The iPhone 12 represents Apple’s first major foray into 5G cellular technologies. Verizon CEO Hans Vestberg was on hand during the event to announce the nationwide launch of the carrier’s sub-6 5G network. Apple says it has designed the iPhone 12 lineup to achieve ideal network performance while balancing battery life. A “smart data mode” uses LTE when your current activity doesn’t demand 5G speeds. Apple says it has tested 5G performance with 100 carriers across 30 countries to ensure a smooth launch.

“So far, we’ve seen amazing real-world speeds, along with improved call quality, battery life, and coverage around the world,” Apple’s marketing says. “This is 5G, iPhone style.”

Apple isn’t the first company to release a 5G phone, of course, but market uptake has been relatively slow. It’s growing, though: In January, 3% of phones sold in the U.S. had 5G; by August, that was up to 14%.

But nothing will do more to increase that share than a 5G iPhone; about half of the phones in Americans’ pockets have Apple logos on the back. 5G devices are projected to make up about 48% of phones in North America by 2025, more than Europe (34%) or worldwide (20%).

What does 5G do? It makes data a lot faster. What does that do for journalism? Last year, I sketched out some of the possibilities.

Things that are possible but suboptimal on middling connections now — say, livestreamed video — should become much more reliable.

Things that are on the edge of possibility now — like decent-quality AR and VR — should become much more mainstream.

And there can just be…more, of everything. An AR experience that today places an object into 3D space might be able to handle an entire roomful of objects tomorrow. One live video stream going to a device might become three or four simultaneous streams, with users able to move seamlessly between them without a stutter or glitch and with less compression required all around.

On the flip side, things that have justified primarily because they improve end-user performance will become less appealing over time. Publishers have adopted Google’s AMP at a large scale because it offers much faster speeds for users on mobile.1 Don’t misinterpret this as blasphemy against the webperf gods — but as data gets faster, the reasons to accept the tradeoff of AMP’s flaws get weaker. (Just as things like web fonts, background video, and larger images are all more acceptable today than they were a decade ago.)

It’s all interesting stuff! But let’s be realistic: The apps that benefit most from 5G won’t be the ones from news publishers. They’ll be the other apps competing for our audiences’ attention: games, entertainment, and other new data-heavy ideas that haven’t been thought of yet.

Think about it: News stories are indeed better on today’s faster 4G connections than they were on 3G a few years ago. But Netflix is a lot better on 4G than on 3G. Call of Duty is a lot better on 4G than on 3G. Houseparty is a lot better on 4G than on 3G. News — text-based news especially, but video news too — just isn’t as well-positioned to take advantage of greater bandwidth as the other icons on our home screens.

1. And, let’s be honest, because Google put its thumb on the scale.

In case you haven’t heard: Last week, Epic tried to get around Apple’s in-app purchasing system — in which Apple takes a 30 percent cut of sales — by adding its own purchasing system to Fortnite on iOS. That’s against Apple’s rules for the App Store — so Apple kicked Fortnite out. Epic, having gotten the response it expected, immediately sued Apple (and Google, which had followed the same playbook on Android), saying that the two giants’ app store policies are unfair monopolies when it comes to software distribution on mobile devices.

Which…isn’t a bad argument.

The past couple of years have been filled with complaints about the aggregated power of Google, Apple, and a few other tech titans. For app stores, though, the imbalance of power has been too big to prompt any real change. Apple took a 30 percent cut of App Store purchases when it launched in 2008; it still does today.

But it’s one thing for small developers to complain; it’s another for Netflix, Epic, Spotify, or Sonos — much less Amazon or Facebook — to raise a fuss, legal or otherwise. Apple cut a special deal to quiet its most potent opponent on that list, Amazon. Epic, though, seems prepared to push this to some sort of legal conclusion.

Different outlets have responded to Apple’s setup (which Google roughly mirrors) in various ways. The Financial Times famously pulled its mobile app from the App Store in 2011 over both data and rev-share concerns. (It returned in 2017.)

Some raise their subscription rates 30 percent to both (a) cover Apple’s cut and (b) hopefully push some would-be subscribers back to a direct subscription. (Though Apple’s rules don’t even let you tell the user they can get a better deal over at your dot-com.)

And some — most, from what I can tell — simply eat the difference. Want to subscribe to The New York Times on your iPhone? If you’re looking at NYTimes.com in your browser, you might get one of any number of offers the Times is testing and thinks might work for you. (In a logged-out window, I just got offered $1/week for the first year, then the full $4.25/week standard rate after that.) But if you’re in the Times’ iOS app, you get a rigid offer for $16.99 a month.

So on the website, the Times will get $52 for a new subscriber’s first year, then $221/year every year thereafter. On the App Store, the Times will get $142 for a subscriber’s first year, accounting for Apple’s cut, even though it would like to charge less to hook in new subscribers. And ever year thereafter, the Times gets $173 — $48 less than it would like. (Apple reduces its cut from 30 percent to 15 percent after the first year of a subscription.)

Apple’s rigid policies also make it harder to test different kinds of subscription offers — a free one-month trial versus 99¢/week for the first three months versus a discount rate for the first year, and so on. Propensity-driven paywalls are a real source of growth in digital subs for publishers, and they’re just about impossible to pull off in the App Store.

The explosion of SaaS has meant there are a ton of companies selling subscriptions on the App Store. But the vast majority of them were born in the iPhone era and have set up a cost structure attuned to the distribution costs they expect. But most subscription publishers existed long before the iPhone and have large fixed costs — like a newsroom that produces new content everyday — and a subscriber base that is still mostly not using app store purchasing. All that means the pricing crunch can be even more severe for them.

It’s even more galling knowing that Apple only applies its restrictions to digital content — a print subscription doesn’t face the same cut — and that Apple has a separate payment system, Apple Pay, that takes a traditional, credit-card-processor-sized cut. (So if I pay my neighborhood sushi place to bring me dinner, Apple only charges 0.15 percent through Apple Pay. But if I subscribe to SushiNewsToday.com on my iPhone, Apple gets 30 percent?)

How is this all going end? Who knows — Epic seems determined, and you get the sense this could be the moment in which a decade of frustration finally turns into action, either by the tech giants voluntarily or by regulators, Congress, or the courts. An easy, secure one-tap subscription was a huge deal a decade ago, when screens were tiny and people were nervous about entering credit card numbers. But today, any number of tools and vendors have made buying an online sub pretty darn straightforward.

I see three potential outcomes. One, Apple and Google stand their ground and Epic can’t convince a judge that it’s an antitrust violation.

Two, Apple and Google agree to cut their shares under some set of cases, as Apple did in 2016 when it dropped to 15 percent after the first year of a subscription. Maybe it exempts certain categories. (I hear robust news organizations are important to democracy.) Maybe the cut drops to zero after a certain length of time. Or maybe they just try to reduce their share to, say, 20 percent and hope that quiets the crowd.

Three — the one I consider the most likely — is that a court or regulator eventually agrees with Epic that Apple and Google’s functional monopolies on mobile software distribution are a constraint on trade and a violation of antitrust law. (That court or regulator could be in the United States; it would more likely be in the EU.) The likely outcome would be a ruling that Apple and Google have to allow alternate in-app payment systems on their devices — the way Microsoft was ordered to allow other default web browsers or AT&T was forced to allow other long-distance companies access to the phone network it built.

But I suspect that would still be years away, and you haven’t made too much money betting against the tech giants in recent years. These monopolies generate huge revenues — about $29 billion over the past year — and neither Google nor Apple is likely to give them up lightly. After all, just this morning, Apple became the first company in the history of the world to be worth $2 trillion — only two years after it became the first to hit $1 trillion.

There were attempts at theatrics. Would thousands of retirees have their pensions saved? Would mustache-twirling Alden Global Capital tie McClatchy’s properties to the railroad tracks as its train rounded the corner? And, most intriguing of all, would the Knight Foundation bet $300 million-plus of its $2 billion-plus in assets on trying to revive an old newspaper company?

That last possibility came and went without public acknowledgment, but down the road it may look like a retrospective tipping point in the disappearance of the American daily press.

In the end, any drama was distilled down to a moment of awkward comedy: Passionate supporters of a vibrant free press rooting for what they hoped would be the less damaging hedge fund to come out on top.

Things turned out just as we and everyone else were predicting back in February, when McClatchy and CEO Craig Forman acknowledged their financial dead end and filed for bankruptcy. On Sunday, the board of the No. 2 newspaper chain in the United States picked the winner of its thinly attended auction: Chatham Asset Management should be the new owner of McClatchy.

It is just a recommendation; bankruptcy Judge Michael E. Wiles must still bless the deal, which he’s expected to do July 24. While we’re still waiting on some details of the deal, including how much Chatham will pay and how much McClatchy’s creditors will get, we can sum up this little chapter in daily descent in 10 points.

And what happens in those hours could prompt a wave of other moves across the rest of the industry.

The dates June 30 and July 1 have called out from the calendar for a while now. On Tuesday, Tribune Publishing will reach the end of two “standstill” periods. Tribune’s two major shareholders — Alden Global Capital, with 33 percent of the company’s shares, and Los Angeles Times owner Patrick Soon-Shiong, with 25 percent — had promised not to actively buy or sell any shares until June 30.

When that restriction ends, you can expect Tribune’s uneasy status quo to come to an end quickly. After a chaotic decade, the chain had been briefly semi-stable after Michael Ferro’s departure from management. But then Alden bought up those shares in November, and since then Tribune has given Alden two board seats, imposed Alden-style cuts, and created Alden-style management chaos.

Then, on Wednesday, final bids for McClatchy’s 30 newspapers are due, as the country’s second-largest chain prepares to wind toward some exit from bankruptcy.

This is the mid-year witching hour for the U.S. daily press, another stirring of the consolidation pot, and another stage in the transformation of newspapers from civic assets to financial instruments. These two big — and potentially interconnected — dramas will determine the futures of the No. 2 and No. 3 local publishers in the country.

The possible combinations and recombinations are numerous. What we know, from a variety of sources, is still piecemeal, with the future of McClatchy’s 30 titles the most uncertain piece.

Here’s one big new possibility to look for: a new potential buyer of McClatchy intent on pulling its newspapers from the clutches of hedge funds and setting up the country’s first major nonprofit newspaper chain. More on that below.

Part of the uncertainty is that the options that seemed possible in December are markedly different now. The one-word reason: coronavirus.

The months of COVID-19 shutdown have only deepened the business issues afflicting the daily newspaper business. Plans that felt like climbable mountains in December now look positively Himalayan. Everyone’s forecasts and valuations have gotten big haircuts. (And some look like they were done in quarantine, with clippers and a mirror.)

With a new wave of infections rampaging across the country, newspaper CEOs now look at another six to 12 months of potential downturn. Small businesses’ struggles will likely leave ad revenues down 35 to 40 percent in 2020, according to Ken Harding, head of FTI Consulting’s respected media practice.

The biggest data point from FTI’s June 1 update: “We project an unrecovered advertising revenue loss between 17 percent and 28 percent as a result of COVID-19 by Q4 2021.”

Those numbers — that projection of extended revenue pain — are driving everyone’s estimations of newspaper company value, which drive their plans for bids and M&A.

The McClatchy drama

Think of this week’s McClatchy action as the beginning of what may become a two-act drama.

Those “final bids” are due on Wednesday. Then one week later, on July 8, a winner will be announced by the McClatchy board. On July 24, bankruptcy judge Michael E. Wiles will review the decision, and either approve it or not. His legal task: resolving the company’s debts as fairly as possible among those owed money.

Finally, they’ll be a formal Department of Justice antitrust review, which should be resolved before year’s end.

In bankruptcy court, wild cards can enter, and one did last week. McClatchy’s unsecured creditors publicly charged what others had been saying a bit more quietly. They alleged that McClatchy’s major 2018 debt refinancing with Chatham Asset Management was “fraudulent.” That refinancing gave Chatham a favorable lien position in bankruptcy; that means Chatham is more likely to be made whole (or more whole) than McClatchy’s unsecured creditors, including pension claimants, who would likely receive pennies on the dollar. While a lawsuit is possible — and could take years, as did some in the Sam Zell/Tribune five-year bankruptcy from hell — it’s more likely there’ll be a settlement that removes that obstacle from finalizing a sale.

Why might July’s drama be only Act I? Because whoever buys McClatchy could then turn around and merge it with another company — or sell off individual McClatchy newspapers, or groups of them. That’s Act II.

Who’s playing in each act?

The one known bidder is Chatham — currently both McClatchy’s lead investor and its largest debt holder. Chatham has already put in a stalking-horse bid of around $300 million.

Auctions like these draw all sorts of lookie-loos. Contemplating a bid can be a great opportunity to examine the innards of a company, to compare benchmarks and metrics — even if the looker has no intention to buy.

This auction has been no different. As the bidding hour approaches, no one expects more than a handful of bids. Likely one, two, or three — maybe, at the outside, four.

Let’s categorize the likeliest bidders:

• The Insider
• The Savior
• The Financial Engineer
• The Roller-Upper

Chatham is The Insider here. It knows McClatchy’s books and operations inside out, and it’s already bid. Its attorneys have said it wouldn’t mind being outbid, and that makes sense: As a hedge fund, it’s in McClatchy for a financial return, not long-term investment or community service. If someone else thinks McClatchy is worth more than they do, they’ll happily take their money.

Most intriguing is The Savior.

Many in the news business have looked aghast at the vultures and financial players who increasingly dominate ownership. They’ve wrung their hands. They’ve offered a vision of new, nonprofit-led future for local news, just as hundreds of smaller sites have set up a shop over the last decade. But nearly all of those startups still pale in size, if not dedication, next to even shrunken local dailies.

The McClatchy bankruptcy has hatched a new idea, one that’s been talked about for at least a couple of years, but mostly hypothetically: Why not buy one of these big struggling chains — and take it nonprofit?

That’s what on the table today. Leaders in the field of nonprofit journalism are deciding over these 48 hours whether or not to make a bid for all of McClatchy, sources tell me. They say they can raise the needed cash of $300 million-plus.

The big question: What then? How would a civic-minded nonprofit approach the tough transformations still ahead for local news, which is still highly dependent on print revenues smack in the middle of the COVID age? In this growing civic-good journalism world, there are many good people with the right motives — but very uneven skills to transform beleaguered companies.

Sources say there’s a newish player in the mix that is strongly considering a bid to be The Financial Engineer, sources say. And it’s not one of the usual suspects — Fortress Investment Group (Gannett’s manager), Apollo Global Management (Gannett’s lender), Alden Global Capital (MNG’s owner, major investor in Tribune and Lee). Those financial giants have each done their share of damage via unending cuts and only murky business transformation.

Then, there are at least two candidates to be The Roller-Upper. No one is putting down a big bet on one of them placing a bid — but no one’s betting against the possibility either.

First, consider the last big roll-up: New Gannett. The combination of Old Gannett and GateHouse, finalized in November, created the most dominant daily publisher in U.S. history, serving about a quarter of daily newspaper readers.

Gannett is highly encumbered by debt. The $1.8 billion loan from Apollo it took to do the deal now feels even more uncomfortable given 2020’s virus-driven ad decline. It just let go its second-in-command CEO Paul Bascobert, who’d been put inside New Gannett by Old Gannett — a scheme that simply didn’t work. It’s also announced an end to at least some of its COVID-related furloughs.

Gannett — and, importantly, Apollo — could make the case to themselves that further roll-up — more scale, more synergies, more cuts — would make the company’s position more secure over the next few years. Gannett + GateHouse + McClatchy is a combination that would reach about a third of American newspaper households. By the standards of old accounting, that’s huge scale. But what is it worth — what’s its value as a bid in bankruptcy court?

The big question for Gannett’s Mike Reed and Apollo’s Leon Black: Will they stay on the sidelines or get in this game?

Then there’s Heath Freeman, the head of Alden. He’s come out of the shadows a bit lately, even giving an interview here and there. His cash-flow-first strategy has worked — for him — with MNG (f.k.a. MediaNews Group and Digital First Media) and he plainly wants to apply it to as much of the industry as he can.

Of course, Freeman may have his hands full with the week’s other big deadline. On Tuesday, his standstill agreement expires with Tribune. While Alden and Tribune have managed to keep their plans very close to the vest, the wide expectation is that Tribune and MNG will move toward formal merger soon — perhaps very soon.

That combination would create a cash-driven newspaper company reaching more than 15 percent of U.S. newspaper readers.

Follow-on civic buyers?

That’s just this week’s potential action. How about Act II?

Whoever buys McClatchy whole may move to either merge it with another player (see The Roller-Uppers above) or sell off some of all of its pieces — whatever’s the best way to maximize its investment. One data point: Apollo’s and Chatham’s leaders have a good working relationship, say sources.

Here we could also see the emergence of more civic buyers. The mayors of both Miami (home of McClatchy’s Herald) and Sacramento (home of McClatchy’s flagship Bee) have publicly raised calls to support community-oriented buyers. We’ve heard such civic calls for several years, in many cities — but the question comes down to, as most do, funding.

There the intrigue is beginning to mount. If McClatchy’s West Coast properties come loose, sources say, philanthropic sources could be tapped for about $20 million within a year, in California (where McClatchy has five titles) and in the state of Washington, where it owns four). There’s also at least one other civically oriented private buyer waiting in the wings if individual properties come into the marketplace.

Fortunately, the new tools designed by the Journal’s product and news strategy teams — which include a clickthrough module to quickly catch readers up on political news, redesigned live update presentations for election nights and debates, and Q&A features — have proven adaptable.

When I spoke to Louise Story, the Journal’s chief news strategist and chief product and technology officer, last week, the paper had already launched a version of the new live Q&A tool — it was just for reporters to answer readers’ coronavirus questions, not their political ones.

This week, after a few more head-spinning news cycles, the election catch-up module on the homepage has been converted to coronavirus information. And the live coverage that’s outside the paywall? That’s where you can find highlights and to-the-minute updates like “Walmart sends corporate staff home” or “Police plan to meet Tesla factory management over compliance with coronavirus health order.”

“All of these things are based on the needs of our audience — they’re all reusable,” Story said. “We’re building things that have really neat uses during the election, but that benefit our products broadly too.”

The election-turned-coronavirus news products are just the latest iteration of the Journal’s longstanding strategy to retain existing subscribers and convert occasional readers of The Wall Street Journal into paying members by encouraging regular engagement. Last month, it announced it had passed 2 million paying subscribers, a number only The New York Times can top among American newspapers. But the fact that its paywall is harder than most of its competitors — not to mention its high sticker price for a digital sub, $39/month — means it has to be more creative than its peers in both attracting and converting new readers.

Last spring, the Journal took a deep dive into user behavior and surfaced with data on actions that boost retention and the likelihood a reader will become a paid subscriber. Then they set out to promote those actions to their member base and occasional readers through what they called “Project Habit.” (We published a breakdown of the process by The Wall Street Journal team that led the effort.)

Data clearly shows that the best way to reduce churn is to increase engagement — but the path to driving product use and building loyalty amongst members has not always been as obvious.

Over the past year, a cross-functional group here at the Journal has worked together to identify retention-driving actions and reinvent the way we promote those habits to our member base. We call it Project Habit.

We’ve known for some time that if a member downloads our mobile app or signs up for an email newsletter, they’re more likely to stay with the Journal.

The key engagement metric was active days, the group concluded. So while the news products like the catch-up module and live Q&As were designed to meet reader needs — Story said their research showed readers wanted to be able to get “caught up” on the news quickly and that some appreciated the opportunity to feel “connected and involved” with the Journal’s political coverage — the team also recognized that the tools could drive retention-friendly habits such as returning to the homepage regularly for updates.

Only paying subscribers — members, in Journal parlance — can submit questions, but anyone can tune in to see them answered. The catch-up module and the live coverage pages can also be viewed without running into the Journal’s paywall.

Each tool had to be optimized and recognizable for both subscribers and nonsubscribers, whether they were reading on their phones, desktop, or through the WSJ app, said Kabir Seth, the Journal’s vice president of product strategy and operations. “We were definitely thinking through the experience as we were building it. How does it feel for a nonmember? How does it feel for a member?” he said. “The graphics team is super important, and there’s a lot of editorial input.”

Live coverage is particularly effective at bringing in new audiences of non-subscribers, Story said. The catch-up module, which can be completed without leaving the homepage, has been performing especially well with occasional readers, a.k.a. the non-news junkies who walk among us.

An example of a catch-up module on the WSJ.com homepage.

The Journal tested the catch-up module at a variety of times (morning, midday, even late Friday afternoons) before settling on weekdays at lunchtime, based on engagement patterns and site traffic. They also found, through testing, that an illustration on the first card drew readers into clicking through the catch-up module better than a photo did — which also helps set it apart from other content on the homepage.

“An interesting thing about making a new story format is that it’s not just the product, technology, and design of it. There’s a different type of content. In this case, it’s short snippets of text that you run through,” Story said. “As we innovate with our products and technology, we also have to innovate with our content and our storytelling.”

In designing the news products, the Journal also hopes to benefit from the relative trust it has across the political spectrum.

A Pew study in January found it was one of only three news outlets (along with PBS and the BBC) that both Democrats and Republicans trust more than distrust. An earlier study found that the Journal’s audience is remarkably evenly distributed across the ideological spectrum. (Among conservatives, the Journal’s news reporting benefits from the paper’s hard-right editorial pages.)

“We’ve found that the Journal is in a great place to be a political news source because we’re so highly trusted on the left and the right. It’s a unique position to be in,” Story said. “That’s part of our thinking around the live Q&A and the other things that have to do with being more transparent and open to questions.”

Story said the process for building new news products is ongoing for her and Seth. Research into how readers think about politics and politics in the media is ongoing.

“It’s very iterative,” she said. “We’re already looking for ways to make our election coverage better.”

That was just last week, and they’ve already found ways to adjust.

In Memphis, two newsrooms — each with about three dozen journalists — slug it out, day after day. They both know it’s possible, maybe even likely, that only one will be still standing in a few years.

What’s happening in Tennessee’s second-largest city, given our times of media high anxiety, also takes on the tone of a morality play, a quizzical dot on the landscape of ghost newspapers and deserted communities. Is Memphis an outlier, or is it a sign of what’s to come in the 2020s?

Quietly, The Daily Memphian — an ambitious local news site launched in 2018 — has shaken up the local news landscape in Tennessee’s second largest city.

“I really think that the presence of The Daily Memphian has been a good thing for the market, and it’s been a good thing for our journalists,” says Mark Russell, the executive editor of the incumbent daily newspaper, the Gannett-owned Commercial Appeal. “I think readers are benefiting from it every single day.”

The “newspaper” war even comes some good trash talk. “I think that competing with The DM has been wonderful for Memphis, wonderful for our journalists and theirs,” Russell continues. But…

“Eric Barnes, Andy Cates, and even some of their columnists have said things in the media and said things publicly that have just been, I’ll call them — call it what it is, outright lies. Because they’re describing The Commercial Appeal and our commitment to Memphis and whether we’re controlled by Nashville. And they know it’s a false narrative. And they keep repeating it. They’ve let up a little bit lately, as I’ve called them on it. But I think for almost a full year, that’s all they talked about, how the CA was ‘not committed to Memphis.'”

The Daily Memphian’s very name shows who it aims to compete with. It’s digital only, meaning of course that it publishes news around the clock. The “Daily” part? It calls out to a group of once-loyal print newspaper readers who might be willing to try out a new alternative.

The Commercial Appeal, founded in 1841, went through a decade of cuts that opened the door — and the community’s wallets — for The Daily Memphian. “We launched our online news source as a direct response to the cuts and consolidation that Gannett imposed on our local paper,” says Barnes, the Memphian’s CEO.

Across the United States, there are local newspapers in various rates of decline — some being stripped quickly for parts by hedge fund owners, some fighting fiercely against the tide through smart business strategy and commitment to their communities.

And across the United States, there are hundreds of local news news sites working to find their own niche in the news ecosystem being born.

But it’s still rare to see old and new compete at something that approximates a level playing field. The local daily, no matter how shrunken, nearly always still has a significantly larger newsroom than the biggest local digital startup. That’s one big reason the battle in Memphis is worth watching closely: If current trends continue, it’s a preview of the sort of competition we might see in lots of other American cities in the coming years.

Eric Barnes, 51, is a former president of the Tennessee Press Association who has been on both sides of the newsroom/business wall during his career. He had a hand in launching community papers in Nashville and Knoxville, led weekly papers, and ran the Nashville Ledger business-and-politics paper for 15 years before the Memphian launched.

“Before that, we did city guides and city directories and business directories and coffee table books,” he says. “Our company was based here in Memphis, but we worked around a couple hundred markets around the country. Then I was at a small business magazine up in New York and a reporter in Connecticut. I also host a show here locally on our PBS station, which I’ve done for nine years.”

While the Memphian serves a metro-sized audience, Barnes applies lessons from his experience with smaller community papers. “Being in the Press Association and getting to know a lot of community-level publishers, small-town publishers, was extremely helpful. The way in which they got hit, everybody in the industries got hit. But they often were slower to go to the web because they didn’t have the money, so they didn’t give away as much. I mean, they kept their print alive. They stayed closer to their communities. I think there are a lot of lessons.”

One lesson: “We are a paywall-driven, subscription-based news source,” says Barnes, who believes reader revenue is the absolute key to getting to break-even.

