Opinion: Local news could be helped by more aggressive use of anti-trust laws, Steven Waldman writes

"Antitrust enforcers could have done more — and must play a bigger role — in saving local news," Steven Waldman, head of the Rebuild Local News Coalition, writes in The Washington Monthly.

"The Justice Department recently filed an important lawsuit against Google’s domination of digital advertising," Waldman notes, but "the role of private equity and hedge funds has prompted a collective shrug. No one likes what the financiers did, but there seems to be an air of inevitability, a sense that media consolidation just couldn’t be helped. That assumption is wrong. The crisis in local news stems primarily from the internet undercutting traditional business models. Advertisers reduced or eliminated their spending in local newspapers and instead placed ads on websites, search engines, or social platforms. The combination of factors led to a staggering 71 percent decline in newspaper ad revenue from 2006 to 2018."

Steven Waldman

Mergers and acquisitions, especially by private-equity firms and hedge funds, have played a big role in the decline of local news, Waldman argues, quoting Northwestern University newspaper scholar Penny Abernathy: “Massive consolidation in the newspaper industry has shifted editorial and business decisions to a few large corporations without strong ties to the communities where their papers are located.” Waldman cites a study by Michael Ewens of Columbia University and Arpit Gupta and Sabrina T. Howell of New York University, published by the Social Science Research Network, which "found that newspapers acquired by private equity firms were likelier than other papers to cut the amount of local coverage, and the number of reporters at those papers fell from roughly 7 to 5, compared to a more modest decline at other papers. . . . By contrast, the study showed that family-owned newspapers had higher levels of local news coverage. . . . Another study, by Benjamin LeBrun, Kaitlyn Todd, and Andrew Piper, in New Media and Society, examined 130,000 articles produced at 31 corporate-owned local newspapers. It concluded that “corporate acquisition leads to a significant reduction in the amount of local news.”

In Hedged, a former executive of Lee Enterprises says pressure to service the company 's debt "made it impossible for his company to invest in the digital makeover that would have given its papers a better shot at long-term stability," Waldman reports. He acknowledges that "acquisition by a private equity firm is, in the short term, sometimes the only way to keep the newsroom open.

"There’s one final, less obvious way consolidation has undermined local news: by reducing the number of advertisers," Waldman writes. "We have seen many grocery, health care, and banking mergers. If there once were five local bank branches and now there are two, that probably resulted in fewer local advertising dollars being spent. And then there’s the effect of Amazon on local retailers. I was at a gathering recently of local newspaper publishers in Wyoming, and they were complaining about the impact of the tech companies. To my surprise, they were mostly referring to Amazon rather than Google or Facebook. It is undoubtedly true that Amazon provides cost and convenience benefits to consumers. Still, we should at least acknowledge that one of the side effects is undermining the retail business whose advertising powered local news and strengthened democracy."

Waldman suggests that Congress "modify antitrust law to resemble the FCC’s approach to overseeing the broadcast industry," citing the FCC's delay of a merger between a hedge fund and Tegna, which owns 64 TV stations. "But localism need not be a consideration only in TV station mergers. The concept was once a vibrant theme in antitrust debates, too. When Congress amended the 1914 Clayton Antitrust Act in 1950, it was concerned about the effects of business mergers on local control. . . .  Another theory—perhaps even one that wouldn’t require statutory changes—would be to look at the diversity of voices. . . . But blocking future mergers isn’t enough. We need a strategy beyond antitrust policy that can prevent more consolidation and trigger de-consolidation — 'replanting' newspapers back into communities. With papers already part of a chain, we could offer financial incentives to local nonprofit organizations or mission-oriented businesses that buy newspapers. . . . We should also amend the plant-closing laws to require that any chain planning to close a newspaper must give the community 90 days’ notice so they might organize a bid to buy the paper."