|English-language dailies that closed, merged or reduced publishing days between 1996 and 2015. (Map from study)|
That poverty isn't just metaphorical. The study concluded that communities that lost newspapers saw increased government costs because there was less scrutiny of local-government deals and expenses. The authors studied the costs for municipal and revenue bonds issued by cities and found that borrowing costs can rise as much as 11 basis points (0.11 percent) three years after a newspaper closes. The average was about 6 points. The authors controlled for other factors like local economic conditions to isolate only the fallout attributable to the newspapers' loss.
The study tracked 296 newspaper "exits" between 1996 and 2015, and surveyed 1,596 English-language newspapers serving 1,266 U.S. counties. It excluded the 1,863 counties without any local daily. An exit was defined as a local paper closing down, reducing its publication to fewer than four days a week, or being absorbed by or merging with another newspaper. The paper has been presented, but has not been published.
"There are already papers that show that there are political consequences, or political outcomes, when local newspapers close," co-author Chang Lee, assistant professor of finance at the University of Illinois at Chicago, told Aamot. "But that’s not really a direct impact on local residents. We wanted to show that, if you look at the municipal bond market, you can actually see the financial consequences that have to be borne by local citizens as a result of newspaper closures."