The Daily Memphian has assembled 11,600 subscribers in the 18 months since its launch in September 2018. Those subscribers initially paid $7 a month, a price now increasing. (It’s currently $10.99/month or $99/year.)

That will add up to more than $1 million in annual revenue, and it’s matched by roughly the same amount in advertising. On one hand, $2 million is a lot of revenue. On the other, the Memphian’s current budget is about $5 million.

That’s the story of this one-of-a-kind play in U.S. replacement journalism: It’s about scale. Scale of ambition. Scale of newsroom. And scale of revenue, the elusive elixir of digital news.

A controversial funding runway

The Daily Memphian has so far raised $8.2 million — $6.7 million of that before launch, the rest since. The goal is to get to break-even or better by 2023. “We’re on track,” Barnes says. “I’ve said publicly before that our goal is to get 20,000 to 25,000 people signed up by Year 5 at a [monthly] rate of around $10.”

“I get what The New York Times, Washington Post, and Wall Street Journal are doing,” says Cates, who led the Memphian’s fundraising campaign and chairs its board of directors. “We believe we are a model for how the Fourth Estate can flourish in middle America. We’re in Siberia. We don’t have national funding, Google or Facebook.”

The CEO of RVC Outdoor Destinations, Cates is a prominent civic booster who gets credit for helping bring the NBA’s Grizzlies to Memphis from Vancouver in 2001. Just as people think that metros need sports teams, they need far older civic institutions — newspapers or the digital equivalent. “For a community to be healthy, it must have a healthy newspaper,” Cates told me. “We tried to buy the CA, and thank god we failed.”

That said, The Memphian’s unorthodox and opaque fundraising strategy has been controversial among many both in the bubbling new news landscape and in Memphis. Transparency in funding has become a mantra in the nonprofit news movement, and there the Memphian is lacking.

“Give or take, the original $6.7 million was all raised anonymously, which caused some consternation with journalists and INN [Institute for Nonprofit News],” says Barnes. “I get all that. Even though I carry the CEO title, I have spent most of my life as a journalist one way or another. Locally, there were a lot of questions: Are they going to have bias? Are they going to carry an agenda?”

(At launch, Cates told Poynter that “he hopes that the [anonymity] will avoid the appearance that local high-rollers are treated with deference in Memphian stories.” Keeping the high-rollers anonymous doesn’t typically help with conflict-of-interest worries.)

Barnes says the money was all local and from “many different funders — it wasn’t one funder.” Now, he says, “I don’t ever get asked a question locally” about funders. He says he’s “felt or experienced absolutely zero donor pressure on the newsroom. The board — which is fully public — has high-level, strategic expectations of the operation, including the newsroom. But they’ve not in any way dictated stories that should — or, and this is arguably more important, should not — be written.”

Proudly paywalled

That’s not the only point of some controversy around the Memphian and money. Its paywall, powered by Piano, limits non-subscribers to three stories per month. That’s down from five at launch.

“In the middle of the summer, we started tagging roughly one story a day as subscriber-only, so you have to subscribe to read that,” says Barnes. “That’s done well for us in terms of converting and reinforcing the people that we’re a paid site.” Reducing from five to three stories a month didn’t bring “a huge impact negatively or positively. We’re not quite sure where we go from there. I mean, the business part of me would love to say it was one free or two free, but it’s a balancing act.”

Barnes says the organization plans to test Piano’s new “intelligent paywall” tech going forward. He cites both the Google News Initiative Audience Lab and the Facebook Local Subscription Accelerator as helpful. “They bring doable advice and guiding, best-practice principles. And to both their credit, they are not pushing Google or Facebook to drive traffic or subscriptions.”

Not many local news startups use paywalls — especially nonprofit ones. But for The Memphian, it’s fundamental to its strategy, even as others advocate open access as a civic good.

“We’ve gotten some pushback from some of the other nonprofit news organizations whose mission is free and open content that should be available to everyone. I love that. I mean, I’m an NPR fan. I’m a fan of local PBS, but we just looked at it and said: We don’t want to constantly fundraise. We don’t want to be a drain on the Memphis community, the philanthropic community.”

To counterbalance the paywall, the Memphian is free when accessed in schools and libraries. Those “with limited means” can apply for financial assistance. Some of the Memphian’s journalism also leaks beyond the paywall via local TV and radio partners. “Memphis has a big poverty problem, and we want to figure out how people who can’t afford it can get it,” Barnes says.

But he’s happy to defend charging. “Let’s value the news, let’s charge a fair rate for it. Let’s say our content is worthwhile and try to undo the, what, 15-year disastrous experiment of giving away local and national news for free. People have paid for news for decades, if not ever long. So why wouldn’t we find ways to have people who can afford to pay for it?” Eventually, subscribers are projected to provide about two-thirds of the Memphian’s revenue, with sponsorship and advertising making up the rest.

Are those ad sales motivated by the Memphian’s mission? “Less than 10 percent has been people saying, ‘Hey, we just want to support you to support you.’ We try not to sell that way,” Barnes says. An advertiser’s monthly spend is often in the $500 to $1,000 range. “It’s not terribly expensive to dominate one of our sections or to dominate our business coverage. They have a very strong presence on our email editions or our business coverage or sports coverage.”

So who is in the audience that those advertisers want to reach? The site’s readers do skew a bit older; “it’s traditional newspaper readers who are desperate for a local source, a locally based news publication, paper or not, a news publication,” Barnes says, getting in a few punches at the CA.

The audience also skews toward higher education levels (almost 70 percent have a college degree) and higher income (overindexing at incomes of over $100,000).

That’s in Memphis — the second-poorest large city in America, behind only Detroit. Of the 50 largest U.S. cities, Memphis ranks No. 47 in the share of its residents with at least a bachelor’s degree. And among large U.S. cities, only Detroit and Baltimore have a higher African-American share of its population.

In none of those measures is The Daily Memphian particularly representative of its city, say some critics. At launch, it faced criticism from people like Wendi C. Thomas, a former Nieman Fellow and founder of the local news site MLK50, for having a staff that’s 80 percent white in a city that’s 63 percent black. (The Memphis metro area overall is roughly 50/50 white/black.) They point to a leadership that is overwhelmingly white, and the staff diversity count of 21 percent people of color, 40 percent female. Of its four regular columnists, all are men and three are white.

The Memphian, for its part, is stands by its own record of diversity and of reaching out more widely in its first two years of existence. Its board is majority female and 33 percent African-American. Its new audience development and digital directors are both women; the new head of advertising is African-American; the new executive editor is Latino. “Since launch we’ve gotten more — not less — diverse,” says Barnes.

Beyond that, Barnes says the Memphian has made major inroads in engagement on the news product itself with its diverse communities. “We have two dedicated reporters to north and south Memphis, historically black and under-covered areas. We have a commitment to diverse stories across all reporters and beats. And we have none of the constant crime blotter coverage with the parade of mug shots and shallow, fearful coverage — coverage that has done major damage to black communities nationally. But we do cover policing, criminal justice, justice reform, the local DA, juvenile justice center, a series on the impact of childhood trauma on the brain, and more.”

In the criticism and on the ground, we can see the contentiousness of journalism change. Some may say that it’s one thing to see on-the-surface power imbalances in a decades-old institution that is struggling to adjust to new realities, it’s another to see it in an organization that’s born fresh and new in 2018.

But these are knotty questions. How much should ambitious startups be faulted for finding the early reader revenue from the often-expected sources of more affluent consumers? Further, an important question. How soon should their overall staff makeup resemble their communities covered?

It’s true that Memphis is one of the least digitally connected cities in America. As of 2018, 48 percent of residents have no broadband connection at home — the second highest rate of large U.S. cities, again behind only Detroit.  But of course, we know that, with very few exceptions, digital-only news startups are the only ones to have a chance to find new success in the 2020s. Beyond all the other challenges of reseeding the news deserts, can we rightly expect news startups themselves to deal with broadband neglect? It’s also instructive that the Memphian has already taken early and substantial initiatives, with more planned, to get free access to communities and individuals that can afford to pay for it.

So some paint this picture: anonymous wealthy funders; leadership that doesn’t look much like its community; a digital outlet in a city with limited connectivity; a hard paywall in one of the country’s poorest cities. They say new startups, eventually replacing traditional daily newspapers, are unlikely to be oriented toward a mass audience as what came before.

But it’s far too early to draw that conclusion. The Daily Memphian may be a Rorschach test in what is such a contentious start-up news movement. Critics inside Memphis, and out, can point to numbers they don’t like. The Memphian itself can rightly claim to be doing something that I haven’t seen getting done anywhere else in the country: a high-quality, at-scale, news replacement with a real business model bent on making its way forward with earned revenue.

Much as discussion about its particulars is warranted, and gets the context it deserves, we cannot lose track of that hugely important fact.

The “newspaper” war

While not much has been reported nationally on this competition, big themes emerge for all who care about future of local news in North America and beyond.

First and foremost, The Daily Memphian aims to be a replacement news company — the primary supplier of local news and information for its area.

Metro Memphis has a population of about 1.35 million, a sprawling area that spreads into Arkansas and Mississippi. Roughly half of that population resides in Memphis proper. Unlike the vast majority of hard-working news entrepreneurs planting seedlings in growing news deserts, the Memphian’s model is built on achieving a scale that can try to match the city.

It now pays a newsroom of 34 — the same number of journalists, more or less, remaining at Gannett’s incumbent Commercial Appeal. Another 12 business-side staffers join them. In addition, the Memphian pays more than a dozen regular freelance contributors.

As of December, the newsroom is led day-to-day by Ronnie Ramos, who left a job as executive editor of Gannett’s Indianapolis Star for the Memphian. That move in and of itself tells us lots about the changing momentum in Memphis.

There’s plenty of newspaper DNA in the rest of the Memphian’s staff. (It covers sports, runs restaurant reviews, even runs obituaries — a mix of content much closer to a print daily’s than what you might find at a lot of local nonprofit news sites.) It hired “10 to 15” of its staffers from the Commercial Appeal. And that hiring changed the CA a lot as well.

“We had to go out and get new players for almost every major position,” says CA executive editor Mark Russell. “And we did that and we got better.” The newspaper’s staff is now younger, more digitally savvy, and more diverse — 33 percent people of color now versus 19 percent before the Memphian began hiring people away. (Russell is black; Barnes and Cates are white.)

Memphis’ story is a lot like that of metros from coast to coast. The circulation losses of The Commercial Appeal tell quite a story, underscoring not just a loss of readers but the widening market vacuum that The Daily Memphian is rushing into.

For the third quarter of 2019, The Commercial Appeal reported a Sunday paid circulation of 52,000 and a daily circulation of 29,000. Just three years earlier, those numbers stood at 103,300 Sunday and 67,000 daily. That’s basically half of its paid base of readers gone in three years.

On digital subscriptions, the CA’s numbers have moved in the right direction. It counts 10,063 in that category now, up from 4,045 subscribers three years ago.

The major circulation declines result from changing reader habits, to be sure, but also from Gannett’s cuts to the newsroom and its pricing-over-volume circulation strategy.

By some remembrances, the Commercial Appeal counted about 200 journalists in its newsroom 20 years ago. That’s more than five times the 37 in today’s.

The Daily Memphian’s founders say its birth grew out of the regionalization of the daily press, but the Commercial Appeal disputes the degree of that regionalization. In 2015, Gannett bought the Knoxville and Memphis dailies as part of its Journal Media Group acquisition. Gannett now owns six dailies in the state, with Nashville the largest. Over time, the Tennessee Network developed, a trend we’ve seen all over the country as regional clusters of newspapers looked for headcount reduction and efficiencies.

“You could regionalize backend design — that’s one thing, fine,” Barnes says. “Centralize your accounting. Okay, that’s fine. But you can move [only] so much decision making out of the local markets before it is [no longer] really the Memphis Commercial Appeal.”

Especially since Memphis and Nashville don’t really get along. (For evidence, see this map of NFL fan bases, which shows Memphis’ Shelby County actually has more fans who root for the Dallas Cowboys than for the Tennessee Titans over in Nashville.)

“Everywhere I’ve ever lived, Tennessee, New York, Connecticut, Washington, Oregon, Alaska — I mean, Eastern Washington hates Western Washington, right? I mean, upstate New York and downstate New York are totally different,” Barnes says. “The idea that you can do these sort of regionalized papers…I’ve never lived in a place where that would work.”

Russell’s retort: “It’s a cheap, easy comparison to make when you don’t want to talk about journalism. Let’s talk about journalism. Let’s not talk about this Nashville vs. Memphis thing. It’s kind of a familiar trope though to people here because people in Memphis and people in Nashville don’t like each other.”

Russell wrote his own column in November to respond to the “centralization” charges, “setting the record straight.”

“What I say about that is that the people in Nashville have their hands full making decisions in Nashville,” he says. “And if you think about that logically for a minute, if you’ve worked in a news organization, you know it is hard to control your own organization in your own city, much less one that’s three hours away that you don’t have familiarity with the people, the places, or the issues of the context. So that’s ludicrous on its face that someone in Nashville making decisions here.

“It’s a short trip to the editors, including me, who are in the market, who know this market, who are working hard every day to produce a good report online and in print…Tell me who in Nashville is staying up late like me, reading content and up early reading content. Tell me who in Nashville is out in the community meeting with community leaders and neighborhood leaders every day. No one. They’re not here. They’re in Nashville doing the same thing I’m doing here. And that’s the way it should be.”

Its delightful to hear a bit of trash-talking by head-to-head news competitors. Reminds me of my days in the Twin Cities 20 years ago, when our Saint Paul Pioneer Press took on the larger Star Tribune.

Even with the head-to-head competition, Russell remains evenhanded in his view of the Memphian. “I talk to readers every single day,” he says. “And what I hear from readers is that they see the Memphis being stronger than it’s ever been. And that’s primarily because we now have a competing publication, and they see that the Commercial Appeal has improved since we lost those staffers. They see it every single day. And they see the DM being a really viable, strong news store.

“So you’ve got two heavyweights going at it on important issues. Readers have found the benefits of that: We’re going to have far better coverage of primary topics like government, the environment, demographics, investigative coverage. They’re going to get better coverage overall, and they have been getting it.”

The future

How long will this head-to-head competition last?

One logical question to start with: How soon could the paid readership numbers of the Commercial Appeal and Daily Memphian converge? A legacy business still transitioning from print to digital — and now owned by a megachain with lots of new debt to pay off — is competing with a debt-free, digital-only, deep-pocketed operation bent on growth.

This is no apples-to-apples comparison; there are many moving pieces and radically different cost structures. Then again, there won’t be many more apples-to-apples comparisons in local news going forward. This isn’t the New York Post vs. the Daily News, the Chicago Tribune vs. the Sun-Times, or even the more recent Times-Picayune vs. the New Orleans Advocate — recognizable battles between distinct competitors, but also between fundamentally similar businesses. But digital subscriptions — how many people in your community can you convince to hand over their credit card for digital access to your owrk — can be a common point of comparison.

How much are Memphis news readers reading one or the other or both?

“I don’t know,” the Memphian’s Barnes says. “I know anecdotally that people tell me that they have dropped the CA. I know other people continue to do both, and they do have some good journalists over there. I mean, they have many good journalists over there. I still read them — if not every day, I read them a couple of times a week. I think that’s true of a lot of people.”

(Again with the trash talk.)

One way or the other, given the tight economics of the local news business itself, no one is under any illusion that Memphis’ contrarian news war will last for a long time. “I’m not sure it can,” the CA’s Russell says. “It’s hard to imagine any community our size supporting two full-blown, news organizations. Even when full-blown doesn’t mean what it meant back 10 years ago…it’s hard to imagine that, it really is.”

The Daily Memphian is, like many of its startup brethren, a nonprofit. But it’s a nonprofit with an for-profit attitude, acting as a business-oriented enterprise.

“We are structured as a nonprofit under Memphis Fourth Estate Inc., but we are intensely focused on building a financially sustainable model that relies not on constant fundraising, but on earned revenue through our paywall subscriptions and sponsorships,” says Barnes.

What are his reader revenue takeaways so far? “We launched on September 17, 2018. Our original projection was 4,500 paid for the first year. We hit 4,500 somewhere in October. I mean, it was under full four weeks.” By year’s end, it was close to 6,000; by its first anniversary, it was at 10,000. Churn is relatively low, at about 6 percent annually. Today the Memphian has settled into a monthly net gain of about 300 subscribers. (The site now gets about 1.5 million monthly pageviews.)

The Memphian continues to test both annual and monthly offers, but generally avoided the “$1 for 6 months!!” deep discounting some other sites have used to draw in new subscribers.

The Memphian has clearly tapped into a substantial early paying audience — a cohort of the civically connected who were more than ready for the Memphian. The big question: What do the next cohorts look like? How big will they be, and will they represent a broader slice of Memphis’ population than its well-heeled early audience?

As The Memphian eyes doubling its subscriber base, Barnes knows the strategy will likely get more nuanced. “It’s a pretty high-income, high-educated audience, so, the [price] is not an issue for them. As we get from 11,000 to 22,000, we have to be more price sensitive, I think, with people. It’ll be tricky over the next few years.”

The Daily Memphian is providing a new value proposition to its readers. But in that offer we can see how in-progress the digital experience remains — especially perhaps for older readers. Take the site’s email newsletters. “We push a ton of email,” he says. “It works really well. We get really good open rates. But what we realized with many, many readers — particularly those who are older — they really don’t understand the difference between the email and the website. So they don’t get what’s in what. They’ll tell us, ‘Well, I’m a subscriber. I get your email edition.'”

Those emails are free to all, not part of a paid subscription. “They don’t go to the homepage, they don’t go to the navigation — they just use that email. Which is in some ways great, but creates a massive amount of confusion.”

In its first year of publishing, the Memphian published almost 7,000 stories, ran thousands of staff-shot photos, added nearly 10 weekly podcast series, and held Daily Memphian events almost every week.

It’s all those stories — buttressed by irrational fervor, best-practice business models, and more — that have always made local journalism work, and will someday again.

“It wasn’t local journalism that failed, it was the business behind local journalism,” Barnes says. “It’s a simple fact that gets lost…That’s been a driving issue for us: There is a lot of traditional local stuff that didn’t need to be thrown out the window. It was just that the business model got so wonky, broken. That was really where the problem was.”

That massive movement within the newspaper industry — equal parts financialization and consolidation — has so far combined the No. 1 and No. 2 chains in the United States (producing New Gannett, which controls a full 25 percent of U.S. daily print circulation), Lee’s assisted purchase of Berkshire Hathaway Media, and the in-process, common-law, unholy matrimony of Alden/MNG/Tribune.

McClatchy’s filing for bankruptcy has seemed increasingly inevitable since the fall, as I raised in November. McClatchy said then it had “going concern” issue, acknowledging it wouldn’t have the ability to make pension payments due later this year. That reality produced this bankruptcy, which in turn prompts our questions about what happens next. Here are six.

How long could McClatchy’s moment of stability last?

It’s almost a 12-step moment: a company acknowledging what had been obvious to everyone around it. McClatchy couldn’t thread its way through massive debt overhead, a pension pileup compounded over decades, and a very rocky print-to-digital transition. Bankruptcy will reduce the company’s debt by a little more than half, it seems, leaving it with a much spiffier balance sheet.

McClatchy — to the surprise of many! — still produces a lot of cash. That’s why all these financial players — Chatham Asset Management here, Alden Global Capital, Fortress Investment Group, and Apollo Global Management elsewhere — find newspapers such a hospitable environment.

Note that amid all this uncertainty and chaos, CEO Craig Forman was able to announce McClatchy’s first earnings (EBITDA) increase in eight years, in its Q3 results. That increase may have only been about $869,000, and it may not be repeated in future quarters, but it also points to a much larger number: McClatchy produces more than $70 million a year in earnings.

So in a sense, this might be a brief moment of relief. Maybe the company’s employees won’t have to worry about the next looming cut for a few months.

Does Chatham want to operate or sell the company?

The McClatchy family, descendants of the company’s founder and namesake, are relinquishing control in this bankruptcy, handing the keys to Chatham Asset Management. Does Chatham want to be an operator of a newspaper company for any period of time? Or will it try to transmute its suddenly shinier asset through the alchemy of the hour, consolidation?

Both arguments can be made. McClatchy post-bankruptcy will now produce similar levels of profit but won’t have to hand as much of it over to feed massive debt and pension obligations. In that scenario, Chatham could just…happily operate the company for a while, even though the ongoing reality of double-digit revenue declines dispel any notions of longer-term stability.

As one savvy financial observer put it to me: “Chatham doesn’t have to do anything.” It’s not under the gun of financial pressure.

That said, Chatham didn’t get into this to run local newspapers. It did so for the same reasons as its financial brethren: to make more money.

Chatham CEO Anthony Melchiorre and McClatchy CEO Craig Forman — assuming Forman stays in place — both believe in the inevitability of more consolidation. Consolidation — as in the case of Gannett/GateHouse and now the increasingly virtual Tribune/Alden/MNG combo — means substantial one-time cost savings. Those offset operating declines and buy more time. “Time to transition,” they’ll all say — but it’s also more time to extract cash flow out of a business in long-term decline.

That’s how we get to my math from December. Five once-towering U.S. newspaper chains — Gannett, GateHouse, McClatchy, Tribune, and MNG/Digital First — could in short order dwindle into two.

The McClatchy/Tribune merger that almost happened in December 2018 might saved McClatchy from bankruptcy. After it fell through, though, Tribune savored its independence a little, knowing that McClatchy’s financial reorg would someday come — and that it would make it a much more appealing catch. That moment is arriving now — but it may well now be Heath Freeman and his Alden troops-in-Tribune who sketch out a deal.

For Chatham, the main question is this: Can it make more money merging with Tribune/Alden — or maybe an again restructured Gannett/GateHouse/Apollo — than it can operating independently? Somewhere in that spreadsheet formula lies McClatchy’s future.

In the short term, most don’t expect Chatham to act like Alden. In its other newspaper investments, including Canadian consolidator Postmedia, it’s acted more like a Fortress/GateHouse — that is, it’s advocated for small but targeted investments in the digital-revenue-driven future of the business. (Alden’s haughty nihilism still stands alone, dis-investing even in a digital future, most recently seen in the single-day elimination of five Tribune execs.)

How long will Craig Forman stay as CEO?

It’s been only three years since McClatchy named Forman its CEO, but those thousand days and nights have been long ones. Forman knew financial restructuring was Job No. 1, much as he focused on his print-to-digital strategy. He executed a debt extension and came close to pulling off a merger with Tribune. But the quicksand of pension obligations sucked the company under.

Will he stick around post-bankruptcy and try to prove out his digital strategy, as laid out in Thursday’s bankruptcy announcement? “McClatchy has grown its digital-only subscriptions by almost 50 percent year over year, and is now roughly evenly balanced between total audience and advertising revenues, with digital accounting for 40 percent of those revenues and growing, a much healthier distribution for an increasingly digital era. The Company has more than 200,000 digital-only subscribers and well over 500,000 paid digital customer relationships.”

If he does, will he be able to up the company’s operating revenue performance, a metric in which it’s consistently lagged its peers by several points? For 2019, the company reports a 12 percent revenue decline, including a 14 percent drop for the fourth quarter.

With McClatchy going private, we may never know if he can pull it off. But that’s clearly a metric that Chatham will care about.

Not to mention, of course, does Chatham want to retain Forman? Will he, like one-year-Tribune-CEO Tim Knight, get caught in the revolving door of knives that is modern newspaper executive leadership?

Knight — who was “streamlined” out of Tribune’s top job on Feb. 3 — was an experienced adult in a room that had had too few. He brought a relative steadiness to Tribune for almost a year, after replacing Michael Ferro protégé Justin Dearborn as CEO. Unfortunately, in the frenetic business of dailies, that era ended abruptly when he was pushed out by Alden.

Is McClatchy better off as a private company than a public one?

Yes — potentially. Given the deepening digital displacement — not just disruption — of the print-centric local news industry, public companies have a nearly impossible task in front of them. Run to the digital future — but also keep short-term-focused shareholders satisfied, showing them profits and, in some cases, handing them dividends.

Papers now privately run by deep-pocketed owners in Boston, Los Angeles, and Minneapolis, are better positioned than their public peers. They operate away from shareholder glares, they’re more patient, and they’ve made investments with longer timelines.

But on the other hand, Alden Global Capital is a private company, too. A very private one — with no public profile, little public mission, seemingly no focus on community impact and all focus on the bottom line. And with its two-class share structure maintaining family control, McClatchy was an unusual “public” company too.

Being shielded from the markets can let you do important but difficult things. Or it can let you get away with stripping civic assets to the bare wiring.

What will happen to McClatchy’s commitment to investigative reporting?

In PR around the bankruptcy, Chatham released a statement saying it “is committed to preserving independent journalism and newsroom jobs.”

That’s the sort of thing you’d expect in any big newspaper ownership announcement (save Alden’s). We’ll soon see how operational it is.

While Craig Forman has both detractors and supporters, inside the company and beyond, he has managed to keep sounding the cri de coeur for newspapers’ civic mission. And McClatchy, though depleted in newsroom strength, keeps demonstrating its chops. Most cited has been the Miami Herald’s work keeping a spotlight on the Jeffrey Epstein story, but investigative and enterprise work from veterans’ high cancer rates to climate change tracking still distinguish the company’s journalists and its long-held, family-driven zeal for the craft of journalism.

Those journalists and those newsrooms need a lifeline.

