The news on Jeffrey Epstein, the Catholic church's sex offenders, Jerry Sandusky, and many others all have something in common. Their stories were all broken by local journalists. Local papers are known for not only being reliable sources but also for their original content. I'm not talking about the big names like the New York Times, I'm talking about papers like the Mercury News. For example with Jeffrey Epstein's case, the reporter, Julie K Brown, was shocked that the prosecutor of that case admitted that she, a reporter, had helped with Episten’s investigation. Local journalists aren’t even acknowledged for the work they do most of the time since the public’s main source of news comes from the radio or the TV, which are second hand sources that repeat the news.
Even with such an important role, the past few months have seen over 35,000 American reporters dealing with substantial pay cuts to just being straight-up fired. This mass release of reporters is in part, related to the covid-19 pandemic which has dealt a dramatic blow to the US economy. However, saying only that wouldn’t be the entire story. In addition to the low economic situation, a tactic used by investors involves investors stripping newspapers of all their share and company value, leaving many papers in severe debt. As Taylor Swift says, "the unregulated world of private equity" is becoming a serious problem in many areas of our country.
According to a study by researchers at California Polytechnic State University, companies that were acquired via leveraged buyouts were ten times more likely to go bankrupt. A leveraged buyout, also known as an LBO, is when a private firm will acquire another company via debt and cash and control the company until they sell it elsewhere. However, private equities are completely unregulated so they can acquire companies, like newspapers, strip them of their supplies and money, and drop them into debt once they’re done with absolutely no consequences. That is exactly why the current pandemic is destroying the already broken news industry. Randall Smith, the owner of Alden Capital, is one of the biggest private equity firms squeezing the papers dry is Randall Smith, the owner of Alden Capital. Under his leadership, there has been a 72% downsizing in twelve of his papers. Just from the Bay Area alone, Alden Capital has made a profit of $41,000,000.
So what happens if we do lose our local papers? How would our society be? Our community would likely be a second Bell, California, a town without a local newspaper. In Bell, the police chief's salary went from $200,000 to $450,000, while the city manager's salary went from $300,000 to $800,000. And because no one knew about a local bill being passed to eliminate a cap on salaries, the police chief and city manager were able to increase their salaries by over 250% for five years. Just for a reference, those were the highest salaries for public officials of all time. All of this corruption was allowed to go undetected because there was no paper reporting this to the town. At this moment, years of torment have left small newspapers grasping at the end of a line. Unless we understand how essential they are to exposing local corruption and unless we find a way to save them our reality will be an unregulated world.
Minhaj, H. and Venkataramanujam, P., 2020. The News Industry Is Being Destroyed. [video] Available at: <https://www.youtube.com/watch?v=icNirsV1rLA> [Accessed 16 July 2020].
McElhaney, Alicia. "Lbos Make (More) Companies Go Bankrupt, Research Shows". Institutional Investor, 2020, https://www.institutionalinvestor.com/article/b1gfygl4r8661f/LBOs-Make-More-Companies-Go-Bankrupt-Research-Shows.
Kuttner, Robert et al. "Saving The Free Press From Private Equity". The American Prospect, 2020, https://prospect.org/health/saving-free-press-private-equity/.
Press, The Associated. "NY Daily News - Bell, Calif. City Manager Gets 12 Years Prison For $6 Million Corruption Scheme". Nydailynews.Com, 2020, https://www.nydailynews.com/news/crime/bell-calif-city-manager-12-years-prison-9-million-corruption-scheme-article-1.1758564.