BOB GARFIELD: This latest indignity to the New York Daily News has been widely decried as the toll of corporate parasites embodied by Tronc, feeding on the few sickly survivors of local journalism.
MALE CORRESPONDENT: Acknowledging his own differences with the paper, the Mayor tweeted “Tronc’s greedy decision to gut the newsroom is bad for government and a disaster for NYC.”
JUAN GONZÁLEZ: Unfortunately, I expected that this was going to happen once Tronc took over. Tronc, of course, is the old -- successor to the old Tribune Company.
DAVID FOLKENFLIK: I think because it can, I think because that’s been its model at its other newspapers is to cut and cut and cut.
BOB GARFIELD: But financial journalist Felix Salmon warns against such tidy narratives. Rather than looking for cartoonish evildoers, he says, we should be viewing this nightmares through the prism of sheer competence. Felix, welcome back.
FELIX SALMON: Thank you very much.
BOB GARFIELD: If Tronc had somehow plundered the assets of the Daily News before these draconian cost-cutting measures, there, I guess, would be reason to demonize them but they didn't sell off valuable stuff because there was no valuable stuff to sell off, eh?
FELIX SALMON: They didn’t make any money. They lost money. They’ve been subsidizing the Daily News for as long as they’ve owned it, which shouldn't have come as any surprise to them because it was losing money when they bought it. And at some point they got sick of losing quite that much money and so they decided to lose less. But they have never displayed any indication that they had any particular strategy or tactic or reason to buy the Daily News, in the first place. And, similarly, there is no particular strategy behind this latest round of cuts. It just seems to be a random cost-cutting measure in order to save on payroll in a couple of weeks’ time.
BOB GARFIELD: Now, they only paid a dollar for the New York Daily News, but they acquired in addition to its name and its business, such that it is, a whole mess of liabilities.
FELIX SALMON: They have to print and distribute that paper every day, which is incredibly expensive, and they have inherited a bunch of contracts which oblige them to do so. It’s really hard to get out of those contracts. You can’t just stop printing one day. It’s much easier if you need to save money to lay off journalists, even though journalists are not really the expensive part of the Daily News.
BOB GARFIELD: Now, on top of all of the other obstacles facing profitable local journalism, there also are the newsprint tariffs that the Trump administration imposed on Canadian paper manufacturers that has further increased the cost of printing paper daily newspapers and making the already unaffordable more unaffordable, still.
FELIX SALMON: I think that might actually have been part of the reason why they cut journalists, is because they decided that with the price of newsprint rising they were going to have to cut pages and if you’re going to cut pages, that means you’re going to cut journalists.
BOB GARFIELD: Now, the people who bought the assets of Tribune Media and renamed it Tronc, you know, they got some decidedly unthriving properties in the LA Times, in the Chicago Tribune. Then they added to it the New York Daily News. You know, I guess the best question I can give you is, what do you suppose they were thinking? This is like going long in coal mines.
FELIX SALMON: It’s the classic strategy, Bob, that you can tie two stones together and expect that they’re going to float.
BOB GARFIELD: [LAUGHS]
FELIX SALMON: If you, if you combine a bunch of crappy money-losing businesses, magically they’ll start making money. No one’s been able to do that in the past but hope springs eternal, especially when you’re run by a bunch of morons.
BOB GARFIELD: Perhaps [LAUGHS] “moron” is, it’s a little less judgmental over in the United Kingdom than it is here.
[LAUGHS] But you here -- you think that their motives and their ambitions did not quite match the reality of their acquisitions. What do you think were their ambitions?
FELIX SALMON: I think their time horizon is about 17 seconds. I don't think they're smart enough to have grand strategic ambitions. But insofar as they did have ambitions, what they wanted to do was have distribution across millions of readers in all of the major media markets in the country, which certainly include both Los Angeles and New York and also Chicago. And once they reach all of these affluent markets, they can serve up a bunch of hashtag content to all of these people using artificial intelligence and computers and cheap labor and something- something. I don't think this is thought through but ultimately, they can make money somehow.
If this was to work, it would only work as a scale play. And so, in the -- in that sense, they needed to get bigger, otherwise they would die. But, on the other hand, the bigger you get, the more money you lose and the more money you lose, the more quickly you die. So you kind of die either way.
BOB GARFIELD: Now, we’ve spoken before this and I know that your suspicions are that they were more attracted to the sort of glamour of being newspaper tycoons than they were to the actual expectations of turning these into profitable businesses.
FELIX SALMON: Almost no one buys a newspaper out of purely avaricious intent. You know, if you want to make enormous amounts of money in the world, there are much easier ways of doing it than buying a newspaper. Buying a newspaper gets you a certain amount of social cachet. You get to decide who the paper endorses in the presidential election and feel important that way. And all of these motivations go into the decision to buy any newspaper, whether you’re Jeff Bezos or whether you’re Tronc. But in the case of Tronc, I think probably it was more incompetence than it was any kind of civic-minded desire to make sure that high-quality journalism reached the thriving city of 8 million people.
BOB GARFIELD: There is this frantic search for revenue streams and an overall business model for newspapers in the wake of the collapse of the advertising market. You mentioned the New York Post. That’s one model, having a billionaire who’s willing to lose $60 million a year because that's just shaking change out of the sofa cushions for him, and Rupert Murdoch wants to be a newspaper baron. Outside of that, is there any sustainable ethical business model for newspapers and the local journalism that goes with it?
FELIX SALMON: It’s hard to see one, to be honest. I think that a very smaller scale in, in the very small cities, large towns -- Warren Buffet has a bunch of small local newspapers, which seem to be doing sort of okay journalism and making a small profit, and he’s happy doing that. So it's not completely impossible but in a massive market the size of New York, it's hard to see how you can really compete and get the kind of scale that you need by serving up local news. Local news has never been that sexy. It’s never been the kind of thing that people are really going to drop everything else they’re doing and run off to read an article about the local city council. So much as it’s valued and incredibly important and democracy kind of fails without it, I hate to say it but it's really hard to see how it can be profitable.
BOB GARFIELD: All right, one last thing. I described the cuts at the New York Daily News as draconian and you’re kind of rolling your eyes because --
-- you come from a different society with a much more colorful way of describing --
FELIX SALMON: In England, it's almost compulsory when describing these kind of cuts to describe them as swinge-ing. That’s a much better word.
BOB GARFIELD: [LAUGHS] Well, I, I got to say, you, you, you give good swinge.
FELIX SALMON: [LAUGHS]
BOB GARFIELD: Felix --
FELIX SALMON: Thank you.
BOB GARFIELD: -- thank you very much.
FELIX SALMON: Thank you.
BOB GARFIELD: Financial journalist Felix Salmon is the host of the podcast Slate Money.
[MUSIC/MUSIC UP & UNDER]
That’s it for this week show. On the Media is produced by Alana Casanova-Burgess, Micah Loewinger, Leah Feder and Jon Hanrahan. We had more help from Meg Harney, Yasmeen Khan and Asthaa Chaturvedi. And our show was edited -- by Brooke. Our technical director is Jennifer Munson. Our engineers this week were Greg Rippin and Sam Bair.
BROOKE GLADSTONE: Katya Rogers is our executive producer. Jim Schachter is WNYC’s vice-president for news. Bassist composer Ben Allison wrote our theme. On the Media is a production of WNYC Studios. I’m Brooke Gladstone.