Is there any number that might finally capture the public’s attention on the loss of a mission-oriented independent press?

Is it the possibility/likelihood of two financial companies, a Fortress and an Alden, controlling more than 40 percent of the nation’s daily print circulation — and thus much of the local digital news communities get (or don’t). Or maybe three of them, adding in Chatham as a longer-term operator, having a majority?

You’d have to be an optimist to believe that there’s any new alarm bell that will elicit a significantly different public response — but we may soon find out.

Or…both? We’ve got a new breakout of platformitis, as news companies try to figure out their complicated relationships with the dominant digital companies of our day.

As Mark Zuckerberg and News Corp CEO Robert Thomson finished up their conversation at New York City’s Paley Center Friday afternoon, announcing the new Facebook News tab, we can take five big points out of this week in Facebookology. For Zuckerberg, it was the culmination of a week from hell. Just within the past week, he had to juggle: (1) advancing its controversial cryptocurrency, (2) taking down “fake” editorial content, and (3) allowing politicians’ ads with falsehoods to remain. As Thomson said to him in what came across as a fairly softball on-stage talk, “It’s unusual when the amuse-bouche comes at the end of the meal.”

This is a milestone in publishers’ quest to get paid for content.

No doubt, the numbers in this deal get attention.  News Corp, of course, most likely does the best (see “Rupert always rises to the top,” below), with millions in new revenue. These two- and three-year deals (guaranteed, I understand, even if Facebook nixes the program earlier) will send low millions to some national publishers, maybe half a million a year to a relative few local ones, but only the promise of traffic-generating links to many of the 200 or so other (almost all U.S.) publishers in the initial rollout.

Only the Facebook Live payments are at all comparable in terms of cash payments to publishers for content. And those required lots of original work by publishers; these deals don’t.

And that’s potentially a big milestone here. News publishers will now say that when it comes to paying for content, it’s no longer “whether” but “how much.” (Of course they’d like hundreds of millions or billions to soothe their advertising losses to digital disruption.) They also like doing deals where the dollar amounts are relatively transparent, in which the platforms don’t have to bet on revenue shares of subscriptions or ads sold. This is the big story to watch into the next couple of years.

Zuckerberg is already trying to get out ahead of that in multiple ways. “I don’t pretend that any of these steps will be enough,” he told Thomson, saying Facebook itself couldn’t solve publishers’ problem. But with more than $7 billion in profit, that may be a bit of an overstatement. “Can” may be the wrong verb here.

Curiously, though, Facebook isn’t actually “licensing content.” The experience, as we so far understand it, includes a headline and precis linking back to publishers’ sites, all presented in a stream in Facebook’s new News tab. Isn’t that fair use, what aggregators and platforms have been claiming for two decades?

It’s fairly clear that it’s the currency that motivates the publishers, but what’s the value here for Facebook? It may be more than meets the immediate eye. There’s an engagement value, to be sure; news comes from that simple root “new,” and it drives lots of eyeballs. That’s why Facebook and its platform peers all keep taking new tries at the news biz. Eyeballs are good and lead to monetization.

Then, there’s the softer, behind-the-scenes reasons. “It strikes me that they are front-running the European ‘snippet’ idea,” says one savvy newspaper insider.  “We all know that most people are only going to consume the headlines and the snippets, and they’re buying the goodwill of the publishers to participate in the effort.”

Yes, the EU’s taking on of the platforms’ power is starting to inform U.S. behavior. That takes into the political dimension of this agreement, one that somehow got little mention in the Zuckerberg/Thomson conversation.

What looks like an oasis could be political quicksand for Facebook.

Call it a shotgun marriage of convenience, perhaps. The news industry needs money — badly. Facebook needs a better story.

It’s under the gun across the U.S. and in Europe. It just agreed to pay a $5 billion fine for its data privacy violations, and it’s just about impossible to even list all the other fronts of questions. And Elizabeth Warren’s break-them-up campaign has sent a new chill through Silicon Valley.  All the big platforms, the GAFA (Google, Apple, Facebook, Amazon) named years ago,  find themselves in the crosshairs. But given Facebook’s role in the 2016 election and its more complicated “social” nature, Zuckerberg’s company has gotten a greater share of attack.

So this is part PR. Don’t look at the cesspool over there, which we’re cleaning up, says Facebook. Look at all the high-quality news we now proudly pay for. Here’s the new shiny object.

Of course, there could also be this calculation: Publishers may be less inclined to focus on reporting Facebook’s bad side if they see its good one up close and personal. Editors and reporters, of course, would recoil at such a thought, but we can see how Facebook could see it that way — and how it might be right around the edges.

But does Facebook risk marching into new political quicksand Facebook? Remember just three years ago, when Facebook fired its editors who, guess what, curated the news, after Republican House members went ape on them in hearings?

“200 publishers” sounds good. But which 200? The inclusion of Breitbart as a partner (along with the much larger and Murdoch-owned Fox News) has already gotten some on the left fuming. What about preference and placement in the feed? Who decides? Human editors? Algos? Who trains the algos? Round and round we go. It’s a question that a Facebook or any other aggregator can’t answer — unless it’s a journalism company. Which it isn’t.

This is a battle for phone-centric news.

Swipe right? Tap the G icon? Find the new Facebook news tab and touch it? Launch a news app, scroll through Twitter, wait for a news alert? The options for news on our phones can be dizzying. Whose story is this again? How did I get here? Whatever, we think — let’s just read.

That’s the attention battle newly joined by Facebook. Google and Apple both have led with different flavors of news aggregation. While Facebook’s two major competitors here both own most of the hardware, they must still fight their way into readers’ attention. Will the News tab do it, or will it go the way of other Facebook news products, fading away slowly or quickly?

To the degree that any or all of the newest news aggregators — a practice that goes back to Yahoo at the end of the last century — succeed, to what degree are publishers trading their destination businesses for distribution businesses? That’s much more than a monetary question; it’s an existential one. If reader relationship is the gold into the 2020s, what does this new phone-centric aggregation world really portend?

Local remains a stepchild, but a taller one.

“I do think local news has been hit the hardest by these changes,” Zuckerberg said, acknowledging reality. A number of local providers — McClatchy and broadcaster Graham Holdings among them — are in the new News Tab program. Those are largely in Top 10 markets. “Working with the top 200 news organizations in the world” has been Facebook’s first priority. “Figuring out how to work with all the little ones is going to be critical.”

That’s been true for a while and is universally true among platforms. Executing many small agreements does take a lot of time; integrating more feeds of lesser volumes of content is less economical. Especially for companies who like to start their counting of anything — money, metrics — in the billions. Local content may be high value, but it’s low reach. An alert out of D.C. these days can catch everyone’s attention, but local stories are useful to far fewer. That’s where personalization will come in, hopefully.

Rupert always rises to the top.

Rupert Murdoch and Robert Thomson deserve credit for their early and continued drumbeat calling for platforms and aggregators to pay for the valuable journalistic content they use.  And Murdoch, as always, manages to combine wider objectives — like helping lead the industry to get money out of those who have more of it than even he does — with enriching his own company. By most reckoning, his News Corp and Wall Street Journal are receiving the sweetest deal, the greatest payment, from Facebook for this news tab deal. (And the Journal secured one of two top spots in the earlier launched Apple News+.)

Who else are Rupert and Robert talking to, and what may those conversations yield — for them and the industry?

After months of work, I’m happy to begin introducing the new company that I’m heading, named Lookout. It’s a wide-reaching new model for local news; we’ll launch next year.

After 15 years providing analysis of the global news industry, the last 10 of them here, I felt compelled to meld together the best of what I’ve seen and heard — the best of the best practices of the trade — in a way we haven’t seen yet. It’s my opportunity, and my calling at this moment, to take the lessons I’ve learned from many of you who lead and work in the news industry and combine them anew. It’s recombinant news DNA for the 2020s.

As John Davidow, managing director for digital at Boston’s WBUR, recently put it after reviewing Lookout’s plans: “It’s like you got in the cafeteria line, but only took the good stuff.”

We are building a city-embracing mobile experience, delivering knowledgeable topical reporting paired with national content partnerships. We’ll meet our audience where they are, via audio, newsletters, and mobile. We’ll connect journalists and readers in multiple ways. Our reader revenue strategy allows for growing customization. In short, Lookout aims to become a true platform, bringing a national standard of digital execution to local news.

Overall, we believe the successful local news outlets of the 2020s will be the ones that authentically embed themselves into the life of the communities they serve. That’s got to be done both digitally and in the real physical world — you know, those humans around you — so the experience is really shared. And those two worlds have to be connected, through news, city guides, community groups, commerce, reader-driven story creation, and more. Facebook, for all that it does, is just an early way-station on the road to authentic community-driven social activity.

The decade now coming to a close has taught us well that the global internet economy values scale. With Lookout, we believe we can prove out a new truism The internet, locally, can uniquely generate and support new valuable individual, group, and advertiser relationships.

So why am I trying to create a new model and company? I could have just written a book about my ideas — Newsonomics 2020, 10 years after my book Newsonomics: Twelve New Trends That Will Shape The News You Get was published (and excerpted here at Nieman Lab). But the limits of writing and the need for doing have become all too apparent.

I’ve exhorted, cajoled, beseeched, pleaded, and lectured at times, preaching the best practices that I’ve found from the smallest of startups to the global news giants. But the diminishment of local news continues to speed up, the incumbents hobbled by legacy structures. And most of the efforts to fill the yawning local gap — powered by talented and caring journalists — are simply below the scale necessary to replace what’s been lost. One key to Lookout’s model is sufficient editorial and business resources to both make and fulfill a promise to readers in the marketplace.

Nieman Lab director Joshua Benton tells me I’ve written 419 pieces here since 2010. And I’m getting uncomfortably close to a million words here — 903,547 of them before today. I do write long, though usually backed up by ample reporting. Here I ask your indulgence for me to explain a bit about Lookout — based not on reporting, but on months of work.

Digital economics, local focus, necessary scale

“You have to do this,” Walker Lundy, the editor I worked for in the 1990s at the St. Paul Pioneer Press, told me over lunch this summer. Walker usually advises his friends to take early retirement, so I was surprised by the statement. I’ve taken on this mission spurred in part by my unusual constellation of work experience. Lookout will be my fifth career in journalism. At the tender age of 25, I became editor and then publisher of an alternative weekly in Eugene, Oregon. Through city magazine work, years with Knight Ridder newspapers in print and digital, and then as a media analyst, I’ve been able to learn so much from so many news organizations.

Lookout is still a work in progress, and I’ll tell you more as we move toward announcing a launch city, date, and who else is involved. We may well chronicle what we’re doing and learning here at Nieman Lab along the way. In short, though, we intend to offer a local news vision for the 2020s. We want to be part of changing the conversation about what’s possible — and what’s necessary — in the reinvention and revival of new local news institutions.

Lookout recognizes how we consume news today — on demand, at home, at work, in the car, on our phones, in audio, text, and video. Many of us believe that local is as meaningful now as in the heyday of print — but that how we write, present, and deliver local news and information requires a blank-slate start. This isn’t a matter of replicating newspapers digitally.

In fact, we should be able to do more and better local journalism now than we ever have. Consider that a digital-only operation like Lookout will be able to devote about 70 percent of its resources to content creation. The print-based daily model — with presses, newsprint, trucks, big office buildings, and more to pay for — can only afford 12 to 20 percent on content. The digital economics can work if we smartly and appropriately apply the lessons of successful national/global media companies to local ones.

Without the burden of legacy costs and public-company pressures, Lookout can harness the attractive math of digital-only business and the increasingly powerful but inexpensive technologies of our time. Earning our way forward is fundamental to the model.

We believe that new news institutions must stand on their own, earning and growing their own reader and local advertiser revenue. We don’t believe that many local news institutions — as compared to national, state, or regional ones — can do the scale of high-quality work required if they are dependent on ongoing philanthropy.

As a for-profit, public-benefit corporation, Lookout will act with the scale and scope necessary to make readers and sponsors a proposition worth paying for. Our public-benefit structure codifies the centrality of our community service mission. Our for-profit structure allows us to endorse candidates, access capital, and become part of local business communities.

We’re truly digital native, respecting our readers’ intelligence and time to earn a primary place on their home screens. Civic engagement — and betterment — is built into our very fabric. We believe the phone should become a primary tool of democracy, and democracy-building, into what history may someday tell us were the Soaring ’20s.

Everyday democracy

Soaring? That might be hard to believe now, in the final coughs of this exhausted decade, but the means of renewal are in front of us.

I’m not usually at the front of the line in citing popes. However, as Pope Francis described Europe’s malaise in 2014, we suffer from a “weariness” to solve problems. Can citizens, in the midst of messy democracy, find common ground to solve their own problems? Some believe that the wave of nationalism and polarization we see across the world’s democracies is a permanent feature of our societies.

There is plenty reason for pessimism. Our ability to tackle the issues of climate change, affordable housing, education equity, and food security, among many others, seems limited. And yet we’ve never had more knowledge and technologies to address them. What we need to do is activate the democracy, and in that, a vibrant, involved, fair, nonpartisan local “press” is essential.

That need is global. I’ve been fortunate enough to work on the problems of media on four continents. The trajectory of digital disruption differs from place to place, but the loss of local journalism — and its resulting effect on self-governance — is universal.

Back in the 1990s, I invited a young NYU professor named Jay Rosen to Saint Paul. We then practiced, in partnership with Jay, “public journalism.” A substantial part of the newsroom had its doubts, but a crew of dozen or so Pioneer Press staffers seized an opportunity: Do great in-depth series journalism on key topics (crime and safety, intergenerational relations, and more), and then hold public forums to involve the now-better-informed citizenry in seeking solutions.

That’s solutions journalism as we’ve come to know it, done in fits and starts across the country. It’s not new, but like the Internet of yore, it’s very unevenly distributed. What Lookout will ask: How do we build everyday democracy into the very fabric of an everyday news source that readers will check into frequently?

Will it work? Certainly, I’ve run across a lot of skeptics. “Nobody cares much about local news anymore.” “There’s simply no business model for local news.” “Why do you think you can make this work when nobody has?” Indeed, the muscle memory of robust local news is atrophying.

Can it be revived? Yes, if you give it a chance — and enough runway to prove the skeptics wrong.

“It’s amazing how people come up to me on the street, and say: ‘You’re publishing stories about things I never knew about,” Eric Barnes, CEO of the year-old Daily Memphian, told me last week.

We’re appreciative of having the support of the Knight Foundation, Google’s GNI Innovation Challenge, and supportive individuals both national and local as we continue to develop our model and build that runway. In the end, it’s a model, made of digital clay. We intend to get more of it right than wrong.

As we do, we’ll figure out where Lookout, goes from there. How might we expand? Where? How quickly? All that is to be determined. The first job is proving out the ambitious model. Lookout Local, the formal name of the public benefit company, will do what it can to enlarge the notion of what is practical in providing robust modern local news.

Talent + technology

One great lesson of our time: Great companies require talent plus technology.

We’ve seen a remarkable brain drain in the news industry, as digital disruption depleted its workforce, its sense of purpose, and its attractiveness to both journalists and business-side professionals. Talent — hiring it at livable, professional rates — will be one key to Lookout. We must find a way to create a new pipeline of agile, diverse, digital-native journalists serving local communities from coast to coast.

How that talent uses technology will distinguish our successes. There is no question that the 2020s will be a time of unprecedented mixing and matching for humans and tech. It must be talent, with clear journalistic and community purpose, that applies the best tools of the day.

We know what doesn’t work. In this age of fast-expanding news deserts and ghost newspapers, we’re — amazingly — moving back to pre-press times when people largely got their news by word of mouth. And the town criers have a lot of problems telling fact from rumor.

David Rousseau, who heads the impressive and fast-growing Kaiser Health News, offered the phrase “misery index” when we discussed how to parse the worse and worst instances of local news. We agreed that while we could spend time writing that algorithm — deciding what and how we should measure — it’s much better to simply reduce the misery. Rousseau, among many others in the industry, has helped me sculpt Lookout this year, and I thank you all.

The extent of that misery is mind-bending, of course, but sometimes it takes a single phrase to stop us. Retired Guardian editor Alan Rusbridger summed it up most jaw-droppingly: “We are, for the first time in modern history, facing the prospect of how modern societies would exist without reliable news.” We must face down that prospect.

So that’s a preview. You’ll hear more as we can report it, here at the Lab and elsewhere. While I’ll be devoting most of my time to Lookout, I will continue to write on other topics. Both Josh and I are keenly mindful of potential conflicts, so we’ll clearly remind readers about Lookout with disclosure whenever relevant. Certainly, there may also be topics that become off-limits, and we’ll take the high road on those.

Early in my current career as an analyst, Michael Wolff, now famous for his Trump work, acidly defined my role in the news industry. “You’re the necrologist for the news business,” he told me, speaking of the ancients who read the scroll of the dead. Or, in more familiar news terms, a writer of obits.

Like much of what Wolff opines, it had the aroma of truth. He had a point, but I hope I’ve performed other duties as well. As I look to the 2020s, I come not to bury journalism but to praise what it can — and must — do for all of us.

(Of course, scale is relative. The merged company would control an unprecedentedly large share of American newspapers. But those newspapers, even when bought in bulk, are far weaker than they were in the industry’s glory days, with shrunken revenues, circulation, and influence. And no matter how big its combined digital audience, the new company’s share of attention will still be no match for Google, Facebook, and the lesser nobility of digital advertising. It’s a very big slice of a much smaller pie.)

As the company that has achieved the long-sought rollup of the daily press, the new Gannett will exert a profound impact on the news industry itself, hundreds of communities, millions of readers and on the very future of the craft of journalism.

This merger produces a new cascade of questions. The first: What are the next dominoes this transaction sets up in the consolidation of the newspaper industry this transaction? Eyes are focused squarely on McClatchy and Tribune, though both Lee Enterprises and MNG Enterprises — the latest name for the collection of papers owned by Alden Global Capital — are also drawing attention. Back in January, I dubbed the industry-wide urge to merge the 2019 Consolidation Games, and this deal certainly sits atop the medal podium just past mid-year.

The deal itself still looks to be along the lines I outlined two weeks ago — designed to generate $200 to 300 million in annual cost savings in an effort to give them more time to “figure out their digital transition,” as they like to say.

GateHouse, through its New Media Investment Group (NEWM) holding company, is the acquirer. That’s surprised many observers, given Gannett’s greater circulation, cash flow, revenue, and market cap. But New Media — led by the industry’s grand acquisitor, CEO Mike Reed, and having the deal energy and resources to bring the financing together — is squarely in the driver’s seat.

Gannett’s shareholders (with 114 million shares outstanding) will receive $6 or more per share in cash, plus shares in the new company, adding up to a price in the $12 range. That’s a little more than a dollar over Gannett’s Friday closing price of $10.75, but it’s four dollars a share more than the $7.90 Gannett was at before investors learned the deal was likely and speculated the price up.

(My efforts to reach both companies for official comment this weekend were unsuccessful.)

But there is one new big player in this story: Apollo Global Management, the private equity firm which will lead the financing of the merger, sources tell me. Apollo’s name had been heard around the industry for a while, most prominently four years ago when it came close to buying what was then branded as Digital First Media from Alden. That deal fell apart at the last minute over price. (If you’ve seen Apollo in the news lately, it was likely in the context of its founder distancing himself from the sexual predator Jeffrey Epstein after a financial relationship spanning more than a decade.)

In this deal, Apollo is supplying much of the money to get the deal done, with financing that sources tell me could approach $2 billion and a major debt service to match in 2020 and beyond — limiting how much any cost savings can be invested into newspapers’ future. Financing in the merger must both pay off Gannett shareholders partly in cash and essentially refinance both companies’ debt. That debt, after cash on hand is subtracted, amounts to about another $1 billion. In its would-be DFM deal in 2015, Apollo saw itself as a strategic consolidator with a game plan throw the switch from print to digital more rapidly. (It’s worth re-reading my story Thursday on newspaper companies’ increasing plans to stop printing their products seven days a week.)

Mike Reed will be at the reins of the new company as New Media acquires Gannett. (“Acquisition” and “merger” are roughly synonymous terms in this transaction.) This deal represents his ascension to the top of the trade, reinforcing what he told Nieman Lab readers last year in lengthy interview: The rollup of the newspaper industry is inevitable. Reed built the GateHouse behemoth out of bankruptcy with strong financial backing, including lower-cost access to capital from the Fortress Investment Group. For its efforts, Fortress has already been rewarded well, taking in $21.8 million in management fees and incentive payments alone in 2018. Dealmakers in this merger face the financial reckoning of buying out Fortress’ contract; that’s been one of the last sticking points in final valuation talks, say sources.

So what will this new company, a supersized Gannett, look like? Don’t expect an unveiling of the daily operating head of the company (presumably someone reporting to Reed) when the deal is announced. Instead, sources tell me they’ll point to further announcements down the road as it moves through the regulatory approval process.

Will the feds quickly approve the deal?

The agreement does indeed require federal approval, with a HSR (Hart–Scott–Rodino) review for antitrust purposes ahead. Department of Justice antitrust review is unlikely to prevent the completion of the deal, but it could take it through some unanticipated turns. Tronc/Tribune found itself stymied by DOJ’s antitrust division in two deals — one for the Orange County Register, the other for the Chicago Sun-Times — a couple of years ago. Those two cases focused on claimed monopolistic limitation in regard to advertisers and/or subscribers in a single market. (In these cases, from uniting the L.A. Times with the Register or the Chicago Tribune with the Sun-Times.)

But GateHouse and Gannett’s holdings, as numerous as they are, may not be considered as competing head-to-head in any single market. The big question is how DOJ will look at the substantial regional clustering of properties this deal would bring. In south Florida and in Ohio, for instance, the regional clustering of Gannett/GateHouse papers would be profound. But it’s that sort of clustering there in many places across the country that drives the cost-saving synergies that form the entire financial purpose of the deal.

(In Florida, a combined company would own dailies in Jacksonville, West Palm Beach, Sarasota, St. Augustine, Naples, Brevard County, Fort Myers, Pensacola, Tallahassee, Gainesville, Lakeland, Daytona Beach, Ocala, Winter Haven, Panama City, the Treasure Coast, the Space Coast, and more. In Ohio, it would own Columbus, Cincinnati, Akron, Canton, and more — three of the state’s four largest papers by weekday circulation.)

Will DOJ take a stand on such regional clustering? Will it find that print advertisers could be priced unfairly? Will it make an argument that the continuing spikes in the price of a print subscription is unfair to those print readers who remain? One fundamental determination: Do weakened newspapers, even if merged, really still have the ability to dominate a market to an extent that would be unfair?

Also: Since this is the first deal to create a truly national newspaper company footprint, might DOJ consider national market domination along the same lines?

Neither GateHouse nor Gannett expect such review to be a major stumbling block. Failing that kind of unexpected outcome, expect the new company to be ready to set up shop by January.

If DOJ expresses concern within its first 30-day review period, the new Gannett could agree to sell off a few titles in contested locations. It’s also quite possible that Reed has already anticipated such sales, both to satisfy DOJ and/or to reduce the debt necessary to get this deal done. Other newspaper chains would likely be interested in buying individual properties that could help them cluster.

Watch the dominoes

Will this announcement push others back to the merger table?

Close observers of the industry now expect the Tribune board to feel more pressure to make a deal. Tribune, along with its past pursuer McClatchy, is one of several companies set to report earnings this week. With the GateHouse/Gannett deal, Tribune loses a potential dance partner. Tribune/Tronc had a long and often bitter battle to tie up with Gannett (a deal semi-negotiated last summer). That presumably leaves it turning its eyes back to Sacramento, where McClatchy will likely be prepared to pitch another iteration of a deal.

McClatchy may well be able to shave a dollar or two off of its rejected December offer and get a deal done. The continuing stumbling block, sources say: Michael Ferro, whose group still controls a quarter of Tribune and who nixed the December deal. Both companies’ need consolidation for the same reasons Gannett and GateHouse do: cost savings to buy time.

(Observers noted McClatchy’s recent filing of a “waiver” request with the IRS to put off payments into its underfunded pension fund and wondered whether it is a sign of financial weakness. That filing indeed indicates tight liquidity, though that barely counts as news for McClatchy, which has been managing down/deferring its still-substantial debt pile of $816 million. While these tight finances do point to the short-term value of merger, they don’t likely indicate an imminent issue. History will note that McClatchy, unlike GateHouse and Tribune, never declared bankruptcy in the aftermath of the Great Recession. Neither did Gannett.)

Then there’s Alden. As I wrote earlier in the year, it probably stands to make some money off its supposed hostile takeover attempt of Gannett in January, depending on how much Gannett stock it retains. Alden president Heath Freeman, vilified as he is in the press, appears to have worked a successful strategy. Did he ever really intend to buy Gannett, as clumsy as his effort ended up being? Or did he just want to put it in play — as he clearly succeeded in doing — to make some money on the Gannett share holdings he had?

So what does Alden do now with its MNG papers — especially in California, where it owns more than 20 papers, including in San Jose, Oakland, Orange County, Long Beach, and Riverside? Will it find a new partner, or some other way to exit the struggling business? And then there’s Lee Enterprises, itself dealing with debt-refinancing issues and maybe another company to add to the would-be consolidation mix.

Where will the $200 to $300 million in synergies come from?

