advertisers and local marketing solutions. Editor Rick Green says that The Record has updated technology, expanded video offerings, and boasts a growing digital audience, adding that he’d “move heaven and earth” to protect its capacity for watchdog journalism. The news organization’s March interview with Trump adviser Kellyanne Conway, a local resident, no doubt dropped with greater authority because of USA Today’s social media following of millions.

The lack of local competition makes it difficult to ascertain how many dogs aren’t barking yet in The Record’s pages. But inside and outside the newsroom, there are complaints that all of the cutting has come at a heavy cost. Its off-site production facility has begotten a growing number of grammatical errors and typos. And with some of the paper’s longest-serving journalists leaving the newsroom, including two Pulitzer finalists who were laid off, it’s safe to say the news organization’s reporting capacity is much diminished. “On a staffing level,” a current writer says, “a lot of people have been saying, Really?”

This kind of brutal belt-tightening has almost become a Gannett signature in the news business. The Milwaukee Journal Sentinel slashed its business and opinion offerings in print in early 2017. More than two dozen staffers were dropped from Gannett newsrooms in Tennessee in March. Three dailies in Louisiana and Mississippi reduced their print editions to thrice-weekly in April. None of the moves is a doomsday scenario on its own—print cutbacks aren’t necessarily a bad thing—but the trend line is ominous.

“Fairly often in the [Louisville] Courier-Journal, I’ll see a story produced by ‘the network,’ ” says Jim Hopkins, who spent two decades as a Gannett reporter before chronicling the company for years at Gannett Blog, a site dedicated to the company’s inner workings. “It’ll have a kind of national feel to it, though it’ll start with a local top. My problem with those stories is that they tend to be a mile wide but an inch deep in terms of what’s going on at the local level.”

 

Belt-tightening has become a Gannett signature.

 

In New Jersey, Gannett’s takeover worked out for many junior-level staffers who have greater digital skills. Some worry, however, about a lack of mentorship and eliminating  what had been a clear path upward through the organization. “It’s hard to do good work when there’s so much uncertainty,” one says. “It’s very complicated, because at what point are you a reporter for The Record, and when are you a reporter for USA Today?”

This tug-of-war isn’t lost on the public. An early content analysis of four New Jersey weeklies bought and consolidated by Gannett last year suggests that they’ve already started publishing fewer and less substantive news articles since the takeover. Current and former staffers say they believe the same is true of The Record as well. Malcolm Borg, patriarch of the family that sold the company, declined to comment because of a non-disparagement clause, saying only, “I spend more time on the crossword now than I do reading the paper.”

“It’s sad and devastating and it hurts the local community,” adds Thomas Franklin, a longtime Record staffer who’s now a journalism professor at Montclair State University. “It hurts people’s confidence in government. You cannot do more with less.”

In Montclair, home to a weekly where Gannett cut staff, a local software engineer dug into his personal savings and hired laid-off journalists to start a competing newspaper. “The [Montclair Times] just lost its local feeling—it didn’t feel like a paper about Montclair anymore,” says Heeten Choxi, publisher of the newly minted Montclair Local.

The frustrations of local journalists and readers are real. But so, too, is Gannett’s rationale for adding new properties to its network. Its argument, essentially, is that Gannett—layoffs and consolidation and everything else it entails—at least has kept the titles afloat. “Had we not bought [North Jersey Media Group], it was not sustainable, right?” Lipman says. “We want to sustain them.”

But what is it that Gannett is sustaining? The corporation is attempting to connect more than 100 individually flailing businesses into a single entity that can stand on its own. “As I say to every journalist in this whole network,” Lipman says, “you have a great idea, you let us know, and we can help you execute it.”

The scenario for success is that the USA Today Network’s pyramid-like superstructure will support its local journalists’ watchdog role as the business regains its footing. Digital advertising will continue to grow as the company scales its marketing services nationally.

The fear, coming into greater focus with each passing year, is that print continues its freefall, and digital gains remain unable to make up the difference. Newsrooms are whittled down to their component parts, optimized for digital traffic, and what had been local newspapers gradually shrink into nothing more than Gannett bureaus with shallow civic roots, if any at all.

There are no easy answers as to what this possible future will hold for American democracy, or what the tradeoffs will be should Gannett’s digital moonshot succeed. There are no obvious villains and, for the moment, no coming saviors. For now, in many parts of the country, there is only Gannett.

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David Uberti is a CJR staff writer and senior Delacorte fellow. Follow him on Twitter @DavidUberti.