The news industry plays a vital role in our democracy by spreading awareness of social issues, holding people in power accountable for corruption and injustice, and educating the greater public. However, two formidable threats—private equity and social media news—are jeopardizing traditional journalism, with local newspapers facing the brunt of this issue.

In the previous centuries, the local news industry was a rather profitable business venture due to constant supplies of advertisement revenue. Advertisements within the paper were the most efficient means to reach the community, as newspapers were a main source of topical information (Journalist’s Resource). 

But in the mid-2000s, large corporations and hedge funds, hoping to take a share of the newspaper industry’s profits, applied the ideals of private equity to local papers, according to Dan Falkner, Journalism Instructor at Jesuit High School. These large hedge funds would engage in a process called a leveraged buyout, in which they transformed public newspapers into private equity to maximize profits. Because these hedge funds were mainly focused on profits rather than true journalism, they caused a plethora of problems for local papers. 

This issue is apparent with the Denver Post, a local newspaper based in Denver, Colorado that was bought by hedge fund manager Alden Global Capital in 2011. The hedge fund imposed an efficiency model on the Denver Post by cutting costs to maximize profits. Since Alden took control, the Denver Post was forced to cut over 70 percent of its staff and downsize staff resources. The problem escalated to the point where Denver Post journalists protested their frustration with Alden Global Capital’s cost-cutting tactics. 

The Denver Post is not the only local newspaper in jeopardy. Alden Global Capital owns over 200 publications and has cut almost three-quarters of news staff since 2012

Hedge funds like Alden Global Capital that capitalize on struggling local papers are known as vulture funds. The issue has escalated to the point where Vanity Fair deemed Alden Global Capital as “The Hedge Fund Vampire That Bleeds Newspapers Dry.”

In addition to problems brought by hedge funds, the emergence of social media news is another factor jeopardizing traditional journalism. Junior Vanessa Auth, currently engaged in a research project about the decline of the news industry, explained how newspaper advertising is becoming less effective in the age of social media. 

“Why would companies advertise in a small, local newspaper that’s probably going to reach 500 people when they could advertise on Google or Facebook and reach millions of people?” Auth said.

As local papers become less relevant for advertising, they receive considerably less ad revenue. This eventually entails cutting costs by limiting resources or even laying off staff.

The issue of hedge funds and social media jeopardizing local papers matters tremendously because local papers play an indispensable role in their communities. For example, The Oregonian has a list of local businesses in need of support as well as important medical resources for people suffering during the pandemic. Frankly, larger news outlets like The New York Times or The Washington Post cannot replace these essential services that local papers provide.  

Local news outlets are also integral to society, as they account for a considerable fraction of original news reporting. According to a study by Duke University’s Sanford School of Public Policy, local newspapers only make up a quarter of U.S. media outlets, but they are responsible for almost half of all original news stories. Local papers disproportionately bear the burdens of original news reporting compared to other media outlets.

Emphasizing the importance of original news reporting, Andrea Bian, a Junior at Northwestern’s Medill School of Journalism, explained the role of local journalists in the national news landscape. 

“A lot of larger news organizations, like the New York Times, base their stories on local reporting,” Bian said. “But because local news outlets are shrinking, it can get difficult for local papers to gain traction. These large corporations that dominate the news industry have the money and power for original reporting, but in reality, it’s people who are getting paid pennies at the local newspapers that are doing all of the critical work.”

In fact, local newspapers have uncovered some of the most significant stories of recent times: the clerical sexual abuse scandal was brought down by the Boston Globe; Larry Nassar, the former USA Gymnastics doctor convicted of sexual abuse, was brought down by the Indianapolis Star; even Jeffrey Epstein’s child sex trafficking ring was brought down by the Miami Herald. 

As evident through the three previous examples, local newspapers perform the crucial duty of keeping people with power in check. They are essentially doing a public service by exposing corruption and injustice within their communities. Furthering this point, Bian added that democracy depends on true journalism. 

“What really is important for democracy is that true, traditional journalism that everyone has known in the past,” Bian said. “With the current trends, that kind of journalism is gradually declining.”

  Although local newspapers are in jeopardy, there’s still plenty that the public can do to mitigate the damage. Falkner gave his simple yet effective advice. 

“First of all, read them,” Falkner said. “That’s the best way to support these struggling papers.” 

Auth echoed Falkner’s calls to support local papers by reading or subscribing to them. Additionally, she encouraged prospective journalists to bring their passion for journalism to local newspapers. 

“If you’re interested in journalism, pursue it. We need more journalists out there who are holding our government officials accountable. We need to be a check on our government and telling the stories of people without sufficient coverage.”

We need to respect and support local news outlets like the essential services that they are. Local papers have a duty to serve their communities by talking truth to power and educating the public. Likewise, citizens have a duty to respect and support local papers for their democratic services. 

Use this link to find local newspapers in your community that you should support.