For the journalists inside what will become the new Gannett, and for their readers, the immediate future is hard to chart. Financial realities drive this deal — and that means cutting. We’ll hear the two companies talk about synergies in that $200 to 300 million range. How do those numbers work?

At the low end, “figure $200 million minus $100 million the first year,” explains one savvy financial insider. “It will cost them about $100 million in severance-plus to get the savings they want. Then there’s a savings of $200 million net a year.”

But wait: That might sound good if newspaper revenues were stable. They’re not, expected to drop another 5-plus percent in 2020 and likely continued decline after that. That could add up to another $100 million vanished from top-line revenues in 2020.

Where will the synergistic efficiencies come from? In order, consider these the sources:

• Corporate and shared services. Two big public companies turned into one can save tens of millions in costs. Finance, HR, technology, and more offer lots of cost savings as two systems become one.
• Old iron, the rationalization of printing, production, and distribution facilities. Already underway all across the industry, this deal enables the next efficient mapping of the old means of production. (And, yes, that means still earlier deadlines for those print readers, with 36-hour-old news becoming a front-page standard.)
• Ad and digital marketing services combinations. Expect cuts and a combination of both traditional ad sales forces and those in the companies’ newer digital marketing services (Gannett’s LOCALiQ and GateHouse’s ThriveHive and UpCurve) that both companies have pointed to as growth drivers.
• Vendor savings. Gannett is already the industry’s savviest buyer of newsprint and ink. More scale means even better materials pricing.
• And yes, newsrooms. Both companies understand how thin their editorial staffing has become and how that complicates the sale of digital subscriptions. But expect more editorial consolidation as well. Regional clustering — another big movement I’ve covered — will mean more consolidation of top regional editorial management positions, and the companies have two major shared design/editing operations to combine in some form.

Let’s remember: These synergies are the point of the deal. But the financing required to put the deal together means paying off a lot of debt — up to that $2 billion number. That could cost the new company something in the neighborhood of $150 million or more in annual debt service, given the high rate of interest Apollo has likely extracted in its term sheet. That annual payment will significantly constrain the new company’s ability to invest in its future — remember, that “digital transition” they keep talking about.

As this deal get finalized and then dissected — by the market and by those who care about local journalism — we’re left with this point from one in-the-fray source to ponder: “If executed well, this company will be much more likely to lead to the further rollup of the industry.” The further rollup.

The merger of GateHouse and Gannett is not the checkered flag at the end of the race. It’s more of a starting gun.

A combined Gannett and GateHouse would create a superchain that owned and operated more than one-sixth of all daily newspapers in the country — a prospect I first reported on in mid-May. The merged company would control 265 dailies with a combined daily print circulation of about 8.7 million. The next largest newspaper chain in print circulation is McClatchy, well behind at about 1.7 million.

Gannett and GateHouse executives (and their bankers) continue to put the deal together. The hard issues have been gamed out, like which company’s shareholders would get a majority of the new company; so have many soft issues, like cultural fit between both companies’ leaders. Over the months that they’ve been talking, the comfort level has grown, I’m told, and that’s what increases the chances of an announcement in the relatively near future.

Call it maybe the only deal that can get done in this environment of newspaper companies in decline. Their leaders have spent the last few years — 2019, especially — sketching out nearly every possible corporate marriage, all in a quest for enough cost-cutting to buy a little more time. The hunt for scale seems to be ending with a merger of No. 1 and No. 2.

Regulatory review would follow the announcement, with the newly merged company likely to start life by early 2020. And of course, that’s only when the laborious, time-sucking work of combining management teams, tech stacks, and corporate (and editorial) cultures begins.

These are the deal dynamics coming into focus:

• GateHouse, via its parent company New Media Investment Group, would be the acquirer — even though it’s the smaller company by market cap, cash flow, and revenue.
• NEWM would then own both GateHouse — the operating company for its 156 daily newspapers and more than 300 weeklies — and Gannett, with 109 dailies and more than 1,000 weeklies and niche publications. The merged company would then take on a unified brand. That could be Gannett, with its longer history and national USA Today brand. Or it could be a new name altogether. (Not TEGNA, that’s taken.)
• With investors currently granting its earnings a higher multiple, GateHouse shareholders would likely get a majority of the combined company’s shares.
• The Gannett board, I’ve learned, would likely be content with its shareholders getting a cash payment in the neighborhood of today’s $7.90 closing share price. The premium would be paid in shares.
• Fortress Investment Group, which manages New Media/GateHouse by contract, will play a still-being-worked-out role in the transaction. Currently, Fortress takes an annual management fee out of the operation. In 2018, it took out $21.8 million in total — based on a basic management fee of $10.7 million and the rest an incentive payout based on GateHouse’s net income. Will Fortress continue to play a role in a merged company? Gannett’s board is unlikely to feel comfortable with that, and that’s one of the issues still to be tackled. According to its management contract, Fortress can be bought out of its agreement. That, though, will cost one year’s fee, or about another $10.7 million (in addition to whatever it’s earning for calendar 2019) and an additional buyout of its incentive fee.

Meanwhile, Fortress’ marketplace heft could be integral to getting the deal done at all. That’s why several industry observers say this may be the only big industry deal that can make it to the finish line in mid-2019.

Throughout the first six months of what I’ve called the 2019 Consolidation Games, industry sources have been reminding me (and I’ve reminded you) that obtaining financing for any major newspaper transactions remains fraught. Who feels confident about any daily newspaper financial projections for 2021, much less 2023? So, Fortress — with its own capital, its standing in financial markets, and its newer Softbank ownership — may be able to bring a deal to financial conclusion where others would stumble.

The logic of the deal

The thinking isn’t hard to understand. This isn’t about building a digital news juggernaut ready and eager to blaze a new chapter in American journalism. Despite the unprecedented scale on offer, you won’t hear any talk of building a “Netflix for news” or a “New York Times for local.”

Simply put, these companies’ leaders think a megamerger buys two or three years — “until we figure it out.” The “it” is that long-hoped-for chimera of successful digital transformation. Gannett and GateHouse, like all their industry brethren, look at ever-bleaker numbers every quarter; the biggest motivation here is really survival, which in business terms means the ability to maintain some degree of profitability somewhere into the early 2020s.

If the deal gets done, the parties will, of course, cite the synergies of the deal — all real, all likely inflated to some degree, as they are in nearly all mergers. Figure those savings could add up to something like $200 million over the next two years, though some are putting the number higher.

“Two CFOs, two legal counsels, two sets of technology, etc.,” one savvy observer summed up the targets of this and other attempted deals. But will it also mean more newsroom cuts? Both Gannett and GateHouse management have done their share of newsroom cutting, and both realize the damage those cuts — and further ones — do to the products they try to sell to subscribers, print and digital. But they have cut, and they will continue to cut, to make the numbers they think they need to make.

One thing you don’t see in that quote above is “two CEOs” — a cost one expects to get halved in a corporate merger like this. That’s a curious wrinkle here. Mike Reed serves as CEO of New Media Investment Group; his longtime business partner Kirk Davis serves as CEO of GateHouse Media. Meanwhile, Gannett doesn’t currently have a CEO, and hasn’t since Bob Dickey retired earlier this year. An announcement of that new CEO had seemed close for months — only to be delayed. Has Gannett abandoned that hire, given the imminence of a GateHouse deal?

Apparently not. Gannett is still apparently proceeding with its hiring of a well-known industry figure, who’ll be considered a twofer, sources tell me. The new CEO, Gannett would expect, could lead the company forward in the runup and workthrough of a merger. Or, if the merger failed, he could operate the company.

The obvious question: Who’ll run the merged company? Would Reed move to chair of a new board? Would Gannett’s new CEO or Kirk Davis ascend to lead this behemoth of a newspaper chain?

The synergies extend beyond cutting, though cutting is where the financial analysis begins. Consider the matchups:

• Both companies’ properties are concentrated in smaller to mid-metro communities. Gannett owns a number of metros (Phoenix, Indianapolis, Detroit, Nashville, Milwaukee, Cincinnati), and GateHouse’s assembled a few too (Columbus, Oklahoma City, Providence, Austin). But their core properties are in smaller markets.
• Both companies have focused on building local agency advertising-plus services and believe more scale may help profitability.
• Gannett touts the success of its USA Today national digital ad network; a merger would add more scale to its offerings.
• Both companies have regionalized huge portions of management and daily production work — editors overseeing multiple properties, regional design centers handling layout, centralized printing and unified tech backends. While that makes for a cultural fit, it also of course means there are probably fewer cost savings left to be squeezed out of even more regionalization.

“Regionalization” really should be a key word here. “Local” news is rapidly coming to mean “regional” news. Readers in print and digital too often now get “local” news out of places 50 miles away, just as long as the daily’s corporate parent also owns those news operations down the road. And I’d expect to see a lot more regionalization out of this merger.

The fall of the house of Gannett

There’s the deal here, and then there’s the spectacle.

Little GateHouse — historically a minor and frankly not journalistically well-regarded newspaper company — ascended from the ashes of a 2013 bankruptcy. As part of that process, Fortress Investment Group invented New Media Investment Group as a holding company, and GateHouse has been on an acquisition rampage ever since.

CEO Mike Reed, who I interviewed for Nieman Lab last summer was able to use Fortress-assembled pools of capital to play the industry’s timing well. A disciplined buyer, he found smaller newspaper owner after smaller newspaper owner, all of them ready to get out of the business as ad fortunes sank deeper and deeper.

The day it came out of bankruptcy less than six years ago, GateHouse had 78 dailies. Today it has 156, by far the most of any chain.

For much of that growth spurt, investors liked what they saw in NEWM, which offered a good-sized dividend. GateHouse’s own performance and strategy hit a wall over the past year, but with this merger, Reed has apparently pulled a new rabbit out of his hat.

Business is always all about timing, and the timing here is fascinating. Gannett has been on its heels since 2016, when it tried a hostile takeover of Tribune, which then Tribune (and soon Tronc) chairman Michael Ferro used to blow Gannett’s house backward. It reached a point of maximum weakness last December, when CEO Robert Dickey announced he’d retire in May and it became clear the company — facing sad financials — had no plan in place to succeed him.

Smelling blood, Alden Global Capital, the trade’s bête noire, struck, making a hostile (maybe even unusually hostile) bid for Gannett at $12 a share. Gannett successfully resisted the Alden push, which apparently ended when shareholders voted down Alden’s alternative board director candidates in May.

But Alden had pushed Gannett into play, as I reported throughout the spring. Forced to defend itself against Alden, Gannett slow-walked its hiring of a CEO and hired Goldman Sachs to explore “strategic options.”

With that exploration — and with the overriding logic of consolidation driving the entire newspaper industry — entered GateHouse. Over the past several months, the two companies’ executives, boards, and bankers have found themselves increasingly charmed by the prospect of putting the two companies together.

It’s remarkable that Gannett — for the past decade, the clear big dog of the local newspaper industry — isn’t the acquiring party here. While its board will have a say in the structure and leadership of the new company, its status has clearly fallen. The silver lining for the top remaining Gannett executives, some of whom will see this as an excellent time to depart? Change-of-control provisions in their contracts will provide some very silky golden parachutes after a sale is completed.

But remember: This deal isn’t quite done yet. What could intervene? Financing could still prove impossible to obtain. Alden could come back with an all-cash offer higher than $8 — but could it finance it? Could a Gannett/Tribune marriage — the subject of multiple failed proposals, as recently as last year — be resurrected? Sources say that’s unlikely — Ferro is still Tribune’s largest shareholder, and he and Gannett have not played well together — but consider it possible.

If this deal concludes, it will certainly earn the gold medal in the 2019 Consolidation Games I’ve covered all year. It’s one big answer to the question of what’s the survival strategy for top newspaper chains. At the same time, though, it poses another big question: How will — or can — the rest of the big players respond? Will Alden, Tribune, McClatchy, and Lee find new and complex ways to mate?

Or can they? The gap in scale between them and a merged GannHouse would be larger than ever, and money is already tight. Even companies with some of the industry’s best balance sheets are currently having trouble refinancing debt, several financial sources tell me. Even with the best deal logic, would financing be available to pull off any other mergers in the industry’s second tier? And where does this all leave the many, many smaller players — the private regional groups, the lone family papers still standing? The top end of the newspaper food chain is getting a lot bigger, and the effects will be felt all the way down.

Now, a few decades after that vision of digital personalization, The New York Times is out with a fresh, modern test of it.

It’s called “For You.” For some users, it popped up — prominently, by design — at the center of a new one-row nav at the bottom of the Times’ iPhone app homepage in mid-June. (The Times, like many companies, rolls out design changes to all users over time.) It sits between Top Stories, which remains the default view at launch, and Sections.

While the Times has been experimenting with limited forms of personalization for years, it’s that prominence in the interface that makes this a turning point.

“This is the most prominent surfacing of active personalization in the experience,” Matt Ericson, a Times assistant managing editor, who worked on this project, said.

No surprise: The goal here is more and deeper engagement. And of course the Times will be closely monitoring how subscribers and non-subscribers use For You, seeking datapoints to suss out “propensity to buy,” the holy grail of our reader revenue age.

“This is not a completely new feature, but the update that we have made is that we are now trying to make it a little more front and center, make it easier for readers to find their way to the stuff that they’re most interested in a and make it easier for them to get into the stories that matter most to them,” says Mollie Vandor, a Times product director, who came to the company in February after a half dozen years with Twitter, Instagram, and Facebook.

We’re all hearing a fair amount of nonsense about AI, ML, and the like. It’s not that these technologies won’t have a profound effect on the news business, but that they are simply tools in the hands of journalists and those that support them. It’s a great boon for the Times to use such tech to do something that seems quite simple: Show us more of the stuff that we say we’re interested in.

The Times launched the similar “Your Feed” last year, with a small and apparently confusing page-like symbol at the top right of the app. The Times gauged enough experience with that usage — by interpreting data and with qualitative focus groups — to take this step of providing prime real estate to For You.

This is one fundamental lesson of this relaunch: It’s not just about providing a function, utility, or service for the reader. It must be crystal clear what that service does for…me. For You is an attempted antidote for overload, one way to break through the noise of any app or a reader’s own busy days, to make it brain-dead simple to access a truly useful new tool.

A new reader habit can lead to increasing engagement, and more engagement means both better subscription sales and retention. Several years ago, the Times was the first news company I spoke with that had discovered that a reader’s devotion to two or more distinct news topics was a big boost to sales and retention. Hook ’em with one topic, okay, but two or more can help seal the deal. The now-1,600-strong Times newsroom publishes about 250 stories a day. While the phone is a wondrous interface for creating user habits, it’s lousy at displaying breadth. Consider For You one effort to widen the reader’s awareness of stories that would otherwise seem hidden — and maybe get that Trump-news-only reader to check out Smarter Living, or the Book Review devotee to spend more time in Opinion.

The major national/global news publishers have worked around the edges of personalization for a while. Each can bring more firepower to personalization than they have thus far. But all are mindful to maintain the tradition of making top editors’ judgment what leads the news presentation. Most are wary of the dreaded filter bubble and enabling readers to simply re-enforce — and not challenge — their own worldviews. (Ten years ago, the Times’ own Nicholas Kristof weighed in with a warning about that.)

As we move further into the fully digital news era, we’re learning that the combination of experienced news judgment and smarter technology will be as much as art as science.

“How do we get personalization to amplify our news judgment?” asks Ericson, a newspaper veteran and a valuable tweener between the newsroom and engineers. “There’s a fair number of signals that we have around from the newsroom in terms of curating a particular pool of stories. How can we make sure that the right one gets in front of you?”

As the biggest publishers experiment, they take different tacks.

The Wall Street Journal, with its My WSJ feature on mobile takes an approach different from the Times. It’s all about passive personalization; the Journal delivers to readers a “recommended” list of stories derived from their viewing history, without any explicit effort on their part.

Importantly for the Times, For You is all about active personalization. You get, more or less, what you affirmatively choose to get. The Times provides me with stories on topics that I have chosen to follow over the years when given the opportunity in various “Recommended” modules.

When I hit the For You star, it populated with a range of Mueller Investigation, Pop Culture, and Climate Change stories. Apparently, it has a better memory of my past choices than I do. (It’s no joke when we say we’ve downloaded our memories to our devices.)

I can’t pick out which topics in my feed I’d like to delve deeper into, newsletter-like; instead I scroll through a variety of stories from across my topics in an order that seems mostly driven by a sense of timeliness. A screen or two down, a carousel of “Saved for Later” stories reminds you of stories you saved but forgot about. Changing the topics you follow takes only a simple trip to settings.

Note that these really are “topics” — not “sections,” which provide the architecture of story placement in the rest of the app. A climate change story may appear in business or theater as well as in Climate and Environment. Options include The Future of Work, Obituary of the Day, Global Migration, Only in New York, and Bitcoin & Blockchain. (Oh, and Animals — “We thought you could use a break,” the app offers.)

“That story and that particular topic might span multiple newsroom desks,” Vandor says, “but the idea is that if you want to follow everything about climate change for example, you’re going to want to see our best stuff from across a variety of different desks, rather than just focusing in one particular desk.”

All of this is managed with lots of under-the-hood metadata. “Part of this is actually powered by the fact that we have actually a pretty good strong history of tagging our stories not just by where they appeared in the paper, but also what is the story about, who’s mentioned, and so forth, so that helps power it,” says Ericson.

For You then, doesn’t offer a bunch of touts for people like you. It’s you, gleaned from your stated preferences. (Don’t like what you see? Change your preferences!)

At this point, readers can choose from several dozen topics, a motley group. (Why, among columnists, do Dowd, Manjoo, and Krugman get topics, but not Gail Collins or David Leonhardt? Why ‘What to Stream’ but not Watching, or New York City Arts but not Broadway Critics’ Picks?)

I’ve liked the ability to follow specific journalists, as The Guardian used to allow and the Journal does currently, but publishers have told me the return on such an offering has been underwhelming. So only a few of the Times’ top reporters and columnists can be chosen. Given how the breakaway success of The Daily podcast has helped create a small galaxy of new Times personalities, there’s clearly more opportunity to allow readers to follow the voices they are getting used to.

For You is an iOS product only at this point, pending further testing. There’s no browser or Android analog.

We’re at the beginning of this personalization test. The Times, while innovative, can sometimes take a long time to build and improve new products; we’ll see over the next year whether this turns into a real hit or just another experiment. For now, this is an experiment that poses as many (good) questions as it answers.

It’s reminiscent of an earlier brand of warfare. Newspaper chains — all cutting desperately, each facing a shortening deadline to make a “digital transition” — line up their dealmaking armies, swords sharpened if not yet crossed.

Gannett, having rejected the hostile takeover bid of Alden Global Capital, has decided to hire Goldman Sachs to advise it on the next rounds of dealmaking, I’ve learned. Goldman participated in Thursday’s Gannett/Alden meeting, alongside Greenhill, its ongoing deal-advising firm.

As that meeting happened, Alden, with its banker Moelis, filed an alternative slate of directors for election at Gannett’s upcoming annual meeting. That action, though, is just another uncertain indicator of whether it’s Alden’s true intent to acquire Gannett, a number of insiders have told me.

As Bloomberg’s Brooke Sutherland summed up well in her lede on Alden’s slate: “The more MNG Enterprises tries to prove it’s serious about buying Gannett Co., the less credible it looks.” (MNG, née MediaNews Group, is the name Alden uses for its newspaper holdings, conglomerated after two bankruptcies.) Remember, Alden’s initial move against Gannett said both that it wanted to buy the company and that Gannett should begin “a review of strategic alternatives to maximize shareholder value.” That’s a baffling combination — do they want to buy the thing or not? Then Alden failed to show Gannett enough financial wherewithal to actually fund an acquisition. Then, after just one rebuff, it filed the alternative slate. Of course, the deadlines of the corporate calendar drove the board filing — but still, it all looks maladroit, clumsily rapacious for the cutthroat Alden.

On the sidelines, Tribune Publishing — an active would-be seller for most of the last year — is waving its shiny, largely debt-free balance sheet Gannett’s way. It’s now advised both by Lazard and Methuselah Advisors LLC.

Curiously, in this small media banker world, switcheroo is fair game: Two years ago, Methusaleh was advising Gannett as it company fended off a hostile bid from Michael Ferro’s Tronc — the company now known (again) as Tribune. And who was representing Tronc then? Goldman. Importantly, all these parties know one another — and the innards of these companies — well.

While a Gannett/Tribune merger looks like one of the likeliest Alden alternatives, Goldman will look broadly at the industry landscape and where Gannett best fits in it — whether as a seller, a merger, or a buyer.

As these three companies line up, a fourth — McClatchy — is looking for its own place on the shrinking battlefield, as I detailed as February began.

“It could be weeks — it should be weeks,” one of the participants told me at the end of last week. “These parties know a lot about each other already.” But all the same questions about valuation (how can you best forecast these companies’ earning power over the next few years?) and financing remain. (How much is it back to the drawing board? “A lot has changed in a year,” another insider said. “In some ways, we have to start all over.”) So any timelines remain TBD.

None of these companies comment on the action, of course, beyond issuing standard-letter comments on each other’s action, as last week when Gannett decried Alden’s board slate and formally rejected its $12-a-share January offer.

Each company has a lot on its plate right now. Bad budget projections for the rest of the year have made this the season for workforce cuts, with McClatchy’s, Gannett’s, and GateHouse’s all making the news. These companies are also preparing to release their full-year 2018 numbers, scheduled over the next several weeks, which will all be down. The biggest investor questions will revolve around forecast earnings for 2019.

While none of these chains has reported yet, The New York Times Co. did last week — further demonstrating how much it has separated itself from its former print brethren. With remarkable numbers, the Times showed new strength that propelled its share price beyond $30 in more than a decade. Remarkably, in doing so, it grew revenues 6.2 percent year over year — a number few other newspaper companies could even realistically daydream about. Digital advertising climbed 11.3 percent for the year, with print advertising down only 5.3 percent.

The Q4 numbers, which included the usual end-of-year holiday bump, were even better, up 23 percent year over year. In Q4 2017, the Times pulled in 17 percent more money from print advertising than from digital. In Q4 2018, the ratio was reversed: It generated 17 percent more money from digital advertising than from print.

Those numbers — oh, and its 3.4 million paid digital subscribers (and 4.3 million overall, including print) — are something whatever execs are left at Gannett, Tribune, McClatchy, and Alden can only marvel at.

We could construct quite a chart of the divergent trajectories of the Times against the chains, individually or collectively. But you hear almost no one in those chains talking about why The New York Times (or the Financial Times, or The Washington Post, or The New Yorker) has been so successful, and what their own companies might apply accordingly. Fundamentals like:

• an increasing volume of high-quality, knowledgeable reporting and writing
• data-driven marketing systems that accurately assess readers’ likelihood to subscribe, and then use that knowledge to convert more of them into subscribers
• advertising innovation that competes well into the Google/Facebook-dominated digital ad world and recognizes that advertising continues to be a prime driver of journalism company revenues, if now a secondary one
• respect for the consumer that seeks to exchange a constantly improving product for earned payment

There are plenty of other lessons to apply, but I’ll stop there for now.

Instead, in this M&A quagmire I’ve called the 2019 Consolidation Games, we get charts like this:

This chart, offered up by Alden Global Capital as it presses Gannett to accept its buyout offer, says so much in so few words.

First, let’s just take note of the enormous violence being done to the art of data visualization here — the non-zero baseline, 11.8 and 11.6 percent being the same height, but 13.4 percent being higher than 13.9 percent. The graphics people at their newspapers would do better. Here’s a more accurate portrayal of their numbers:

Alden points to its MNG EBITDA, or earnings before interest, taxes, depreciation and amortization. “Ours keep going up,” it essentially says, “while yours at Gannett decline. Prima facie evidence that we can manage decline better than you can.”

The numbers tell us much more.

Some history: After I reported on Alden’s outsized profits here in May 2018, the company complained that the numbers were wrong — “we don’t know where they came from,” “they do not reflect the true cash flow of these businesses,” “those aren’t the real numbers” — and that actually Alden’s profit margin was nothing special.

Some quotes from a June staff meeting at The Denver Post with Joe Fuchs, the board chair of Alden’s Digital First Media (emphases mine):

We don’t produce the kind of profit margin that some of the competitors do, but we are in there to be sort of be in the midrange of what I would call profitability…

So, what is an appropriate profitability? You know, that’s a real tough question to ask. I’d say, I said to you before, we compare our numbers with everybody and then some private companies when we can. And we’re sort of in the middle.

…trust me, we do not want [the Post] to fail, we want it to be vibrant we want it to be a force in the community and yes, we want it to be profitable in the range that is sort of the norm within the industry. Nobody’s driving it to be the most profitable.

Now, instead of saying it’s only a middle-of-the-pack profit maker, Alden has reversed course and points with pride to its top-of-the-industry profiteering.

Further, Alden does manage to show that while both companies have cut and cut — with staffing at some Gannett newspapers no better than the more publicly maligned Alden-owned ones — Alden’s success in squeezing accounts better for itself. Why invest in what it sees as Gannett’s digital marketing businesses of dubious profit potential when you can line your pockets more thickly?

So where do we think the action goes next?

By all accounts, Gannett — with lame-duck CEO Bob Dickey retiring and board chair John Jeffry Louis shouldering the burden of leadership — prepares to do battle with Alden. Between now and its annual meeting (expected this spring, though the date is as yet unannounced), Gannett wants to make sure it can defeat Alden’s board slate, and that its directors can maintain control of the company’s fate. That’s job one for Goldman. The fact that Alden baldly put up a group of its own insiders — including Joe Fuchs and former DFM CEO Steve Rossi — helps Gannett’s argument that the slate is simply meant to deliver Gannett to Alden, and not “pursue Gannett’s best interests.”

