Mercury Local

Tag: hedge-funds

  • How Private Equity Gutted Local Newspapers: A Data-Driven Autopsy

    How Private Equity Gutted Local Newspapers: A Data-Driven Autopsy

    The Deal Playbook

    Private-equity firms do not buy newspapers for journalism. They buy distressed cash flow, pile on debt, harvest fees, and exit before the presses seize. In 2024 hedge funds and PE groups controlled an estimated one-third of U.S. daily circulation, according to the State of Local News report from Northwestern’s Medill School State of Local News 2024.

    Step 1: Leverage the Balance Sheet

    A fund forms a shell company, borrows against future cash flow, and acquires a cluster of papers. Alden Global Capital used this tactic to pick up Tribune Publishing in 2021, adding 9 metros to a portfolio that already held 68 dailies and 300+ weeklies What Works News Coverage. The debt sits on the newspapers; the fund collects a management fee.

    Step 2: Consolidate, Cut, Centralize

    Costs fall fastest where citizens feel it most: reporters. Median newsroom headcount at Alden papers dropped 55 percent between 2012 and 2022, versus a 33 percent industry drop Hedged. Printing plants close, customer service moves offshore, copyediting shifts to a hub two time zones away.

    Step 3: Milk the Margin

    With debt serviced and payroll slashed, cash still flows—until it doesn’t. Funds dividend out what remains. A 2023 Boston Globe review found Alden siphoned $300 million from MediaNews Group through “consulting fees” and real-estate deals over ten years.

    Charlotte Case Study: The Chatham Pivot

    McClatchy’s 2020 bankruptcy put The Charlotte Observer on the block. Chatham Asset Management, a New Jersey hedge fund, won the auction and converted $263 million of debt into ownership Axios Charlotte. Newsroom jobs fell from 210 (2009) to about 65 (2024); print home delivery shrank to three days per week. The city of 880,000 now relies on a skeleton daily and a patchwork of niche sites.

    The Civic Ledger

    • 2,500 U.S. newspapers have closed since 2005, a quarter of the market Washington Post.
    • 279 counties now have zero or one local outlet, classified as “high-risk news deserts” AP News.
    • Municipal borrowing costs rise 5–10 basis points in counties losing a daily, evidence that less scrutiny equals pricier bonds (Brookings, 2023).

    Why Advertisers Should Care

    When reporting disappears, so do engaged readers. Page views sink, ad impressions decline, and brands chase eyeballs elsewhere. A 2024 Poynter survey of regional businesses found 61 percent cut spending with chain papers after seeing local beats eliminated by Poynter. PE owns the asset; you own the wasted budget.

    The Exit—and the Wreckage

    Funds flip real estate, merge titles, or liquidate mastheads. Communities inherit a “ghost paper”—a familiar logo carrying wire copy and sponsored obituaries. Trust erodes; civic turnout falls; corruption climbs. PE profits are internalized, public costs externalized. Classic tragedy of the commons, played out on newsprint.

    Opening for Public-Benefit Models

    The gap is large, but so is the opportunity. Independent, privacy-first outlets—yes, we have skin in that game—can reclaim beats abandoned by leveraged chains. Clean balance sheets, diversified revenue, and open licensing keep cash in the newsroom, not the Caymans.

    About the Author

    Fueled by an espresso that might qualify as a controlled substance, Peter Cellino scribbles about journalism’s money trail. Ping him on Bluesky @pc51.bsky.social and wander the Mercury Local rabbit hole: Blog | Case Studies | Resources | Local SEO Playbook | Advertising | Charlotte Mercury | Strolling Ballantyne.

    Footnotes & Fine Print

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    Creative Commons License

    © 2025 Mercury Local / Mercury Local
    This article, “How Private Equity Gutted Local Newspapers: A Data-Driven Autopsy,” by Peter Cellino is licensed under CC BY-ND 4.0.

    “How Private Equity Gutted Local Newspapers: A Data-Driven Autopsy”
    by Peter Cellino, Mercury Local (CC BY-ND 4.0)

  • Ghost Papers: How Hedge Funds Hollowed Out Local Newsrooms

    Ghost Papers: How Hedge Funds Hollowed Out Local Newsrooms

    The Lights Are On, but Nobody’s Home

    Walk into the Hartford Courant newsroom and you’ll hear more echoes than phone rings. Staff cuts since 2008 top 60 percent—standard for papers bought, stripped, and flipped by private-investment funds [1].

    What Counts as a Ghost Paper?

    Researchers call a title a “ghost” when it still prints but has lost most of its reporters. Margaret Sullivan notes that U.S. newspapers shed nearly half their newsroom jobs between 2008 and 2018 [2]. Penelope Abernathy’s UNC team maps hundreds of counties now served only by such phantoms [3].

    How We Got Here: Debt, Roll-Ups, and the 45-Percent Guillotine

    Hedge funds chased double-digit margins in classifieds, borrowed cheap, bought chains, layered fees, and harvested real estate. Alden Global Capital cleared a 17 percent operating margin while closing bureaus and selling buildings [4]. The 2019 GateHouse-Gannett merger created a 250-daily megachain run from McLean, Virginia—not from local pressrooms [5]. Former New York Times editor Dean Baquet warned that most local papers would “die within five years” without new ownership models [6].

    Civic Consequences: No One Left to Read the Zoning Agenda

    Less reporting means higher borrowing costs and lower turnout. A Journal of Politics study found municipal bond yields rise after newsroom cuts [7]. Ken Doctor tracked similar spreads in counties that lost watchdog reporters [8]. The result: taxpayers pay more, officials face fewer questions, and polarized social feeds fill the vacuum.

    Why Mercury Local Bets on Depth, Not Strip-Mining

    We hire locally, publish weekly, and license content under Creative Commons to widen reach. The model trades page-view quotas for engagement with readers who catch a planning-board loophole faster than any AI summary. Debt service: zero. Accountability reporters: growing.

    Endnotes

    1. Susca, Margot. Hedged: How Private Equity Dismantled American Journalism (2024).
    2. Sullivan, Margaret. Ghosting the News (2020), p. 18.
    3. Abernathy, Penelope. The Expanding News Desert (UNC Hussman, 2022 update).
    4. NewsGuild-CWA, “Alden Capital’s Hidden Profits,” April 2023.
    5. Securities and Exchange Commission filings, New Media Investment Group, 2019.
    6. Dean Baquet interview, Columbia Journalism Review, Oct. 7 2020.
    7. Gao, Lee & Murphy, “Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance,” Journal of Politics 82(2), 2020.
    8. Doctor, Ken. Newsonomics column, March 15 2021.

    About the Author

    Fueled by a mug of dark roast that’s probably one refill too many, Peter Cellino lurks on Bluesky as @pc51.bsky.social—slide into the DMs. Browse the Blog, crunch the Case Studies, raid the Resources hub (start with the Local SEO Playbook), or see ad slots that respect readers at Advertising, including Charlotte Mercury and Strolling Ballantyne.

    Footnotes & Fine Print

    Enjoy the read? Peruse our policies and ping us anytime:
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    Creative Commons License

    © 2025 Mercury Local / Mercury Local
    This article, “Ghost Papers: How Hedge Funds Hollowed Out Local Newsrooms,” by Peter Cellino is licensed under CC BY-ND 4.0.

    “Ghost Papers: How Hedge Funds Hollowed Out Local Newsrooms”
    by Peter Cellino, Mercury Local (CC BY-ND 4.0)