Earlier this month, private equity killed another news outlet. Splinter, a news and politics website where I’d previously worked, was shut down by its owners. Seven people lost their jobs—a comparatively small culling compared to the hardships some other media outlets have recently endured. Nevertheless, Splinter’s fate points in the direction of bloodlettings to come.
It was a long and tortuous road that led to Splinter ending up in the hands of private equity masters, beginning when Gawker Media was hounded into bankruptcy by Peter Thiel, who backstopped Hulk Hogan’s defamation case against the site. Denied the opportunity to appeal the judgment against them, the media properties that resided under Gawker’s banner were rebranded as Gizmodo Media Group (GMG) and sold to Univision. It was an ill-fitting arrangement: Univision was a normal, cautious media company mostly focused on Spanish-language TV, and GMG was a small-ish network of irreverent websites that regularly published the musings of a dog and Ashley Feinberg. The unwieldy partnership was exacerbated by corporate mismanagement which saddled the profitable GMG with debts from Univision’s disastrous experiment in millennial-focused content, Fusion. Fusion’s website was rebranded and relaunched as Splinter in the summer of 2017; GMG was eventually sold to the private equity firm Great Hill Partners, who renamed the company G/O Media.
Given all that history, it was never a guarantee that Splinter was going to succeed, the Hogan lawsuit having transformed the uniquely profitable media venture of which it became a part into a troubled property overnight. But Great Hill Partners, a firm with no previous experience in building a successful media brand, quickly demonstrated that they were bent on proving that they could be the worst stewards of the company. They interfered with G/O Media’s editorial independence, stuffed the sites’ layout with eyesore ads, and pushed out competent managers, such as Deadspin editor-in-chief Megan Greenwell, who laid out a searing indictment of Great Hill’s mismanagement on her way out the door.
This is not to further pan for lamentations over the demise of a website. Splinter and its parent company was already something of a distressed asset—its status as such, in fact, likely played no small role in attracting the attention of Great Hill in the first place. But the wider world of mass media is filled with other such distressed assets, from the websites spawned in the heyday of venture capital media mavens, to long-standing local and regional newspapers, straining to balance their journalistic mission with an ever decreasing supply of capital. It feels increasingly like the terms of journalism—which kinds of outlets get to do it, who gets paid enough to live doing it, which communities get coverage—are set by the rich. The best case scenario is that journalists become part of a billionaire’s patronage network. For the unlucky, vultures lurk. The rich have killed before, and they will kill again.
The story of private equity gutting and destroying local media is familiar and already well-told. Over and over again, journalists have documented the atrocity, including some whose jobs were lost over their work. Though the ultimate goal of journalism is to create change, change in this area has been slow to emerge. Private equity keeps buying and destroying.
When Splinter shuttered, former Gawker writer Brendan O’Connor wrote that “the workplace under capitalism is a dictatorship, and the dictatorship of private equity is an especially arbitrary one.” It’s a shame that journalism—something with such obvious broad societal value, and that should be wholly antagonistic to the rich and powerful—should be mostly done for private profit, with all the compromises that come with that. But the sad fact of journalism’s dependence on profit-making becomes far more grotesque and dangerous when the profiteers in question are financial sector wheeler-dealers.
This particular flavor of profiteers seek a higher yield, faster, with no regard for the long-term sustainability of the business. Alden Global Capital, which owns Digital First Media (DFM) and its publications like The Denver Post, drained hundreds of millions of dollars from DFM for their own gain. It can be confounding to contemplate: How can a hedge fund profit from destroying the value of what it just bought? Remarkably, they can. As The American Prospect explained in detail last year, private equity can make big bucks off destroying local papers if it “strips staffing and siphons off cash flow.” Papers continue to make money off local advertisers who still value them, even as the quality of the journalism collapses; cutting costs by laying off staff or centralizing production can speed it up. Essentially, the long-term consequences to profits don’t catch up fast enough to prevent the hedge fund owners from stripping the assets, who then flip the carcass.