This morning, Gannett increased its aggressive response to Alden’s offer, on numerous grounds, including these gems:

At least three of MNG’s candidates may be legally incapable of serving on the Gannett board under applicable antitrust laws, given their roles with MNG, which is a competitor of Gannett. Several other elements of MNG’s notice to Gannett raise additional concerns regarding the credibility of its proposal, including nominating 78-year-old Mr. Fuchs, who exceeds Gannett’s mandatory retirement age applicable to all directors, and MNG’s statement that it reserves the right to substitute director nominees in direct contravention to Gannett’s bylaws.

But it still has to prepare the defense.

The question then: Hamstrung by that defense and less-than-robust leadership, will it have enough bandwidth to seriously enter new talks with Tribune Publishing and its new CEO Tim Knight? Knight, with the backing of his board, his advisors, and 25 percent owner Patrick Soon-Shiong, would like to put together a Tribune–Gannett merger. And, we can expect, he’d like to become CEO of the combined company, which would by far be the largest newspaper chain in the country. (If Alden managed to snatch the CEO-less Gannett, who might lead that combined company? Two sources this weekend suggested that same Steve Rossi, who retired as Digital First Media’s last CEO in 2017.)

The path is there. Combine the companies, claim $100 to $150 million in synergies over two to three years, and make the case that it’s in the best interest of shareholders, employees, and readers. And proclaim that it’s a better deal for shareholders than Alden’s offer.

Gannett and Tribune negotiated last year, but talks fell apart on valuation issues (how much of the merged company each side would get) and on whether ex-Tronc chairman Michael Ferro would get a board seat.

That was 2018. Sources say Ferro, who still heads a group that owns 25 percent of Tribune, has now dropped his demand for a board seat. His hand-picked CEO Justin Dearborn is gone, dispatched last month as damaged goods in order for Tribune to finally get a deal done.

One would-be dealmaker offered this arithmetic. Combine the cash flows of Gannett (around $300 million), Tribune (around $100 million) and merger synergies (let’s say $100 million), and that can support the financing — in addition to stock swaps — needed to get a deal done.

The companies have each done their analyses on how a merger might work — even though the industry’s worsening state, updated revenue forecasts, Tribune’s plummeting share price, and the threat of recession will all force revisions. February and maybe March should be about these companies and their advisors working on those two issues: valuation and financing.

What’s a split of the new company acceptable to both parties? Could the deal be done as a stock swap, or it would necessitate new financing? If so, at what cost?

That’s the money side. But there’s also that other element in any negotiation: time. It’s fleeting, faster than all the print ad dollars exiting newspapers. Will Gannett be able to deeply engage with Tribune at the same time it battles Alden?

Can it afford to spend that time? Can it afford not to?

So go the fortunes of four of the six largest U.S. daily newspaper companies. The journalists’ Twitter is alight with Game of Thrones metaphors, but I think that’s misplaced. The action seems more Bravo-esque, The Desperate Housewives of Main Street, perhaps. Or, more prosaically, as one newspaper company exec told me Wednesday, “The pressure for consolidating is only intensifying.”

Those aren’t the only digital media soaps in action. Consider the draconian, get-ahead-of-the-recession first-of-the-year layoffs at both BuzzFeed and Verizon, and Friday at Vice. Take that as one end-of-the-decade sign that the VC-driven, digital media hockey stick of near-infinite growth is badly bent, if not broken. Infinity, it turns out, isn’t infinite. Then, there’s Conde Nast’s suddenly getting paywall religion, announcing it will — after years of dithering — paywall them all, in some fashion. “I’m not sure what they are doing,” one magazine industry pro told me this week. “They’ll lose 90 percent of their traffic.” And so, as Condé has dispatched CEO Bob Sauerberg on the heels of a $120 million annual loss, there’s more potential M&A.

Is it all connected? And how much does it matter?

There’s Jill Lepore’s “Does journalism have a future?” Or Farhad Manjoo’s “Why the latest layoffs are devastating to democracy.” Jeff Israely’s “2009: The internet is killing (print) journalism. 2019: The internet is killing (internet) journalism.”. Or AP’s: “Loss of newspapers contributes to political polarization.”

CNN blared: “Media industry loses about 1,000 jobs as layoffs hit news organizations”.

And The Newseum, the temple of what-journalism-once-was, looks as if it could be sold off for parts.

All in two weeks.

Yes, it all matters, and it’s all connected.

The state of consolidation games

As January plummeted to a close, attended by those thousand or more journalism layoffs, where do we stand with all the huffing and puffing around newspaper company M&A? (The companies declined comment on their potential buying or selling strategies for this piece.)

At this writing, Gannett, having taken several weeks, will soon formally tell Alden Global Management a polite no to its “offer” to buy the company for about $1.5 billion on January 14. Though the Gannett board, which met Thursday, is suspicious that Alden doesn’t have the financing available to complete such a buy — and Alden, sources say, didn’t respond to its request to show Gannett its money — its public suiting has awoken Gannett anew. And that may have been its game plan all along, in making its “offer.” On Friday the Wall Street Journal reported that Alden’s DFM has hired a financial advisor to press its buying case. (See my best reporting-informed speculation, below.)

So what do we do know about Gannett today?

Expect the company to soon complete its process of hiring a banker to work alongside its long-time advisor Green Hill. That banker will help Gannett assess its market position. Another way to put it: America’s largest regional daily newspaper chain, the globe’s second largest given its ownership of UK’s Newsquest, is in play.

“Ask the banker” will tackle these questions: Should Gannett sell itself — and at what value and price? Should it buy? If so, what? The company experienced corporate indigestion in swallowing whole the Journal Media group in 2016. Then, it kneecapped itself in making a hostile effort to buy out Michael Ferro’s then-new trophy Tribune Publishing/Tronc, later that year. It was enough to make Gannett publicly swear off buying more newspapers — even as its merger negotiations with then-Tronc (now Tribune Publishing again) continued.

Instead, CEO Bob Dickey, who’s headed into retirement this spring and was told to focus more on “digital” by his board, re-targeted his efforts in buying digital media. In fact, it was Dickey’s buy of digital marketing companies that gave Alden a talking point, as it stalked Gannett.

Meanwhile, Gannett continues to reel internally. In January it laid off dozens of people. It’s cutting back on its heavily promoted program of placing USA Today national news inserts in many of its 109 dailies, multiple sources told me. Those inserts have largely been standalone sections; now they’ll become more integrated with local newspaper sections. That saves on newsprint cost, which ran as high as $20 million annually when the sections were introduced five years ago. One potential result: less space for local news. And, of course, fewer journalists to fill the pages anyhow.

“I am getting the feeling that Gannett, especially with the January cuts, has moved a lot closer to DFM news staffing than is generally recognized,” one veteran news manager told me. “I see the El Paso Times [with a metro population of 844,000] shows 13 people on its news staff. The editor there retired some months back…One person told me their goal is not more than one senior editor per state…This all just makes me wonder if Alden really knows what has been cut in recent years. They wouldn’t have had the detailed financials, given that it’s a hostile offer.”

As the company looks for anywhere to trim, like all public companies, it eyes the calendar. In February, Gannett, Tribune, McClatchy, Lee and the other public companies will have to report their fourth-quarter, 2018 and full-year financials. They will be ugly. The question: How ugly?

Gannett has already announced cutbacks — but it won’t be alone as companies trim ahead of the earnings reports to show their commitment to shareholder value.

Fast-declining revenues are a certainty. But how did these declines impact earnings, and what do the CEOs forecast for 2019? As wheeling and dealing among newspaper chains continues, the price of assets — the valuing of merging, acquiring or selling — gets adjusted. The weaker the results, the more vulnerable the company. The more vulnerable the company, the lower a potential sales price or valuation in a merger.

There’s also financing to worry about. Financing is tighter now than it was in mid-2018, though it has eased some from December. That isn’t only the case for the ailing newspaper trade (see Tuesday’s news that Gamestop’s buyers couldn’t get financing to complete an acquisition). But it is truer of newspaper companies, given how tough it is to forecast going-forward earnings in an industry declining so rapidly. Any of these potential deals faces tough financing standards. “Lenders now want to see any deal include some deleveraging,” said one financial observer. “If it doesn’t, it won’t fly.”

How long will the consolidation games go on?

There’s lots of action ahead. For its entire history, the U.S. daily newspaper industry has been a fragmented one. In the beginning, local printers became publishers.  Most were one-offs, single proprietors. In the seventies, eighties, and nineties, chains — Gannett, Tribune, Knight Ridder, Advance, Hearst, MediaNews, Lee, and more — grew. But they were still outnumbered by the number of family-owned concerns across America. Importantly, no single company dominated the landscape.

Today, Gatehouse (under New Media Investment Group) leads the pack with about 155 dailies. Amid all the would-be M&A hysteria, Gatehouse CEO Mike Reed has stuck to his knitting and his strategy of buying up remaining family-owned, smaller circulation titles, some in small chains, as well as individual properties. It is an approach characterized by greater precision and less rancor — and the need to incrementally grow topline revenues by acquisition. Although the company performs at the top end of regional chains, it still is losing about five percent of its same-store revenues year over year.

Just this week Gatehouse bought long-time independent Schurz Communications for $30 million, adding 10 dailies and 10 weeklies to its total. Reed’s value-oriented buying — backed by ready, lower-cost financing through Gatehouse’s operator, Fortress Investor Group — has been steady. It will likely continue to buy, as it can more easily raise money where others can’t.

All totaled, three companies — Gannett, Gatehouse, and Digital First Media — now control about a quarter of the remaining daily titles. That’s a significant concentration, historically. But in an industry where expense reduction is the prime strategy, much more consolidation is likely on the way. Little regulation prevents it, and the financials all favor it.

There remain some newspaper chain CEOs who still see a straight line between maintaining, if not growing, their title’s journalism capacity and the product quality, mainly digital, to deliver. They are a minority, unfortunately. For one, fewer and fewer would-be buys — at the prices the market still demands as of this moment — appear palatable.

“Yes, we could buy select properties, but the multiple would have to be low enough, considering the reinvestment needed to maintain EBITDA through recession,” said one of the savviest, speaking of the Tribune titles. “And we just can’t justify the reinvestment necessary in these papers to get them through the recession.”

Q: How much does the fear of recession drive M&A thinking?

A: A fair amount.

The next recession may not happen anytime soon, but in the words of economist Sam Khater, there’s a “mental recession.” Corporate chiefs, in newspapers and in other industries, now largely assume one. For many thriving industries, that just means a re-calibration. For a newspaper industry in such a distressed state, this driver carries more weight. Buying any newspaper property may require more reinvestment and for a longer period if both revenues and profits take a further hit in a 2019-2022 recession.

The fear of recession is one of at least two drivers connecting those dots from Gannett/DFM to Buzzfeed/Verizon and Conde Nast. Everyone in the media business believes it is going to get worse — before maybe getting better.

Q: What is the other common thread?

A: Google, Facebook, and increasingly Amazon dominate digital advertising and will likely will take more and more share, especially into a recession. The most recent estimate is that they control 61.9 percent of the digital ad market, worth $111 billion. (For every one percent, you could pay the salaries of over 10,000 journalists, but I digress.) (Digital disruption has wounded every legacy news and information industry in the Western world and now it’s turned on the digital news disrupters as well.

Q: What does Heath Freeman, Alden’s president and Digital First Media magnate, really want? Is Alden a buyer, or a seller, or a lemon-squeezer?

A: There’s a one-word answer: Money. To his credit, in the stories often told by his former management, Heath and DFM are really straight shooters. They’re just greedy in the “Wall Street” sense, although today’s newspaper industry is rapidly redefining the possibilities of looting sinking ships.

Four possible rationales have emerged for Alden’s bid for Gannett:

1) Alden looks at Gannett and truly sees lots of fat, despite all the skinnying Gannett management has done for good part of the decade. That’s why Alden’s bid freaked out so many Gannett employees: It could get worse.

2) Alden wants to juice Gannett’s share price so that its 7.5 percent stake, bought at about $9.68 a share, will increase. Alden cashes in and makes more money without actually having to strip any more parts from any new newspaper company. Alden’s $12 offer shot Gannett’s share price up from the $9 range, and it still rests at about $11. On paper, then, Alden’s got about $11 million.

3) Alden actually wants Gannett to buy it, as rumored recently. Would Heath Freeman sell anything? Yes — back to the single motivating principle, profit maximization. Is it likely that Gannett, which is stumbling its way into the new wilderness with a lame duck CEO, wants to buy DFM properties? No, and remember that CEO’s opinion above about how much any buyer would have to put into distressed properties. DFM properties are among the most distressed.

4) Alden wants to put Gannett into play. If someone else buys it, sending up the stock price, Alden wins. If Gannett is put into play along with Tribune, and with McClatchy eagerly seeking a deal, then maybe DFM could offload some or all of its properties as part of somebody’s roll-up strategy.

If you had to bet (don’t), you’d pick the fourth one. Alden does not appear to have the financing to make a $1.5 billion hostile takeover of Gannett possible, though its hiring of a financial advisor may tell us it’s more serious than some suspect. SEC law complicates the second option. The third one seems unlikely. Why not just cause more chaos in the flagging distressed industry and see what new hand Heath Freeman may have to play?

Q: Why is February 7 important?

A: That’s the date by which Alden would have to file an alternative slate of directors for a contested election at Gannett’s spring annual meeting. The maneuver would show Alden is serious. (Bonus points to readers who recall that Gannett CEO Bob Dickey fatally wounded his own hostile takeover of Tribune two years ago by missing the deadline to file an alternative slate in a Tribune board election.)

Q: What’s with these change-of-control clauses? Haven’t they played a major role in Tronc/Tribune Publishing’s directing of millions to a few top execs while whittling down their newsrooms?

A: Yes. Those with lots of experience in C-suite thinking say that “change of control” clauses actually carried some logic. The idea: Investors don’t want top management to reject a lucrative buy-the-company offer just to save their own jobs and incomes. Pay them well in the case of sale, and you’ve removed that disincentive.

In normal times in normal industries, that might make sense. In the newspaper industry of this wretched decade, it’s just been one more perverse incentive. As Howard Schultz gooped his intentions to run for president, journalists noted that he makes 1,049 times as much as the median Starbucks employee. I haven’t run the numbers in the newspaper industry, but it’s a number worth researching. These jobs should be well recompensed, but along the way some companies lost their ethical center.

Q: So what’s going to happen in February, or March?

A: The consolidation games push everyone into the pool.

Gannett will “assess its future.” That probably means rejecting Alden for now. Its likely next move will be to pick up the talks with Tribune that it abandoned in 2018. Now that Ferro lieutenant Justin Dearborn has been dispatched (deemed more likely to mess up a Tribune sale than help lead it), and Ferro himself has told people he would give up his long-time demand of a board seat, a deal is more likely. It would involve a stock swap, with the valuation of who gets what chunk of mergeco still the contentious issue. And who would lead? New Tribune CEO Tim Knight is the last man standing in those two companies right now, but is he “digital enough” for Gannett’s board?

Tribune badly wants to sell, but hasn’t closed the deal. It rejected a $16.50/share offer from McClatchy in December, and now trades at around $12. Suitors have included Will Wyatt’s Donerail Group and Jeremy Halbreich’s AIM Media. But in the wake of rejecting McClatchy, it couldn’t move on either of those deals. Price and financing are issues. It will likely turn to Gannett again. Importantly, Patrick Soon-Shiong, who owns 25 percent of Tribune, recently gave the Tribune board the ability to make its selling decision, giving up blocking rights. He wants out, and knows removing more obstacles to sale may finally seal some deal.

McClatchy was sorely disappointed that it failed to win Tribune. It would been more icing on CEO Craig Forman’s “deleveraging” cake, as he has pushed out the company’s big debt off into the 2020s. With Dearborn out, Soon-Shiong standing down, and Ferro’s interest maybe waning, could the deal be revived?

Or could Gannett solve its current identity problem by buying McClatchy? That would give Gannett an even bigger national footprint. But McClatchy’s $745 million debt (well down from what it borrowed to buy Knight Ridder 13 years ago) is a sticking point.

Still, financial analysts tell me that either the Gannett/Tribune deal or Tribune/McClatchy deal could result in $100 million or more of “synergies” — those cost savings that drive all of this action.

Finally, consider a few other players. Lee, a big chain of small dailies, could find a new partner. Gatehouse and Hearst will hang around the periphery, glad to pick up selected titles that may fall out of any big deals — if they can pencil them out to their satisfaction.

Could the moves presage the major rollup that’s been increasingly talked about in America’s now-in-play, ever-struggling daily newspaper industry? Does the move tell us anything about the likelihood of Alden Global Capital successfully winning Gannett?

What will Tribune, Gannett, Digital First Media, and McClatchy — four of the major U.S. daily chains, all involved in this possible buying, selling, and mating — look like when the newsprint M&A dust settles?

The suddenness of Dearborn’s removal suggests that bigger moves are imminent.

One theory: Tribune — in play itself but left without a good buyer — seizes the moment made present by Alden’s Sunday night bid for Gannett. As Gannett itself scrambles to fend off Alden (expect a meeting between the two companies by the end of the month), both Tribune and Gannett see the same opportunity: A Gannett/Tribune merger.

Gannett now sees a Tribune merger as probably its best move, if Alden’s charge is a serious one. Tribune investors — led by former chairman Michael Ferro, whose group controls a quarter of the company’s shares — want to sell. Though Tribune rejected McClatchy’s mid-December offer of $16.50 per share, Alden’s blitz has altered the board game.

With Ferro nemesis Bob Dickey retiring, in part due to Ferro’s victory in defeating Dickey’s 2016 hostile bid for the company, Ferro could gain the merger he sought and crow about a victory. At the same time, he could exit Tribune and satisfy his own Chicago-based investors in the company. It’s no secret that it’s been Ferro — not Dearborn — who was seen as an impediment to a Tribune sale. Now, though, Ferro may have softened his stance.

In fact, to get such a deal done, sources say Ferro would be willing to drop his previous demand for a board seat on the merged Gannett-Tribune. (Ferro’s poor reputation has only gotten worse.) Or, if the Gannett deal is a bridge too far, Tribune could act on the offers made by the two companies (Donerail Group and AIM Group) that came in behind McClatchy in the fall selling sweepstakes.

With Tim Knight ascending to the CEO position, and the likely elimination of three high-priced executives earning more than a million dollars annually in salary, Tribune cuts expenses. Further, it may be able to charge the share-based compensation — totaling $10 million or more — now. That’s the clearing, or financial clean-up.

Both moves would help in its calculation of going-forward EBITDA (earnings before interest, depreciation, taxes and amortization), which often stands as the key number in calculating a sales price. The fewer the going-forward expense obligations, the higher the EBITDA, on paper at least. Buyers then pay a multiple of EBITDA; Alden’s offer stands at about 4.7x EBITDA. Raise the EBITDA by a million dollars, and a selling company could see a return of about $5 million. Raise it by $10 million and it could yield — depending on the negotiating skills and leverage of the buyer — as much as $50 million.

As the news sprinted across the web that Ferro’s long-time right hand man Justin Dearborn was gone overnight, people puzzled. With his quarter-share of the company, Ferro has long controlled the company, its board and management.

Why would Tribune dispatch Ferro’s right-hand man, Dearborn, and two Ferro hires — Ross Levinsohn, the former Yahoo head whose brief stint as publisher of the Los Angeles Times was ended by sexual harassment charges, and Mickie Rosen — so apparently unceremoniously?

The “clearing the decks” metaphor offered by one financial analyst is one good theory. The fact that David Dreier, the former GOP congressman whom Ferro put on the board in 2016, becomes chairman buttresses the case. It seems more likely that this apparent coup has Ferro’s hand on it than that he and his people are the victims of it.

While Dearborn, Levinsohn, and Rosen are now all immediately unemployed, they stand to reap millions of dollars in stock and other compensation, promised to them in agreements Ferro provided over his tenure as Tribune/Tronc chairman.

Upon sale of the company, Tronc/Tribune packages provide millions of dollars in payout. Even as they exit the employ of the company, their stock grant redemption should hold, say sources.

In March 2018, Dearborn’s compensation agreement was updated. He received “an annual base salary of $600,000 and…an annual cash bonus, with a target of 100 percent of base salary.”

The most current Tribune SEC filing totals Dearborn’s compensation, including stock awards, at as much as $4,397,500 in 2017 and $8,123,914 in 2016.

While Dearborn served almost three years in the job as CEO, both Levinsohn and Rosen’s values to the company are much less apparent.

Levinsohn joined Tronc as publisher of the Los Angeles Times in August 2016. He hired Lewis D’Vorkin as editor-in-chief, and D’Vorkin lasted four months in the job, upended by staff mutiny. Levinsohn himself was there for less than six months, as sexual harassment allegations resulted in a suspension. An internal Tronc inquiry cleared Levinsohn and he moved on to become CEO of Tronc’s L.A.-based digital play, Tribune Interactive.

Both he and Rosen, whom he had hired as LA Times president, have since quietly headed that effort, amid many staff complaints that they were being paid to do little.

As I wrote from SEC filings in August 2017, Levinsohn’s package was huge: An employment term of three years, through August 2020. One million dollars a year in salary, $600,000 per year and an additional $100,000 per quarter. A cash bonus of up to 166.66 percent of his base salary. Stock share — exercisable on a vesting schedule of three years, in three equal installments over the term of his agreement — worth about $8.5 million at [then] current Tronc share pricing. Levinsohn would also receive 400,000 shares, plus 200,000 more in the form of stock options. The most current Tribune SEC filing totals Levinsohn’s compensation, including stock awards, at as much as $7,036,000 in 2017.

It’s unclear from this reading how and when exercisable those grants may be, but financial observers doubt that the let-go executives will forego that compensation. Further, a “change of control” at Tribune — meaning a sale — is the likely accelerant to these riches. That, as I’ve pointed out over the years, encourages executives to manage to a sale, rather than to better civic and reader service.

Such numbers will only further grill Tronc/Tribune’s many critics, who have accused the company of self-dealing and profiteering. “Tribune is still making money,” one observer told me. “They are taking the cash they earn in January, February and March and giving it Dearborn, Levinsohn and Rosen.”

Meanwhile, cuts to newsroom budgets have resulted in weakened Tribune products and dozens, if not hundreds, of additional job losses.

Tribune intrigue now joins Gannett intrigue, with January only halfway over.

We know the Gannett/Alden set-to should move well into February. Gannett’s been scrambling all week, getting its defensive ducks in a row. But Gannett is known as a “shareholder-friendly company,” meaning its defenses against unwanted suitors are weak.

Alden could take its case case to those shareholders by putting up an alternative slate of board directors. The deadline to file that slate is mid-February, a few months before the vote. (It was, curiously, Gannett’s failure to file an alternative slate on time in its Tronc takeover attempt of 2016 that fatally retarded its efforts.)

Expect a first meeting between Gannett and Alden by about month’s end. In the interim, Alden may be asked to demonstrate how it would finance a $1.4 billion cash acquisition. Speculation is growing that Alden only wants to shove Gannett into play, not actually buy it.

Public filings show that Alden paid an average of $9.69 a share for its 8.5 million Gannett shares. If it fetched $12 a share — bought by someone other than Alden at the price Alden offered this week — that would net the hedge fund $19.7 million in profit. After peaking at $11.95, a nickel under Alden’s bid, on Monday, the share price has drifted downward, but still surpasses the pre-bid pricing.

Inside Gannett, there’s great nervousness.

The company is trying to send out reassuring messages to its workforce. (Long-time industry watchers will note the irony here since Gannett’s own expansion led to worries, some well-justified, of the Gannettization of the papers it acquired. That was then, this is now, and as I noted two years ago, “Your Gannettenfreude will only take you so far.”)

Gannett employees’ woes are exacerbated by the knowledge that layoffs will follow a buyout offer. Even as Alden makes its laughable case that it can better manage Gannett, the company looks publicly weak as it cuts more staff and heads toward a full-year financial report in February that won’t be positive.

Further, there’s the little problem at the top. CEO Bob Dickey announced his May retirement in December. Company executives say uncertain leadership over the next few months is only a continuation of something that was a problem for more than a year.

“Bob was just checked out,” explains one associate. “He has spent a lot of time at his home in Bend [in Central Oregon, a long journey each way to and from Gannett’s suburban Virginia headquarters].”

“There’s no doubt he’s working when he is there, but he just has too little contact with top company execs,” added another.

Execs point to Dickey’s failed bid for Tronc as the beginning of the end of his tenure, which began when Gannett divided its valuable TV properties into TEGNA in 2015.

Dickey, too, was well-compensated as his company’s operating performance declined and it cut many journalists. His 2017 compensation was estimated at $8.7 million, following $6.9 million in 2016. In retirement, he will likely reap millions more.

At Tribune, Tim Knight moves into the CEO position. Long considered a “good operator” in newspaper publishing parlance, Knight kept his head down through the twists and turns of the Michael Ferro era at Tribune.

Within the industry, Knight has been considered the adult in the often fractious Tronc room. He’s the exec with decades of newspaper executive experience, leaving the Tribune Company after 13 years and then joining Ferro for four years beginning in 2011 as Ferro operated the Chicago Sun-Times. After a brief stint as publisher of Advance’s Cleveland Plain Dealer, Ferro hired him back at Tronc in March 2017. When Ferro left his formal position as chair of Tronc last March, Knight’s responsibilities continued to grow.

Yet, interestingly, as one source put it Thursday, “he’s not a deal guy.”

Knight’s tenure could be very short, depending on whether Tribune sells and to whom. But it’s also possible that he could become CEO of a Gannett-Tribune mergeco, the chieftain of the nation’s largest newspaper company.

On Monday, I noted the dearth of CEO newspaper leadership, as Digital First Media operates without one and Dickey heads to retirement and Justin Dearborn looked like a short-timer. Dearborn’s overnight disappearance surprises even me.

Now, Tim Knight (who was unavailable to comment Thursday night, as were other players in this story) joins the CEO group. He may have a parachute amounting to more than $4 million in potential compensation, but he’s in for turbulent skies and an uncertain landing.

Photo of Tribune Tower by Bernt Rostad used under a Creative Commons license.

Alden apparently told reporters it had been in recent contact with Gannett about the offer. But later on Sunday night, Gannett’s USA Today told a different tale, with a company source saying “there has been no communication regarding a proposal to the company.” But this morning, an updated version of the story acknowledged Gannett had “officially received an unsolicited proposal to acquire the company.”

This may be the first newspaper mergers-and-acquisitions story of 2019, but it definitely won’t be the last. Consolidation (and the cost-cutting that comes with it) remains the dominant strategy in the daily newspaper industry. If revenue continues to drop at or even near double-digit levels, the consensus thinking is that radically reducing expenses through consolidation is about as good a card as anyone has to play. Eliminate or reduce corporate staffs, centralize everything that can be centralized, and maybe in some cases continue to make small investments in newer revenue streams.

Just a month ago, McClatchy was close to finalizing its own big consolidation by buying Tribune Publishing. But it got left at the altar when the Tribune board rejected its bid. Remember both those names as we consider the cascading effects of this Alden bid — the end result of which might be a new Gannett/Tribune combo.

Digital First Media has just under 50 dailies and about 100 total titles in its portfolio. Gannett counts 109 “local media organizations.”

Alden’s DFM, of course, stands at one extreme of the industry, unusually naked in its strategy of extraction, investing as little as possible in the business as it harvests some of the highest profits in the industry. (Documentary film producers are now hard at work on telling the tale of the daily newspaper apocalypse through publishing’s bête noire.) Alden took a severe media beating last spring as it whacked one-third of The Denver Post’s newsroom, but Alden president Heath Freeman continues to see financial opportunity in what may be the final years of print.

As I reported less than a month ago:

Alden president Heath Freeman has recently noted some interest in buying other chains. His rationale is quite understandable: He’s optimized his cost-cutting enough to keep profits flowing smoothly, pushing only a tenth of his subscribers a year to cancel. He believes he could “optimize” other chains and, to their dying moments, extract higher returns.

The only surprises, then, are the speed with which Alden has struck — and its intended target. With a current market value of $1.1 billion and annual revenues that run to a little more than $3 billion, Gannett has long sat atop the newspaper industry, largest in the country and second worldwide (to News Corp), given its ownership of the U.K.’s Newsquest. (Gannett is the largest chain in terms of paid circulation, but The New York Times Co. has passed Gannett in market cap — fitting, given the extent to which the sweet spot in the newspaper business has shifted from local papers to a few national giants.)

So how will this bid play out?

Gannett is scrambling to respond. This morning, it issued a statement:

Consistent with its fiduciary duties and in consultation with its financial and legal advisors, the Gannett board of directors will carefully review the proposal received to determine the course of action that it believes is in the best interest of the company and Gannett shareholders.

Given the 23 percent premium on offer, Gannett can’t just say it doesn’t want to sell to someone like Alden. As a single-class public company, it’s duty-bound to maximize shareholder value. Expect it to hire an investment banker to “explore the company’s options.”

(One quick numbers clarification: In its press release, Alden refers to its cash premium as 41 percent instead of 23 percent. That’s because they’re citing the price Gannett stock closed at on December 31, $8.53, instead of the price it closed at Friday, $9.75. And in early trading this morning, Gannett stock was going for around $11.50, as traders bid it up closer to Alden’s $12.00 offer.)

What all this means is Gannett, like it or not, is in play. Even two years ago, that statement might have been dropped jaws — Gannett was clear it wanted to be the consolidator, not the consolidatee. But no longer: In an industry of unending downturn — and in a world flirting with a who-knows-how-deep recession to come — all bets on the conventional wisdom of newspaper ownership are off. Anyone with the appetite and dollars to buy can, whether it’s a Patrick Soon-Shiong or an Alden Global Capital.

The decline of Gannett

How did Gannett get to this point?

It was long prized by Wall Street as the daily newspaper company with the best capital structure and most consistent financial performance. It led of the last wave of consolidation in the industry, pre-web, buying up dozens of family-owned newspapers around the country. (Investors liked that — journalists, not so much.)

But Gannett, like its peers, began to show its cracks over the past decade. It announced one new transformation initiative after another — in newsrooms, in ad sales, and more lately in digital subscription sales — but Gannett has never been able to turn the digital corner.

Its digital businesses now contribute 37 percent of total revenues — more than most of its peers. But the company was still down around 7 percent in overall revenue through the first three quarters of 2018. Gannett’s print ad revenue was down about 17 percent over that span. Amid it all, Gannett’s journalists, even as their ranks have thinned, have won plaudits from readers (and peers) for reinvigorated national/local investigative projects.

Anyone searching for a turning point in the company’s fortunes should look at CEO Bob Dickey’s attempted hostile takeover of Tribune Publishing in 2016. (It was Tribune Publishing before it was Tronc before it was Tribune Publishing again.) In resisting Dickey’s bid, Tribune’s then-chairman Michael Ferro vowed privately and publicly to wreak vengeance on his unwanted suitor. Ferro — who still heads up a group that owns 25 percent of Tribune and essentially directs it to this day — is no doubt enjoying today’s news.

Gannett’s bid to buy Tribune started disastrously when it missed a deadline to file its own board slate at an annual election and then petered out as now-L.A. Times owner Patrick Soon-Shiong invested with Ferro, helping thwart the takeover.

Gannett’s share price tumbled and has never really recovered. Neither did Bob Dickey’s standing; it’s no accident that Alden’s bid comes barely a month after Dickey announced his retirement, which is set for May.

Who will replace Dickey? A national search is now just taking shape. The company looked at its thin executive bench — cleared by years of executive re-organizations and poor succession planning — and decided that it has no successor inside the company. Just this last week, Sharon Rowlands, who had headed up the company’s business leadership and was passed over for the job, departed to become CEO of web.com, a digital marketing company.

Alden’s Freeman apparently celebrated the holidays by assessing this particular moment of Gannett weakness — a lame-duck CEO preparing to announce another quarter of trouble. And so he struck.

The game ahead

Sunday’s announcement has sent people running newspaper companies (or just eyeing them) to their chessboards, I found calling around last night. (Given the timing of the Alden bid, no company spokespeople were available to comment for this column. It doesn’t talk to reporters much, anyway.)

Think of it as a game of two-and-a-half dimensional chess — something’s missing, but we may not be sure what.

Start with the Alden bid itself. The offer’s in cash — a rather pricey pile of it, at more than $1.35 billion. Does Alden have that money available today? If not, can it get it? Financial insiders note recent volatility in credit availability and say that some deals planned for December have been slowed as a result. Overall, 2019 projections show credit nervousness.

Consequently, Gannett may first simply ask Alden to show its wherewithal. Alden has quietly built up a 7.5 percent stake in Gannett already; as one keen observer of the industry told me Sunday evening: “Do you think they’re really trying to buy the company or just pumping up the value of their equity stake?” (Just from this morning’s bump in Gannett’s share price, that 7.5 percent is about $16 million more valuable today than it was yesterday.)

Alden has let it be known that it plans to be an activist investor. Its offer letter sent this morning notes that its existing stake makes it Gannett’s “largest active stockholder.” And it spared few feelings in describing how it sees Gannett’s current management and strategy:

Because we know how to consolidate and operate successful newspaper businesses over the long term, we have approached members of your Board and management on multiple occasions about a potential strategic combination. Despite our overtures, Gannett has not meaningfully engaged with us.

Gannett has lost 41% of its value since its debut as a public company two and a half years ago, significantly underperforming its peer group and indices. During this period, Gannett suffered from a series of value-destroying decisions made by an unfocused leadership team — overpaying for a string of non-core aspirational digital deals and pursuing an ill-fated hostile for Tribune Publishing, all while Gannett’s core revenue, EBITDA, margins and Free Cash Flow continue to decline. With Gannett’s CEO departing by May and its key digital executive leaving later this month, there’s now an even greater leadership void. Frankly, the team leading Gannett has not demonstrated that it’s capable of effectively running this enterprise as a public company. Gannett shareholders cannot sit by and watch further value erode while the Board casts about for a strategy and a leader, especially when there is an opportunity to maximize value right now. We believe Gannett shareholders deserve better.

Accordingly, MNG proposes to purchase Gannett for $12.00 per share, representing a substantial cash premium, and requests the Board immediately take the following actions to maximize value for stockholders:

• Enter into discussions with MNG about a strategic combination;
• Hire an investment bank to conduct a review of strategic alternatives, including a potential sale of the Company;
• Commit to a moratorium on digital acquisitions; and
• Commit to a feasible, strategic and financial path forward before hiring a new CEO.

(Emphasis very much theirs.)

If that “moratorium on digital acquisitions” doesn’t make it clear enough, the letter also says Gannett has lost its way by focusing too much on all this newfangled digital stuff:

We believe that Gannett’s newspaper business could be improved and made more profitable by optimizing the Company’s cost structure and showing discipline in capital allocation with a goal of optimizing EBITDA and Free Cash Flow per share every year. However, instead of focusing on its core newspaper business and acting as the industry consolidator pitched to investors at the time of the spin-off, the Company has spent approximately $350mm on digital acquisitions since 2015…

Despite the Company’s poor stock and operating performance since the spin-off, the Company seems to be doubling down on its current strategy. As we have heard from senior leadership, and as reported in the news media, the Board appears to be looking for a new CEO with a digital rather than newspaper background.

(Another bit from the letter: “When other people won’t step up, we do. We save newspapers and position them for a strong and profitable future so they can weather the secular decline.” It certainly is…interesting to see a hedge fund best known for laying off journalists positioning itself as a bold guardian of grand newspaper tradition. As one recent study put it: “At a time when other major newspaper chains were struggling to maintain single-digit operating margins, executives at Digital First had posted an operating margin of 17 percent, apparently by cutting newsroom staffing by as much as twice the industry average.” DFM has also closed or consolidated 21 newspapers since 2014.)

A different combination?

Last month, I predicted: “A Gannett/Tribune combo may re-appear in 2019…Gannett could buy Tribune — or vice versa.” That possibility — which I believed was warming on the back of a stove — will now likely move to a front burner.

A Gannett–Tribune merger could blunt an aggressive Alden bid. Both companies’ balance sheets are in better-than-average shape, and we’d hear a ton about the synergies of such a consolidation. But pricing and cash could still be formidable issues. Tribune rejected McClatchy’s $16.50 bid just a month ago — and then saw its share price plummet as low as $10.82, before rebounding with the rest of the market to $13.36 on Friday. (It’s down to about $12.80 in trading this morning.) It was Michael Ferro who refused the deal.

Sources tell me he’d likely be more amenable to a Gannett deal today — a victory in that two-year-old battle. The immediate question: How much cash and stock would it take to bring the companies together? Could a stock-only deal pull it off? And, importantly: Can Gannett make the case to its shareholders — especially those who bought speculatively and could sue — that a Tribune merger, creating a huge daily newspaper company by historical standards, is a better deal than that pile of cash from Alden?

Then there’s McClatchy. As I’ve noted, in his two-year-stint as CEO, Craig Forman has focused on getting McClatchy’s house in order. He’s negotiating a deal to push back the company’s debt, and he saw the Tribune acquisition as another way to buy time for a digital transformation of the company. After being rejected in December, what cards can he play now? He’ll be looking for new ways to insert McClatchy into the 2019 Consolidation Games.

Finally we have the private equity players, like Will Wyatt’s Donerail Group, which made its own bid for Tribune, or Apollo Global Management, which has been sniffing around the ragged edges of the newspaper business for years. (In fact, it came close to buying most of Digital First back in 2014.) At a time of anything-is-possible chain consolidation, might these companies assess and bid?

If you want to fully understand the dismal state of the industry, consider that Craig Forman is likely to be the only CEO among all these big companies who’ll still be in place by midyear. As noted, Dickey is retiring at Gannett. With Tribune Publishing likely to be sold sooner rather than later, Ferro acolyte and CEO Justin Dearborn has told associates he’ll hit the door at the same time.

Then there’s Digital First. It doesn’t even have a chief executive officer. When DFM CEO Steve Rossi retired in fall 2017, the company opted not to replace him. Its chief operating officer, Guy Gilmore, now runs the company from that position. One more way Alden has shown its commitment to cutting costs and reducing headcount, I suppose. And a trivia question: Where did Gilmore spend 20 years working early in his career? Gannett.

Facebook has fallen flatter on its face, The Social Network is in danger of becoming a social disease. Google maintains its primacy, even as its CEO is called to Capitol Hill to explain how the current president’s name somehow appears when “idiot” is typed into its engine.

Greed isn’t just good in the minds of many — it’s the long-term strategy for some who’ve somehow gotten a hold of the only business framed in the First Amendment. Phone companies spend billions on “content” properties and them mark them down (and out) like Kmart bluelight specials. Press gets kicked out of the White House — for asking questions. Even the anachronistic White House Correspondents Dinner can’t break a smile. We require, at a minimum, Mencken, Hunter S. Thompson, and Tom Wolfe to best reflect on these idiocies of the moment, but they’re in short supply.

We also sense in all the ferment — political, social, and journalistic — something else brewing for 2020s, but we can’t yet identify it. So let’s see if we can make a little sense of the year that was.

The reader revenue revolution is real.

There’s a simple reason why we see so many double- and triple-bylined stories in The New York Times these days: lots more journalists. In 2014, the Times was still struggling, losing revenue year over year. Its newsroom numbered 1,100, and buyouts and layoffs remained a feature of its business. Today, the Times tells me, it counts 1,500 staffers in the newsroom — up 36 percent in four years and 15 percent in the last two years. (In 2016, it reached 1,300.)

The Washington Post has had its own impressive ascent — but its newsroom peoplepower is still only about half of the Times’. Today, the Post’s growing newsroom pays 825 people, up 37 percent in two years from 600. When Jeff Bezos took over the Post, the staff had been reduced to about 500.

Both have built enviable digital subscription businesses, the Times at more than 3 million, with more than 4 million in combined digital and print. The Post is far less public about its numbers, but it passed 1.5 million digital subscribers not long ago.

And then there’s the Los Angeles Times, beginning to play catch-up after Patrick Soon-Shiong’s green-lighting of Norm Pearlstine’s hiring binge. It’s tough to put a new number on the L.A. Times, and to figure how many are new positions and how many are replacements for the numerous staffers who have left over the past couple of years. All totaled, including all those work for Times-owned pubs in L.A., the number seems to be about 540. For the Times newsroom, it’s about 480.

It’s no secret that local dailies have enjoyed far less success with digital subscription, for lots of reasons. Now, they’re trying — once again — to create sports niche subs, but they’re unlikely to match the out-of-the-box digital sub success of The Athletic. And as the year ends, the direct-to-reader, ad-free The Correspondent has once again shown us its own contrarian ways, raising $2.5 million in an accelerated crowdfunding campaign to launch a U.S. edition mid-2019.

If Mic was the end-of-year whimper, Verizon’s Oath announcement was the bang.

Verizon declared Tim Armstrong’s whole strategy worthless — taking a $4.6 billion writedown on both its AOL and Yahoo purchases. I couldn’t help but think of the 18-year-old image of AOL founder Steve Case grinning alongside a what-have-I-done Time Inc. CEO Jerry Levin. That was 2000. Nine years later, after Armstrong became AOL’s CEO, which had gotten to his own first payoff (Verizon’s buy of AOL in 2016) from poor bewildered legacy media cluelessly trying to buy a piece of the digital future — which, as usual, was already really part of the digital past by the time the deals closed. Urging his parent Verizon to buy Yahoo in 2017 was just icing on the overcooked digital cake. (Note: I mistakenly conflated Steve Case and Tim Armstrong into one person in an earlier version of this column.)

Oath, even at its height, could only claim second place in the branding malpractice department. Tronc will be hard to ever beat, even as that company has reclaimed Tribune Publishing again. Frankly, many of us are having a hard time letting go on the silly name.

Inside Oath, people have told me they’ve fared unevenly. Often left alone, they could chart their own company’s paths. But the absence of an overall strategy — how to link up these islands of both still-in-play and misfit toys — dogged Verizon’s purchase from day one.

At the end of this decade, the pipes companies — the distributors, including the old phone companies Verizon and AT&T — have survived and had money to spend, however recklessly. That money? It was ours, spent on paying for what’s coming out of the pipes. That massive cash flow, from our Internet-connected wallets and phones, fueled these nonsensical buys. And in the end, that strands even more journalists on uncertain ground.

The reversal of national news fortune looks increasingly complete.

Recall a headline from 2011: “The Huffington Post Passes The New York Times in Traffic.” Of course, “traffic” meant “monthly unique visitors” there, and the years since have finally almost killed that trick; the industry now understands more deeply the fact that digital news reading is about engagement, not the near-infinity of units (and bots, Macedonian or otherwise) that saw a single pageview blow by in the past 30 days.

It’s the legacy news sources — led by the Times, the Post, and CNN — that have both transformed their businesses to digital. At the same time, it’s those news companies which have steadfastly stayed on the biggest political and public affairs story of this generation, the Trump presidency. That’s not a coincidence.

BuzzFeed, Vox Media, and Vice — all still contributing significantly to the national discourse, each quite differently — are all looking for new futures. You can’t name a more high-flying dotcom news CEO than BuzzFeed’s Jonah Peretti, and he’s talking about being “open to M&A.” NBC has poured $600 million into BuzzFeed and Vox Media collectively. Given the recession-is-coming, batten-down-the-hatches consensus in many C suites, don’t expect any doubling down on that investment.

BuzzFeed is among those now moving more quickly towards…reader revenue. Yes, it’s all but certified conventional wisdom that the top two winners in the digital ad game are impossible to beat, or even take appreciable market share away from. The Google/Facebook duopoly has ended dreams of “overtaking The New York Times” or “winning a generation of Millennials,” as Mic had once proclaimed.

After pivoting from text to video (but not apparently enough towards its readers/viewers/customers), it could only fetch a $5 million say-goodbye payment once a Facebook video deal fell apart. Put the buyer, Bustle Media’s Bryan Goldberg, on your 2019 watchlist. We’ll see what he does with the Mic brand — and with Gawker, slated for relaunch next year. Having bought at firesale prices, can he find new value in this Internet age?

And then there’s HuffPost itself. Reimagined by editor Lydia Polgreen, it now must find itself again, within or without the Oath structure.

A Gannett/Tribune combo may re-appear in 2019.

No laughing, Tronc watchers. The battle that consumed 2016 may find a second act in 2019. With the McClatchy buy of Tribune looking kaput, a new round of mating dances has already begun, I’m told.

Gannett could buy Tribune — or vice versa. A merger would mean consolidation, which would mean lowered costs, which is the name of the game. Gannett is three times larger than Tribune in revenues; Tribune’s balance sheet is even more pristine (thanks to Soon-Shiong’s cash deal for the L.A. Times) than Gannett’s good one.

What could hold it up? Those two nemeses: Gannett CEO Bob Dickey and former Tronc chairman Michael Ferro, who just nixed the McClatchy buy. Dickey has just announced his retirement, and it’s unusual for a company to pull off a big deal with a lame duck in charge.

Then there’s Ferro himself, the big thorn in the last deal. Tribune CEO Justin Dearborn would probably try to keep Ferro away from the deal, especially as it includes talks with Gannett chair John Jeffry Louis, whom Ferro had harsh words for two years ago. But that won’t be easy.

Gannett’s next CEO won’t be one of the usual suspects.

Dickey never recovered from that maladroit failed effort to buy Tribune/Tronc. Even more, though, Gannett’s board now understands — sound familiar? — that it needs to get more digital more quickly.

The company has begun a national search. As Dickey departs, Gannett’s thin bench stands out. The biggest U.S. news company has few if any internal prospects. Sharon Rowland, Dickey’s corporate business head, is seen as the only possible inside candidate — and since she wasn’t named with Dickey’s announcement, her chances to ascend seem less than 50-50.

Don’t expect Alden Global Capital to sell anytime soon.

Remember the spring peak of the Alden fury? In March, it axed a third of its Denver Post staff and set off protests around the city, reigniting (briefly, once again) national recognition of the news desert enlargement.

Civic cries of “sell!” went unheeded, and largely unacknowledged.

I was able to describe in detail the outrageous profits that Alden was able to continue taking out of the Post and all the Digital First Media “properties.” Which answered the question, however dis-satisfyingly: Why would these guys ever sell?

Spin forward to today and the answer, those in and around the company tell me, isn’t much different. In fact, Alden president Heath Freeman has recently noted some interest in buying other chains. His rationale is quite understandable: He’s optimized his cost-cutting enough to keep profits flowing smoothly, pushing only a tenth of his subscribers a year to cancel. He believes he could “optimize” other chains and, to their dying moments, extract higher returns.

At year’s end, Digital First Media is losing its most outspoken editor: Mercury News executive editor Neil Chase departs to head up CALMatters, the three-year-old public policy statewide org modeled on The Texas Tribune. As he leaves, he salutes his Merc staff: “I’m very proud of what we accomplished in my time here,” he told me Tuesday. “We — not just me, the whole team — transformed The Mercury News and East Bay Times into what they need to be right now. We went from being defined by print sensibilities and deadlines and tools and thinking to being a true digital newsroom, focused on building the online readership that’s essential to our survival. And we did it amid budget challenges and staff cuts, delivering important coverage (punctuated by the 2017 Pulitzer Prize) and amazing features and the kinds of stories that have meaningful impact. The people in this newsroom really care, and it shows in the work they do.”

In forum after forum this year, Chase had noted matter-of-factly that he worked for a venal Wall Street investment company that made no bones about its singular interest — maximizing profit. For instance: “I can’t fault them for not investing in community journalism. But if they don’t want to, someone else should…Democracy can’t succeed without a free press.” He said it often, but with a small smile and without seeming angry. And, as he has pointed out, Alden didn’t even care, as long as he managed to keep the profit-producing presses running.

The hedge fund virus of newspaper ownership isn’t confined to North America.

After contributing to the demise of Canada’s major regional dailies, GoldenTree Asset Management took control of 172-year-old Johnston Press in the U.K. last month. Johnston publishes the “i” national newspaper and 200 other titles. As a bondholder, along with two other U.S. hedge funds — Carval Investors and Benefit Street — GoldenTree took the asset when Johnston couldn’t find a buyer in Britain’s beleaguered newspaper market.

That market has gotten so bad, that the BBC is now sharing its license fee proceeds in any effort to revive local news reporting. (Similarly, a new effort to boost the regional press in Canada is gaining traction.)

What’s GoldenTree’s Canadian legacy? Consider the “tawdry fall” of its Postmedia, or how Canada’s competition watchdog decried its job-cutting, title-closing ways.

Clearly, the native English-speaking world is in a heap of journalism trouble. Of course, that’s in part just a symptom of the wider times. Listen in to The New Yorker Radio Hour’s recent depiction of sad Brexit. On it, Rebecca Mead, one of the magazine’s London-based staff, offered this pithy observation: “The difference between Britain and America now is one of depression and psychosis.”

The ownership of American dailies may make less difference to the actual staffing of their newsrooms than we’d like to believe.

It’s now a familiar morality play. We have the venal Heath Freeman of Alden, bête noire to the interests of community journalism and journalists, on the one hand, and the family owners, best symbolized by the McClatchys of Sacramento, on the other.

Indeed, their motives may be worlds apart. And yet as journalists, we have to see the world for what it is. And that lies in strong part in the number of journalists newspaper companies now pay.

In my column this week on McClatchy’s apparent failed effort to buy Tribune Publishing, I noted that the company now pays fewer than 900 journalists, including its Washington bureau and design center staff. One alert reader did the quick math: “That’s an average of just under 30 per paper, which would be astounding.”

It’s good to still maintain a capacity for astonishment.

The deeper truth is that for those owners tied to the strictures of short-term profit (or break-even, in some cases), the pressures to cut newsroom staffing are near-universal. Alden’s DFM and McClatchy, along with the rest of the chains and many other owners, all continue to cut.

That’s doubly structural: The deepening spiral of (a) universal print decline and (b) short-term-oriented ownership that can’t do anything other than manage that decline.

Consequently, moving into 2019, we see two parallel but wildly uneven trends. There’s the Soon-Shiong buy-and-long-term-strategic-reinvestment camp, which is small enough to meet in a large closet. (Soon-Shiong likes talking in 100-year increments.) Then there’s the single driving motive of increasingly chained-up industry: consolidate, consolidate, consolidate. That’s a cost-savings strategy that doesn’t do much for growth. So the newsroom numbers only move in one direction.