That’s how you end up with instances in which Alden executives “rewarded themselves with tens of millions of dollars’ worth of prime real estate in Florida and the Hamptons for their personal enjoyment.” It’s how DFM could make a 17 percent operating margin, with $160 million in profits, in 2017—all while cutting their properties to the bone. Around the time those heady figures were reported, the company laid off 30 percent of The Denver Post’s newsroom. As the private equity firm GateHouse merges with Gannett, the largest daily newspaper owner, cuts of up to 10 percent of its workforce loom. What happens to the journalism when all the journalists are gone? It suffers; hard-hitting accountability reporting on matters of public interest goes away, because that takes time and costs money, and is replaced by fluff and nonsense to pad the space around the ads.
As Greenwell wrote on her last day as editor-in-chief of Deadspin, the decisions that are handed down from the rich guys in charge—the decisions that are supposed to steer unruly writers back towards profitability—are often very stupid. Half the industry pivoted to video at the behest of Facebook, who provided media companies with metrics that promised large returns on investment but which anyone with a clear head could easily surmise had been substantially juked (since it was in Facebook’s interest to do so). Eventually, you hit a critical mass of media executives who pick up Rich Guy On a Plane Magazine while heading home from Aspen and read about how their competitors are investing heavily in video because of Mark Zuckerberg’s Panglossian promises of profitability who think, well, if BuzzFeed or Vice or HuffPost is doing that, we need to be as well.
It’s a dark state of affairs when a journalist would be sensible to breathe a sigh of relief that a billionaire bought their outlet. But it’s clear that the sugar daddy model of journalism is one of the safest remaining business models. The Los Angeles Times was rescued from the madness of Tronc’s ownership—which paid for its incompetent executives’ private jets and wanted to build a shadow newsroom of non-union journalists after its thoroughly zany idea to generate video content through “machine learning” failed to pan out—by billionaire Patrick Shoon-Shiong. Shoon-Shiong’s leadership has had its own problems, and the paper’s union only just reached an agreement on a contract after more than a year of hard negotiation, but it’s clearly a better environment than the dark days of Tronc; the paper has managed to add staff since the sale.
But the feel-good story of The Los Angeles Times has been a relative rarity. For every boon there seem to be a hundred boondoggles. The wonders of the free market have left hundreds of communities with no news outlets, and thousands with just one newspaper. Many papers across the country have cut staff and coverage so that they cannot provide adequate coverage. Some, like The Denver Post are slowly being exsanguinated by their financial sector overlords. In a dystopian twist, the ever-expanding void left in the wake of all this creative destruction is being filled by websites masquerading as local news outlets that serve up right-wing agitprop. Someone trying to find out what’s going on in their community might end up being fed a Heritage Foundation white paper dressed up as neutral news, without ever realizing that they’re not reading the genuine article. Having freedom of the press means nothing if you barely have a press at all, and what’s available is the product of deep-pocketed propagandists.
In a cruel cosmic joke, a few days after Splinter was shut down, supporters of President Donald Trump who were participating in a conference at the president’s Doral resort in Florida were shown a violent parody video in which a figure with Trump’s face was depicted murdering anthropomorphic representations of various media brands in a church. Naturally, journalists—who are rarely more incensed by the president’s attacks than when they are the targets—raised a hue and cry, sorting their coverage of this viral video alongside the breaking news in the days that followed.
It’s almost more comforting to imagine that the biggest danger that journalism faces, in this era, is a heavily armed Donald Trump—a singular villain who might be overcome or outlasted. The president has a checkered history of indirectly inspiring acts of violence, and big media brands have, in recent years, made their imagined martyrdom part of their essential branding. But journalism is not going to be shot in the face by a man with a gun. Its demise will come in the form of handsome men in expensive suits, with bright eyes and firm handshakes, who’ll smile and publicly proclaim their best intentions and boldest promises. Then, once they’re behind closed doors, the only sound that will be heard is the delicate whisper and swish of coldly brandished knives.