The age of NINO is upon us.

Penny Abernathy’s ground-assessing research has given us “news deserts” and now, in her latest report, “ghost newspapers.” Both are highly descriptive. This year, I added NINO to that vocabulary: Newspapers In Name Only.

NINO has become my best reply to the hundreds (thousands?) of times over the years I have been asked the question: Will there be a day when we don’t have print newspapers? The smarter daily publishers still try to maintain a useful and intelligent print product for their remaining subscribers who are (over)paying. But travel the country and see how much those few remaining printed pages are filled with little and old and wire content. You’ll see quickly that, while they are still being printed, they are shadows of what previous generations got from their dailies. They’re newspapers in name only.

An uncountable number of highly motivated, talented journalists are ready to jump back into the fray — if only they can be paid.

Ethereum and blockchain have proved to be a sideshow, at least for now, as journalism faces the 2020s. Civil Media generated tweetstorm upon tweetstorm. And yet amid it all, dozens of journalists, even if paid uncertainly in dollars and coin, put together impressive sites — from the Colorado Sun and Block Club Chicago to Sludge and Popula. All totaled, roughly 100 journalists got some funding to their work through Civil. As the work of all those involved in INN and LION and in projects from Report for America projects continues to prove: If you pay them, they will report.

We’re ready to cast the next Hollywood blockbuster inspired by American journalism.

“Levinsohn represented by Harder! Secret tapes! Someone option the movie rights to this thing!” tweeted Alley CEO Austin Smith, as NPR’s David Folkenflik reported Michael Ferro’s further descent, “Tribune, Tronc And Beyond: A Slur, A Secret Payout And A Looming Sale.”

Maybe it is time, after the perhaps too-inspirational Spotlight and The Post. Unfortunately, I haven’t yet had any inquiries to option the Newsonomics Tronc/Ferro motherlode, but hope springs eternal. [We’d have to work out a revenue split, Ken. —Ed.]

In the midst of Mr. Ferro’s War to keep his company “independent” (still seems like a wrong use of that word), I once suggested that Christian Bale (the Christian Bale of American Hustle that is) play Ferro. Perhaps we need to go more malevolent (Malkovich?) at this point, given the further allegations of sexual harassment and anti-Semitism. Comments are open.

Business (magazines) have moved (far) east.

When Chatchaval Jiaravanon bought Fortune for $150 million in November, it reminded us much of the business news market has moved to Asian buyers. Just four months earlier, Tokyo-based Uzabase paid $75 million or more for Atlantic Media’s Quartz. That followed Nikkei’s surprise purchase of the Financial Times in 2015. That was preceded by what became a tortured sale of Forbes to “Asian tycoons” in 2014, and ended in a 2017 settlement. (And Forbes’ new ownership has raised the big questions — again surfacing on Capitol Hill in the Google hearings last week — about how the Chinese government mandates in press censorship.)

Why the move east? There’s no one reason, of course, but there are several truisms. Economic growth has shifted to Asia, and the rising class of those involved in it (or who would like to be) are great audiences for the business press. In the U.S., the traditional magazine business has flagged more quickly than even Europe. That digital transformation continues to overwhelm that industry. Time Inc. sold to Meredith and sliced up. Then, just this month, Condé Nast got ready to dispatch its CEO Bob Sauerberg. The reason: insufficient progress toward a digital future.

The relatively few magazines that are finding a future are thought-provoking, reader-supported ones.

The New Yorker, The Atlantic, Vanity Fair, and Wired are among those that are making the digital subscriber transition. Each offers audiences a unique set of voices and reporting. Each, arguably, has risen to our times. It’s the shelter, fashion, travel, and lifestyle magazines — beset by unlimited free digital competition — that suffer, slim, and shutter.

The lesson, again, and again: Unique voices supported by subscribers point a way forward.

Public media seems to be at a familiar crossroads.

Can public media fill the yawning vacuum of local and regional news? That question’s been on the table for almost a decade. Too many of the U.S.’s hundreds of public radio stations still act mostly as pass-throughs for national NPR programming, offering scant original reporting of their own.

Certainly, the largest public radio stations — from WBUR, WNYC, and WAMU to KPCC, KQED, and OPB — have stepped up. But that’s mainly a metro area response. We do see networked improvements, as with the public radio’s Collaborative Journalism Network and Here & Now’s innovative use of regional correspondents. But it’s not nearly enough.

Public radio news directors’ Super Regional events continue to focus on the question, with solutions so far being more piecemeal than nationally strategic.

Into this landscape, as the new head of NPR News, walks Nancy Barnes, previously the respected top editor at the Houston Chronicle and Minneapolis’ Star Tribune. Barnes replaces the #MeToo’d Michael Oreskes (who’s found new work, it seems) after another “interim” year for NPR’s 400 journalists. She brings lots of experience from newspaper companies’ own efforts to harness both the full power of local and national. She will face the familiar and tough-to-change public radio culture, though. With CEO Jarl Mohn now stepping down, more flux is ahead — flux listeners would like to see turned into more local news.

Podcasting — and the newsy podcast — is now mainstream.

Seventy-three million Americans — 26 percent of the population — listen to podcasts at least monthly, according to Edison Research. Also important, podcast listening now matches up demographically with the U.S. population. It’s a great market: Younger women love podcasts.

Just this fall, The Washington Post, having studied the Times’ breakout The Daily success, launched Post Reports.

None of this is brand new, and the Lab’s Nick Quah has covered it in all its fits and starts expertly. What is interesting is that it all seems like prologue.

Smart-speaker penetration approaches 50 percent. The voice age is almost upon us. But there’s at least one rub: News companies aren’t ready for it. Talk to the good folks behind Alexa, Google Home, and Siri, and they’ll point to the lack of news company innovation in the field. Maybe this will change in 2019 — a new distribution pipe with new ad potential.

The news isn’t just the news anymore.

Recall the days of LIFO — last in, first out? That’s how news publishers shoveled their news onto to the web, and then smartphones. In fact, too many still do, relying on cheap-to-present automated mobile phone technology. That’s why you often get the latest non-happening out of the local Planning Commission at the top of your local newspaper feed on your phone.

Check out the Times or the Post these days, though, and it is a different world. Stories of greatest import can sometimes stay atop phone screens for much of the day. And the rank order of stories isn’t based at all chronology — with real breaking news of importance elevated to the top, of course — but again on perceived (and data-measured) reader interest and news value.

The phone particularly — now the origin of two-thirds or more of news reading minutes — hasn’t just changed news presentation. It’s changed news judgment itself. Put another way, and not just by the president’s supporters: Have these “papers” inevitably been politicized?

Regional news cooperation initiatives could be a new future, or just an intriguing interim.

As core daily newspaper reporting has so badly eroded, many smaller niche news operations have surfaced, filling gaps here and there.

In 2018, we saw them tested in several regions. The Democracy Fund backed the North Carolina Local News Lab Fund. In Philly, Lenfest money continues to push together regional reporting projects, through the Philadelphia Solutions Journalism Project.

Meanwhile, Bay Area-based Reveal’s own expanding Local Labs initiative finds novel ways to share both investigative chops and audio storytelling, pushing forward stronger regional media.

“We’ve gotten San Jose and New Orleans off the ground,” Reveal CEO Christa Scharfenberg told me last week. “We’re hiring a collabs manager shortly and will then launch the process to select two more cities. Based on outcomes from these first four cities — and learning from our earlier experiments in NJ, Mississippi, Oklahoma, etc. — the plan is to build a network of labs across the country that does three things: 1) increases the capacity for and volume of local investigative reporting, 2) gives us a pipeline of local investigations to bring up to the national Reveal platform, and 3) provides us with a network to tap into for localization of our national investigations.’

These fledgling efforts show that sum of often-smaller efforts can maximize impact. Are they smart Band-Aids or a wave of the future?

A president without boundaries and an Internet without boundaries have run headlong into each other.

Meanwhile, a press weakened in number but emboldened in spirit increasingly questions those uncertain frontiers — often finding itself ensnared in No-Man’s Land.

If this year has almost seemed too much, let’s recall a little wisdom from Dr. Seuss: “Sometimes the questions are complicated and the answers are simple.”

Arc is now used by more than 30 clients operating more than 100 sites on four continents. It’s not the industry standard, but it’s not too early to call it an industry standard. But its ambitions are still nowhere near met. Now the Post is moving Arc into a new phase, talking of a connective effect that could impact the face of the business formerly known as “newspapering.”

Arc wants to be more than a technology stack — it wants to be a network.

“Arc is reaching a critical mass of most of the advertising markets in the United States, the major markets,” Shailesh Prakash, chief product and information officer for the Post, told me recently, listing off cities where it has customers — New York, Los Angeles, Chicago, Boston, Philadelphia, Dallas, Washington.

How do publishers traditionally make money? Two ways: from advertisers and from readers. Arc has plans to be a player in both for news sites around the country and around the world.

First, ads: The Post will begin testing an ad network based around Arc clients in 2019. “We’ve got this technology we call Zeus, which basically does a more effective header bidding. Does things like autoplay for video, refreshing of ads. And I think our sales team is fairly good on the programmatic side to figure out how to get more, to squeeze money.”

Can the Post convince publishers in all these different markets to let the Post power some of their advertising?Prakash thinks so. “It’s good for us because The Washington Post now has a wider network to sell to, and it’s good for them because we think we can raise their CPMs. Certainly, we raise our own CPMs over here with our technology. So can we do that for others?”

He says Zeus increased the Post’s CPM ad rates by 30 percent. What drives that growth? Speed, viewability, and optimizing programmatic bidding, says Prakash.

Next, readers: The Post’s new ambition is to become a key part of its customers’ digital consumer revenue too — that is, the digital subscription businesses of its customers. At the end of this month, starting with the New Zealand network of sites NZME, the Post will launch a paywall product Prakash calls “a CMS for subscription.”

“Everybody has a paywall, but there’s a lot of back and forth that goes on every time you want to try a particular offer,” he said. “Let’s say Mother’s Day is coming, and you want to be a retailer — put some kind of an offer out there. There’s a lot of friction between the business team that wants to do and the design team and the engineering team that has to implement it.”

Just as content management systems took a once difficult task (updating a webpage) and made it one-click easy, this new offering aims to make paywall adjustments simple to pull off on the fly — “you basically put your creative in there to set your prices and to let the offer go,” Prakash says. Want to make your sports paywall tighter than your opinion paywall and see what happens? Make traffic from Reddit unmetered for the day? Offer out-of-town visitors a different deal than locals get? Each of those could be worthy ideas, “but then it gets lost in all the usual confusion that occurs when an engineering team gets involved.” The goal is to enable rapid and frequent paywall testing, “to empower the business analysts to do their own experiments to come to an optimal configuration of what works for them. The next version of the paywall of the subscription module will be propensity-based.”

At this point, the Post plans to market this offer-making technology to Arc clients. As it develops a more sophisticated propensity modeling — intended to parallel the work of such paywall-tech incumbents like Piano Media — the Post and Arc could get more fully into the digital subscription business. It’s not hard to imagine networked, perhaps bundled, digital subscription offers, though that’s not in immediate plans. The subscriptions product will be in beta this fall and “will become generally available early winter,” says Prakash.

If this story sounds familiar, it’s because this isn’t the first time a Jeff Bezos-led company has tried to pull this trick — becoming the infrastructural underpinnings of an industry by offering products both good enough and easy enough that they fade into the (highly profitable) background. That’s the path Amazon Web Services took to becoming a profit-producing machine. And AWS followed the same path Arc wants to head down: a technology stack built first for internal use (running Amazon’s servers, running the Post’s digital publishing), developed for a “first and best customer,” and then licensed out to the world.

Not a replacement — an upgrade

As the daily newspaper world continues to reel — from print ad loss, uneven digital moneymaking, and intensifying cost pressures — the Post wants to make Arc central to the business strategies of the trade.

Post publisher Fred Ryan positions the networking moves this way: “We’re not pitching ourselves as a replacement. We’re pitching it as an upgrade. It is something that can do more than the system that many publications now have in place.” Ryan characterizes Arc’s journey: “We’ve looked at Arc as a viable business for quite some time, but I think we’re at the stage now that we could say that it is a thriving business. There’s incredible demand from not just legacy news organizations, but from digital native organizations and brands as well.”

The opportunity is to connect up the new holy trinity of digital publishing: technology that can improve the publishing process, digital advertising optimization, and digital subscription development. And Bezos’ Post wants to be at the very center of it — globally.

Will it work? Success won’t be easy, or likely quickly proven. The landscape is littered with failed and ho-hum ad networks. Publishers will have to be convinced that the digital subscription tools of The Washington Post are applicable to their own much more local businesses.

But Arc continues to have success making that pitch for other parts of publishers’ tech stack. It’s set for major growth: Prakash says that by Q1 2019, Arc “will power over 400 websites and serve over 10 billion page views per month as ongoing implementations go live.” Beyond the U.S., it currently serves top-three news and information sites in Argentina, France, Canada, New Zealand and Spain. In September, Arc announced both The Dallas Morning News and Spain’s influential PRISA Noticias, publisher of El País, as customers.

Why are publishers adopting Arc? Major chains and titles — including Bonnier Co., Tronc, Advance Local, The Boston Globe, The Philadelphia Inquirer, Canada’s Globe and Mail, Latin America’s fast-growing InfoBae, and the New Zealand Herald — cite both the economics and the Post’s deeper understanding of the news business in the digital age as drivers. Prakash says the typical savings a single metro paper might derive from switching to Arc is typically around 15 to 20 percent, but that “there are other places that they’ve worked on where we believe the savings are even closer to 60, 70 percent, simply because they have so many vendors.” (That reduction in vendor count is something publishers often cite — both for the cost savings and just less time dealing with multiple companies and focusing on integrating their various products.)

The Post has built a staff of about 110 directly supporting Arc, about 100 of them engineers. That contingent makes up about a third of the Post’s technology staff of 300, doubled percent since Bezos bought the Post and heavily reinvested heavily in both its content and technology. In early summer, says Prakash, the Post authorized 50 new hires; 15 of those are now on board.

Arc Jedi warriors with our master, the Yoda of SaaS. Great day today planning the future of publishing with the greatest innovator of our time. #innovate-we-must #disrupt-we-will ⁦@WapoEngineering⁩ ⁦@wapoarc⁩ ⁦⁦@WashPostLife⁩ pic.twitter.com/6fxre1DW0f

— Shailesh Prakash (@sprakash007) September 15, 2018

Prakash, a former Microsoft executive, began development on Arc six years ago (before Bezos’ purchase), but it emerged fairly slowly into the public eye. Today, it has its own P&L and is “slightly profitable,” he says.

The new wave of platform plays

Arc now contains 17 increasingly integrated modules. These power the newer essentials of the news trade, from newsletter creation to native app creation to recommendation engines to A/B testing to audience analytics and beyond.

Beyond economics, Arc’s market timing fits in with a common understanding arrived at as the news industry’s disruption moves beyond its adolescence: In-source or out-source. For years now, newspaper publishers have adopted that philosophy when it comes to Old Iron: Either make your press, production, and distribution facilities a business unto itself — taking in outside work, including from your print competitors — or outsource the job. If they outsource that work, they save expenses, even if their payables obligation and inflexibility increase. That’s a transition many publishers have made.

Arc then fits into that thinking’s maturation into digital. Talk to people at newspaper conferences (or even at such digital-only ones like the recently concluded Online News Association confab in Austin) and they’ve come to a shared belief: License the best cloud-based publishing platform you can afford.

That’s why Arc isn’t the only player in this new game of outsourcing.

WordPress is developing a cloud-based content management system on WordPress.com (with partners including Spirited Media and the News Revenue Hub) aimed at the needs of small-to-medium local news sites. The system would incorporate a variety of innovations developed by leading news publishers. The idea, as with Arc: provide integrated services to publishers and drive continued development more quickly and inexpensively than can be done on individually hosted instances, whether of WordPress or other platforms.

WordPress already powers many smaller news publishing sites, while its enterprise group, WordPress VIP, serves larger clients, including News Corp., Penske Media, Hachette, USA Today Sports, and VentureBeat.

Acting on similar principles, digital news veteran Merrill Brown has recently launched The News Project Inc.

“What we’re building is ‘news business in a box,’ Brown says. “It costs too much to launch and operate news sites. We are building a low-cost technology solution to encourage investment and improvement of existing news site technology and approaches to sustainability.” Brown’s new company aims to put in that box “must-have features for professional publishing — plus a suite of carefully integrated tools for monetization, content creation, distribution, customer engagement, and business-critical insights.” Brown says the company will focus primarily on small newsrooms and startups providing in-depth coverage of vertical topics and underserved communities and regions.

Brown says his for-profit company expects to announce its first major customer this week, and others as soon as next month.

Then, there are the stirrings out of the revivified Los Angeles Times.

New owner Patrick Soon-Shiong has made no secret of his belief that he can bring innovative technology to the ailing world of news publishing. In fact, that intention may drive Soon-Shiong to support a McClatchy merger with Tronc, as I reported last week. Though the Times was the first Tronc paper to implement Arc as its publishing platform early this year, Soon-Shiong has talked about replacing it with technology of his own. Expect Soon-Shiong and the Post to continue talking about how independently — or together — the two companies might work.

These are just the latest efforts at contemporary content management and digital platform building.

The industry has seen a lot of consolidation — a common feature of any declining industry — in the traditional content management veterans serving publishers. Newscycle (having absorbed DTI, Atex, Saxotech, and MediaSpan) and CCI are among the dominant traditional players in that business, and they, too, have been making a transition to cloud-based systems while continuing to enable print output. MediaSpectrum works the ad tech space for publishers.

Lee Enterprises’ Town News platform serves numerous local newspapers and TV stations. In the local TV trade, Lakana provides a platform solutions for several chains.

On the pure digital side, Vox Media’s Chorus recently announced a new initiative to license its tech. The Kinja platform, developed by Gawker and then expanded by Gizmodo Media Group, once seemed primed for licensing, but its future is clouded as parent Univision decides on the sale of the websites it powers.

Post Central?

It’s significant that the Post is now talking openly — for the first time — about its wider network ambitions. When I first began writing about Arc three years ago, the Post indicated it had no such plans. If it had done so early on, it might have scared away early customers.

As we approach 2019, though, the world has changed. Daily publishers have lost additional billions in revenue; cost cutting is down to the essentials. Fears of a dominant, Amazon-like Washington Post pale alongside the existential worries consuming newspaper company operators.

Could a bigger Arc play create a mountain of consumer readership behavioral data? More data, well used, can drive more revenue. How much of that revenue would go to the Post; how much to the Post’s Arc customers? Within just that one question, we could enumerate at least a dozen others.

There’s also a more mundane concern. How good will Arc be as a vendor, especially considering Arc’s hyper-growth? Customers I’ve talked with generally give the product good marks — and recent signees have done their reference checks. Some note hiccups in customer service, but nothing much worse than what they’d expect with any vendor. (Even the Post newsroom itself — while appreciating many of the problem-solving tools now built into Arc, including Websked — have grumbled about the time it has taken to create a new frontend system for the creation and editing of content. That system, known as Ellipsis, is now rolling out at the Post.)

Then there’s the eggs-in-one-basket concern. Sure, it’s great to eliminate multiple vendors — but doing so increases reliance on the new single one.

Can the Post, some customers wonder confidentially, continue to ramp up its customer support staff to match the speed at which it is signing up new clients? Prakash, of course, says it can, and that Bezos has provided funding to do that.

Prakash says Arc’s expansion got a thumbs-up recently from Bezos himself when he visited the company 10 days ago. “He thinks that Arc’s story is similar to AWS,” Prakash says.

You see, while this might be a somewhat effective way for us to communicate with you, lovely Nieman Lab readers, it isn’t the most effective for the breadth of the BBC’s audience. Though journalists might be trained to write in chunks like this, some readers — especially young’ins — need information that comes in a more deliberate format.

As Tristan Ferne, the lead producer for the BBC’s research and development unit, put it in a recent 2,043-word post, “Could we combine existing media to make online news more accessible, engaging and relevant to young people?” (This was just one phase of the team’s year-long quest to test new formats for storytelling; other stages involved ways to help readers comprehend news better, and new methods of personalizing information.)

Some options beyond just publishing several hundred words: A highlight in an article that reveals context when it’s clicked. A video with a scrollable transcript that speeds up or reverses the video, too. A movie-trailer-like intro, drawing readers into the setup of the story. A re-enacted text exchange between a journalist and a source live from the scene.

“With an 800-word article, there is no interaction,” Ferne said. “This audience is spending all their time in Snapchat and Twitter, where there’s constant interaction in the interface. There’s stuff to do with your thumbs: You can swipe, scroll, tap. We found that [users] expected that.”

Many news organizations are looking to move beyond text. The Guardian Mobile Innovation Lab, which operated for two years, tested an interactive podcast player, “Smarticles,” an offline news app, and live push notifications. Newsrooms like The Washington Post have been experimenting with AMP stories boosted by Google’s toolkit, similar to Snapchat or Instagram Stories. The BBC has also been working on more exchanges with its audience like in-article chat bots and improved vertical video within the app.

Ferne and his four-person team — one journalist, one designer, one user researcher, and one developer — spent two months experimenting with 12 prototypes, all intended to move the BBC beyond standard 800-word articles. They used “a bit of guerrilla testing on the streets of London near universities,” and also tested things out on a group of 26 18- to 26-year-olds (that’s Generation Z, by the way). Here’s some of what they learned (and more is here).

What worked

The Expander — This superhero-sounding item is already in use at other outlets, like The Guardian, and Ferne said it’s going to be tested on the BBC’s site starting next month. When readers see a yellow ellipsis after a key term/event/name/etc., they can click on it to pop out some more information. (Two examples in a piece about Catalonia independence: The definition of sedition, and an explainer on the Catalonia region.) The Expander and the next prototype are the only two that can reuse news items, assuming the information is still accurate and relevant.

The Incremental — (Do these all sound like superheroes or is it just me?) The audience favorite, this choose-your-own-adventure style format can indeed reuse content, but requires a heavy editor lift by creating the same content in various forms. The story is segmented with options for a video clip, short-, or long-text route for the next segment, or you can skip the next part entirely. “We think it could be a kind of longform by stealth — a way of engaging people put off by long articles or lots of sidebars and related article links,” Ferne wrote.

Fast Forward — Scrollable. Video. Synchronized. To. The. Transcript. It’s like subtitles, but actually useful for moving around in the video without missing a segment or nudging your thumb juuuuust too far to the right. Skimmable video? Yes please.

Viewpoints — This reminded me of Snapchat’s polls in the Good Luck America series, where, after diving into issues like the removal of Confederate statues, users were prompted to vote on their conclusions. For the BBC’s Viewpoints, users encounter an introduction to a topic followed by short videos of people describing their opinion, either for or against. Then the users are asked to weigh in. Imagine a Tinder-inspired Opinion section 2.0 of a news website, but with less nasty commenting and more putting-a-face-to-an-issue-ing.

What didn’t work

Atmosphere — Setting the stage with background audio when users started reading an article was too distracting for testers. “Young people are trying to navigate a difficult path between information overload and FOMO,” Ferne wrote in the post-mortem, and the addition of audio created sensory overload too.

Consequences — More buttons! This prototype invited uses to select their topical issue of choice, in an attempt at personalization or at least relatability, after reading a shorter article. Tapping on one icon would reveal a bulleted summary with the impact (consequence!) of that news item on, say, the environment; another, the economy, and so on. “People told us they want to know the impact the story has on them. But that’s hard because you don’t know what people do or who they are,” Ferne said. “By breaking it down, they can choose what they care about.” This prototype was better-received than the team had anticipated due to its simplicity in formatting — still pegged to an article — but the team decided not to advance this idea to the next round. “There was nothing fancy about it.”

Drawing In — Imagine the Star Wars opening sequence, but instead of “in a galaxy far, far away,” this prototype introduces the article. Okay, it’s not exactly Star Wars, but the way Ferne describes it conjures that image: “We tried to present a story like the intro to a movie. We started with background sound and blurry visuals and as you scrolled it came into focus and there was a bit of background video, like the scene of the story before the story came in,” he said. It flopped bigger than the Solo spinoff movie: “The idea that we could ease people into the story was wrong,” he said. “People want to know what the story is about before they decide to invest time into it.”

Messages — In a generation already fraught with anxiety, inviting users to watch a reenactment of a WhatsApp conversation between a journalist and their source in a disaster zone wasn’t exactly the biggest hit. “It was authentic and raw and captured people’s imaginations, but it was too distressing,” Ferne admitted.

The R&D team’s year-long hunt for feasible new story formats wraps up in September, though its contributions to the storytelling scene are ongoing. The Expander will begin its pilot next month and further prototypes may be rolled out after further testing, Ferne said. Other BBC teams are continuing work on voice prototypes and chatbots, and of course they have some folks thinking about the ethics of all this journalism technology too.

Now vote: Which format do you think this article should have been in, instead of 1,156 words?

Now the battle is heating up on Capitol Hill over tariffs that the Trump administration imposed on Canadian groundwood paper earlier this year.

The tariffs increase the cost of newsprint by as much as 30 to 35 percent, though the impact on publishers is highly uneven, with some chains in better shape and the dwindling independents most at risk. The predictable impacts already in motion: more newsroom layoffs, thinner (and reshaped) print products, fewer Sunday preprints, and an overall further diminishing of the value proposition newspapers are offering their readers.

The Pittsburgh Post-Gazette will reduce its printing days from seven to five next month. The Nevada Appeal in Carson City, Nevada, moves from six to just two days, while its parent cuts frequency on three adjacent papers.

Within the industry, there’s talk of “dropping Mondays” and replacing print editions with e-editions on other days as well. It looks as if newsprint tariffs will force more publishers to take the path Advance Publications first took six years ago, swapping daily print for digital.

One big question: Are these dailies much more ready in 2018 than they were in 2012 to “go digital?” Can they “transform their businesses and still keep any semblance of sufficient news-producing capacity in place?

Black swan events — like sudden oil shortages, 9/11 strikes, stock market meltdowns, volcanic eruptions, the Black Death of medieval Europe — unexpectedly and sometimes catastrophically swoop in, causing, exacerbating, or proliferating great change, as author Nicholas Taleb wrote in his bestseller The Black Swan. “Most vulnerable to such natural or man-made disasters: those individuals or companies already ailing,” he wrote. Exhibit A: the newspaper industry.

Behind this tariff battle

The genesis of this particular tariff battle — distinct from Donald Trump’s wide-ranging attack on the global trade status quo — is quite arcane. Newsprint manufacturer NORPAC brought its “newsprint dumping” case against Canadian newsprint manufacturers in August 2017, a little less than a year after private equity company One Rock Capital Partners took control of the company. It alleged that Canadian government subsidies allowed Canadian manufactures to sell paper at prices 16 percent to 65 percent lower than the market.

The Longview, a Washington–based company, is the sole complainant. Now allied against it: all the major newspaper publisher organizations, two key unions and 19 testifying bipartisan members of Congress. The tariffs imposed thus far now range up to about 22 percent, and could rise as high as 50 percent. They will stand unless at least three of four U.S. International Trade Commission (USITC) commissioners vote to overturn the tariffs at a vote scheduled for August 28.

There is no guarantee that the newspaper industry will be able to get the tariffs reversed. If they are, NORPAC could appeal; process (if the publishers lose, they can also appeal).

“You got two years of litigation,” said Paul Boyle, SVP of public policy of the News Media Alliance (NMA), the newspaper industry’s largest trade group, of the potential lingering impacts. “You’re going to see more newspapers cut pages. They’re going to cut days of delivery. They’re going to lay people off.”

NMA receives good marks from its members for its early and organized opposition to the tariffs.

“NORPAC is an outlier. It doesn’t have multiple operations. It is not doing the steps that Resolute or Kruger [two large Montreal-based paper companies] or others have been doing,” Boyle said. “They’re closing inefficient machines because the demand has fallen, given the shifts toward digital. So, this private equity firm comes in and buys the company while everybody else is managing to the lower demand.

“They’re basically trying to use current trade laws to get an advantage or improve their financial condition at a time in which every newsprint mill has been facing declining demand and had to close or convert mills. It’s had nothing to do with pricing. There’s no smoking gun, but everybody thinks that that’s the genesis of it.”

Long-time free enterprise advocate Steve Forbes agreed with that analysis, telling the Wall Street Journal, “NORPAC’s petition is an example of protectionist cronyism. Among U.S. paper producers, the company is conspicuously alone in its petition for protective tariffs.”

“It’s not pricing from Canada. It’s the overall shift in demand for newsprint,” Boyle said. “So, what the ITC is looking at is: Was there material injury by Canadian imports during the period of investigation [2016–17]? Are [U.S. newsprint manufacturers] threatened with material injuries? We try to point out that these tariffs are more of a threat to the U.S. newsprint industry than Canadian imports because newspapers are cutting back demand.”

Why would that be the case? Why would these steps that are supposed to advantage U.S. manufacturers actually hurt them?

Boyle says that’s simply a recognition of how companies behave. Publishers, he says, will find multiple ways to cut newsprint consumption and those cuts will be permanent, not to be reversed even if the tariff decision gets reversed.

“If these tariffs are removed, you’re not going back to seven days. In Ohio, the Madison Press, with 1,300 weekly circulation, just moved completely to digital. They’re not going back to print.”

It’s not just the cost hit here. There’s a parallel revenue one as well.

“What people are missing is the impact on preprints [advertising inserts],” said Tonda Rush, public policy director of the National Newspaper Association, a major group of smaller dailies and weeklies. “We’re seeing a 20 percent reduction in preprints as well.” Why would advertisers cut back on those still-lucrative-to-newspapers Sunday circulars? The cost of paper drives their own volume reduction.

That business, too, may have a hard time returning even if the tariffs get turned back.

Speeding the downward spiral

This potential black swan won’t cause the death of newspapers — at least not in the short term — but it may well deepen the incontestable downward spiral of the traditional local news business. As publishers and CEOs grapple with a major unexpected new cost of operation, they quickly look for ways to offset the new expense.

Even among those who prize their newsroom staffing as both a business and community essential, the choices are becoming fewer and fewer.

What’s at the top of their lists? Fewer pages of newsprint to print, of course. Some reconfigure the page itself, to use less paper. Others look to charge subscribers more for the pages they do print, even with the acknowledgement that further raising prices may be suicidal.

Some will accept lesser profit, a commodity narrowing over time as well, and some won’t.

The prospect of further cutting news product, coupled with new price increases, reminds me of the metaphor I’ve often used to describe the downward trajectory of the industry: “It’s like selling a 20-ounce bottle of Coke for a buck — and then three years later hawking a 10-ounce bottle for $2.”

Charging more for less seldom works in the long term for any business or industry. Besides, reported company financials tell us that many publishers have already hit the wall. They’ve more than doubled their prices and halved their products — and their circulation revenue results are, for the most part, flat at best, and in some cases, trending downward.

Make no mistake: Newsprint itself is still what makes newspaper companies possible. For most companies, more than 70 percent of all revenues in 2018 still remain print-based, with too many companies still seeing only 15 to 20 percent in digital revenue. That’s despite the unending decline of print-driven dollars.

How big an expense is newsprint? It can be the second largest expense after staff. Inland Press Association, which represents hundreds of largely non-metro press titles, says that its 2016 survey showed that newsprint made up 10.5 percent of total operating expense. Of those respondents, 75 represented papers with an average daily circulation of less than 25,000. At larger chains whose representatives I’ve spoken with, newsprint makes up between four and eight percent of expenses. What accounts for the difference between the larger and smaller papers? Chains’ volume of newsprint buying helps lower costs per ton. In addition, smaller papers may be running comparatively larger “news holes” than chains.

In any event, the hit here is uneven. For some chains, we can count the impact in low millions. For others, it will amount to $20 million or more. That could be 200 jobs within a single company. One CEO who asked for confidentiality told me that, with these tariffs, “There’s no extra revenue product being created. It’s all cost.”

For chains like Gannett, Digital First Media, and McClatchy, which maintain partial ownership in newsprint companies and have longer-standing big deals, the impact may be more manageable. For other chains, it is less so.

For the little guys, it’s both a question of cost and, potentially, of unavailability.

“The financial sustainability of the Black Press of America is now facing a catastrophic and a possible deadly impact, because of these new tariffs,” Ben Chavis, CEO of the National Newspaper Publishers Association, wrote this week. His association represents more than 200 African American publishers.

“During the past 191 years, the Black Press has survived, endured and overcome past firebombing and improvised explosive attacks, as well as other deadly manifestations of racial violence,” he wrote. “Given that newsprint and labor account for most of the cost of running a newspaper, it is easy to see how jacking up the price of newsprint by more than 30 percent could spell the difference between these publications eking out a modest profit or going out of business.”

In an era when the foundations of democracy and press meet daily new challenges in the homeland, we may encounter one of the hallmarks of non-democracies — a scarcity of the very stuff that newspaper printing depends upon. Here, even as a president assails the press nationally as the enemy of the people, and as Congress members now use the same mantra against publications like the Fresno Bee, that’s just collateral damage. Yet, it’s damage nonetheless, with the same impact of such newsprint-restricting moves in Russia and Turkey: less newsprint, less news, fewer journalists.

Publishers now find themselves even more boxed in than they were six months ago. What will that prompt? More selling by independent publishers, for sure.

Remember that 2018 marked the biggest year for the sale of newspaper properties in almost two decades. This expense hit — and future uncertainty — will only exacerbate that trend.

For those who stay in business, what will be the result?

Consider that still-continuing reliance on print for revenue. The great majority of newspaper companies have not found a model that will sustain stable newsrooms if and as they go more digital. They can, and will, cut days and shrink product, but unless they can produce mobile products that themselves produce mobile-centric subscriptions, there’s little there out there. One dirty little secret: many metros now know that more than a third of their print subscribers are 70 years or older.

Amid multiple crises, newspaper publishers and journalists struggle to keep their heads high and their notions of public mission intact. In this current drama, we may see their dignity further challenged.

“I’d be surprised, with all that is going on, if all the companies that are making newsprint today will do so tomorrow,” one CEO told me Thursday.

Tariffs create chaos for the manufacturers, even as they react to declining worldwide demand. Maybe there’s a more stable market for the pulp they process.

“Why not just make more tissue or toilet paper?” said the CEO. “That would be easier.”

The above chart refers to Americans who “often” get news from mobile or desktop/laptop, but 96 percent of Americans ever get news “online” (i.e. from a mobile device or computer).

Pew also offers up some other, not-super-surprising stats about who’s most likely to get news from mobile: young people, people of color, and Democrats (who also tend to be younger and less white). And “those with more formal education and higher incomes are more likely to get news on both mobile and desktop or laptop. Those with a college degree are more likely to often get news on mobile than those without a college degree (66 percent vs. 51 percent).”

This seems like a decent opportunity to check in on how the PC market is doing, so here you go: Desktop and laptop sales have fallen steadily since 2012, per Gartner research cited in PC Mag — but shipments actually grew for the first time since then in this year’s second quarter.

A new China Internet Report out this week was compiled jointly by 500 Startups, the South China Morning Post (SCMP), and SCMP’s China tech site Abacus, and it offers fresher numbers illustrating the reach and ambition of Chinese tech companies, the aggressive influence of the Chinese government, and the behaviors and preferences of Chinese internet (well, let’s just basically say mobile phone) users. In a country of more than 1.4 billion people and no access to U.S.-born giants like Facebook, WhatsApp, or Google (or news sites like the Alibaba-owned SCMP, or The New York Times), local companies that have played nice with authorities have been able to thrive. I’ve picked out just a few numbers from the report, around short-form and streaming video and social and messaging apps, but you can download the full set of slides for yourself here.

The top companies in several major industries, in China versus in the U.S. China Internet Report 2018, pg. 4.

Three companies dominate the internet space, from media to gaming, financial technologies to artificial intelligence, education to autonomous vehicles. There is no online sphere where Baidu (you may know it best for its search engine), Alibaba (China’s e-commerce and technology behemoth), and Tencent (which controls all-purpose messaging service WeChat) aren’t involved, whether that’s by building their own products directly or acquiring or investing in other companies, including many well-known companies outside mainland China: Uber and Lyft, Snap, Cloudfare, Taboola, the list goes on. You can filter through this full list by company and sector over at Abacus.

Most Chinese smartphone users are watching shortform video on various short video apps. Time spent watching shortform video grew by 323 percent between December 2016 and December 2017 (as a percentage of total time spent on mobile internet activity). Messaging is the most prevalent mobile internet activity, but the percentage of mobile internet time spent there actually declined last year, according to the report. The same three major companies above also own the top platforms in the online (not shortform) video space.

MAU for the top four shortform video apps in China. China Internet Report 2018, pg. 31.

An estimated 600 million people in China “are actively using short video apps” as of March of this year. Four main apps dominate that ecosystem, three of them owned by the personalized news app Toutiao. If you haven’t experienced any of these apps, know that a lot of the videos on the platforms are the familiar internet fare of people livestreaming themselves doing stuff. Kuaishou, the most popular shortform video app in China, has risen to the top in large part because of its focus on growing a user base beyond China’s largest “top tier” cities like Beijing and Shanghai. Despite the dominance of a few apps, competition in the livestreaming video space is fierce. One of my favorite illustrations of this (U.S. on the left, China on the right):

(Sanchez) Wang Jiapeng's #ISOJ2017 slide shows the different live streaming apps in China, compared to US. pic.twitter.com/OW3v6bQ4EY

— Robert Hernandez (@webjournalist) April 21, 2017

Most people in China get their online news through two platforms, Tencent News and Toutiao. An average user spent more than 73 minutes per day in Toutiao as of December 2017. Toutiao, interestingly, is starting to publish content from BuzzFeed, but overall I’m not totally sure about this “news” classification — most of what I’ve gotten when I check out my feed on Toutiao recently has been video of people making sculptures out of packets of instant ramen or fantasy World Cup lineup montages.

Toutiao and Tencent are the top apps for online news in China. China Internet Report 2018, pg. 34.

Tencent’s WeChat, though, is the undisputed ruler among mobile apps in China, now with around 1.04 billion monthly active users. Weibo, a Twitter-like platform that’s grown rapidly in the past year, has around 411 million monthly active users.

Many of these companies are in a delicate with the Chinese government over censorship of content on their platforms: Regulators ordered Toutiao to shut down its joke-sharing app over “inappropriate content,” which led to the company’s founder issuing a public apology and pledging to hire 4,000 additional in-house content moderators, bringing its total number to 10,000 (Facebook, with a much larger global user base, will have around 8,750 after a hiring spree). A top shortform video app, Kuaishou, was most recently in trouble for allowing content featuring teen moms. Potentially politically charged content regularly disappears, searches for key terms are disabled, and influential users are blocked on WeChat and Weibo.

An estimated 78 million rural internet users access news from three major news apps at least once a month. Internet penetration in rural areas of China had grown to 35 percent as of 2017, up from just seven percent a decade before.

The internet’s impact on rural China. China Internet Report 2018, pg. 16.

Had GateHouse devoured yet another storied publisher? No: It was a FloridaPolitics.com April Fool’s prank played out to a near-incredulous audience. Mike Reed, the CEO of the New Media Investment Group that runs GateHouse, spent much of his April 1 responding to the confusion among the company’s shareholders and employees.

The news wasn’t real, but it was believable: GateHouse’s acquisition appetite has seemed insatiable. The company now owns more daily titles than any other U.S. publisher, or for that matter, any newspaper publisher anywhere. In total, it owns 146 dailies — more than 10 percent of the U.S. total. That total itself may amaze some, though it well could be doubled, creating the first real national roll-up of U.S. dailies. In fact, with Patrick Soon-Shiong finally closing Monday on his deal to buy the Los Angeles Times and San Diego Union-Tribune from Tronc, the rest of Tronc’s properties could soon hit the market, accelerating more consolidation. Could GateHouse be interested in any of those properties? GateHouse has long eschewed larger metro properties, so the company is highly unlikely to bid for the new Tronc overall. Yet, if Tronc’s Sun-Sentinel in south Florida were to be sold singly, regional efficiencies could drive a GateHouse deal. In fact, GateHouse is one of the very few companies mentioned in any conversation about newspaper buying. The reason is obvious: The pace of GateHouse buys just this year have been head-turning.

Twelve days after April Fool’s Day, in fact, GateHouse announced it was buying another small metro paper, the Akron Beacon-Journal, for $16 million. A couple of weeks before that, GateHouse had outbid both Tronc and Gannett, and at least one local billionaire, to buy the Palm Beach Post from Cox Media for $49.25 million. A few weeks before that, it had acquired the Austin American-Statesman, which Cox had put up for auction in late fall. In that deal, it had emerged as the victor over Texas daily publisher Hearst Newspapers, paying $47.5 million.

Even within the last month, GateHouse has added still another daily: the 150-year-old Pueblo (CO) Chieftain, which had been locally owned.

GateHouse emerged out of bankruptcy just five years ago, but under the leadership of Mike Reed and COO Kirk Davis, it’s rapidly moved up the food chain. Once a seeming hodgepodge of smaller community dailies, it has more recently claimed smaller metro turf — Providence, Columbus, and Worcester, in addition to Austin, Palm Beach, and Akron. And it has no plans to stop buying. In early spring, the company’s board authorized the further sale of $300 million in new shares, to be used to fuel more buying.

In a recent, wide-ranging two-hour interview, I spoke with with Mike Reed, the financial engineer of the company’s growth. Reed, who’s worked in the industry since 1988, has rarely spoken publicly about GateHouse’s stunning growth or the strategy fueling it.

Could GateHouse outrun Gannett, the country’s leading daily publisher by revenue, building from 150 properties to 300 or 400? “It could. It could,” he told me.

In fact, amid all the tumult of a daily newspaper industry gasping for breath, GateHouse seems like a company with confidence and a plan, as its peers struggle mightily.

Gannett is struggling to turn around its image as a fading leader, contending with poor financial results and orchestrating a major shake-up of its business side coast to coast.

Tronc has just halved itself with the sale of California dailies, and is now likely test the market for the rest of the company. Sources say that shopping has quietly begun, with Rupert Murdoch passing on a Tronc buy. Patrick Soon-Shiong, himself still a 25-percent owner of Tronc, has been flexing his Tronc muscles, declaring the silliness of the Tronc name.

Then, there’s much-vilified Digital First Media. DFM remains in limbo, though its comfort level with its status quo may be newly challenged. On Monday, the Colorado Sun, featuring some of the Denver Post’s best talent, announced its digital startup plans and a couple of years of funding. That’s competition for readers that DFM isn’t used to — and competition that could spread to other markets. Two top DFM executives arrived in Denver Tuesday afternoon, at least in part to address the Post staff.

As his peers’ missteps have been quite public, Reed has made GateHouse (under the ticker symbol of NEWM) almost has valuable as Gannett. The company passed the billion-dollar market cap milestone last week. GateHouse now standing just about $100 million behind the longtime U.S. local newspaper leader. That’s despite the fact that Gannett remains a far larger company, with revenues more than double those of GateHouse.

Reed told me that he is aiming for his company to be revenue-growth neutral (on the basis of same properties, not counting new acquisitions) in 2019. That would be a major milestone, as newspaper companies (with the recent exception of The New York Times) have seen largely negative revenue numbers for a decade.

Reed cites UpCurve, GateHouse’s small- and medium-sized enterprise services division, as foremost in his growth strategy. UpCurve moves GateHouse beyond its newspaper advertising roots, as it sells financing, HR and IT services. (My talk about it with Reed is broken out as a separate post, here.) He also point to events and digital subscription strategies as the means to get the company to a financial turning point.

Reed knows that GateHouse engenders suspicion among its peers. In 2017, its revenue was down almost six percent compared to 2016. Its earnings report for the first quarter of 2018 showed a decline of 4.5 percent compared to the same time last year. Many in the industry suspect that GateHouse is bent on “buying revenues in big chunks while using the new cash flow to prop up earnings,” one financial source suggested to me recently. Some have put GateHouse in the same bucket as Digital First Media, especially given that it’s managed by a private equity company, Fortress Investment Group, through parent company New Investment Media Group.

It’s a characterization that Reed and other top GateHouse execs decry. For starters, GateHouse isn’t private equity–majority-owned the way Digital First Media is (Alden Global Capital controls it with a 50.1 percent stake). Though Fortress, bought last year by Softbank, manages GateHouse, it only owns about 1 percent of the company. Institutional funds, including pension funds, hold major stakes.

Reed point to a number of executive hires over the last year as evidence that GateHouse — unlike Alden’s DFM — doesn’t have a burn-the-furniture, maximize profit, and turn-off-the-lights strategy. As Alden has become the bête noire of the business, GateHouse aims to convince the industry that it’s not of the same ilk.

“Content is our number-one priority,” Reed told me. But he’s unwilling to publicly commit to any new level of funding or staffing to meet that goal.

GateHouse has also had its share of struggles with the News Guild, which represents more than 30 of its newsrooms, and is organizing efforts to unionize more. Last year, the company agreed to its first “global” contract with the Guild, providing two one-year pay increases. Long-standing issues, though, persist. GateHouse believes it needs more flexible work rules, given the pace of change in the industry and wants to reward higher-achieving employees with pay increases more based on merit, and still finds itself at loggerheads with the Guild on those issues.

The company has made efficiency, and cost-cutting through regional and national synergy, a hallmark — and that’s included major cuts at some of the properties it’s bought. How smartly or bluntly has it wielded that cost-cutting, especially in newsrooms, is a tough question to answer conclusively, but an important one. Clearly, though, the company that began as a roll-up consolidator, and whose corporate staff looked more like a holding company than a strategy-driven operating one, appears to be building structure.

In March, GateHouse hired digital product pioneer Jeff Moriarty as its first digital business head. Last year, it hired Denise Robbins as SVP of consumer marketing, from The New York Times. And last week, GateHouse announced that Robbins would head a new consumer marketing agency that, over time, will focus beyond digital subscriptions on “products and services including apps, podcasts, specialty newsletters, e-editions and other digital products across the entire enterprise.”

Those executives joined Jason Taylor, GateHouse’s president for western U.S. publishing operations and the leader of the company’s events business; Peter Newton, a six-year veteran of the company and CEO of its UpCurve brand; and SVP of news Bill Church, who heads GateHouse’s production facility in Austin. (Church won industry notice and cred when, as editor of GateHouse’s Sarasota Herald-Tribune, he refused to participate in journalistically unethical “investigative work” meant to aid Sheldon Adelson.) And Kirk Davis, CEO of GateHouse Media, has long been Reed’s partner in the reinvention.

I spoke with Mike Reed about it all. Our conversation, edited for length and clarity, is below.

How GateHouse picks markets

Could GateHouse soon own a third of the U.S. press?

What’s GateHouse? What’s NEWM?

Mike Reed’s theory of the case

Reinvestment and growth

The math on crossover

GateHouse’s new executive ranks

We’re not DFM

The Adelson affair

In South Korea, nearly all of its population — 96 percent — access the internet at least “occasionally,” or own a smartphone. In the sub-Saharan African region, median internet use is below half the population — 41 percent — across six countries.

In India and Japan, men were much more likely than women to access the internet. The gap also persisted in Tunisia, Ghana, Kenya, Nigeria, Tanzania and Senegal.

The rise of internet access (and smartphone ownership), however, has been rapid in the past couple of years, specifically in countries with developing economies surveyed by Pew.

Individuals with higher incomes were more likely to own a smartphone. In Peru, for instance, about 60 percent of those reporting higher incomes said they owned a smartphone, while 24 percent of those with lower incomes said they owned a smartphone. But, the report points out, “significant, double-digit divides by income on smartphone ownership exist in all the other countries surveyed, with the exception of Lebanon.”

A median of 75 percent of people in the countries Pew surveyed either used the internet “occasionally” or owned a smartphone (which according to Pew, reasonably, means they use the internet). At least 75 percent of adults in the countries Pew surveyed said they owned some sort of mobile phone, but globally, fewer owned smartphones. The differences in smartphone ownership between countries with developing economies and countries with developed economies are significant:

In 12 of the 22 emerging and developing nations surveyed, fewer than 50 percent report owning a smartphone. And in India and Tanzania, fewer than one-quarter report owning smartphones, the lowest among the countries surveyed.

Among emerging and developing nations, Middle Eastern countries in particular have high rates of smartphone ownership, including 80 percent in Lebanon and 76 percent in Jordan.

Similar to internet use, smartphone ownership is lowest in sub-Saharan Africa, where a median of 33 percent report owning a smartphone.

Asia-Pacific (53 percent) and Latin America (54 percent) are closer to Europe (70 percent) in median smartphone ownership than they are to sub-Saharan Africa.

Age and education are also distinguishing factors. In Greece, for instance, 93 percent of adults surveyed between 18 and 36 said they owned a smartphone, but only 38 percent of those 37 or older said they did. (Greece also has a 40-percent gap in smartphone ownership between those who’ve received less education and those with more.)

Like many Arab countries, Lebanon and Jordan are experiencing a “youth bulge”: The median age is 31 in Lebanon and 23 in Jordan. The age differences in these countries aren’t as drastic as in Germany and Japan – a 34-point gap in Lebanon and 8 points in Jordan – but the large youth population contributes to high social media use.

The report highlights unevenness in social media use — and growth of social media use — around the world. Some larger, developed economies had notably low levels of social media use: In Germany, only 46 percent of the population use social media, though far more people in those countries own smartphones. Meanwhile, social media use has risen rapidly in other countries from 2015 through last year:

In the Philippines, for example, while overall levels of social media use stand at about half of the population, among internet users, that figure is closer to nine-in-ten (88 percent).

And in Jordan, an astounding 94 percent of internet users are also on social networking sites.

Only 49 percent of Lebanese adults used social media in 2015; in 2017 that number is 72 percent.

Similarly, just two years ago only 51 percent of South Korean adults were on social media, compared with almost 69 percent in 2017.

These findings were based on a survey conducted in 37 countries in early 2017, with 40,448 respondents, and surveys conducted in the U.S. in 2018 with 2,002 people and in China in 2016 with 3,154 people. The full report with findings and analyses is available here.

IAB’s study — which surveyed 4,200 people in 21 countries around the world — found 71 percent said they were extremely or probably likely to watch matches live on TV, versus 65 percent online.

In some countries, digital streaming actually beat TV — including in China (+6 percentage points), Russia (+7), Saudi Arabia (+2), United Arab Emirates (+1), and even the United States (+1). (American soccer fans have lots of unused rooting capacity ready to assign to one of the 32 countries that actually qualified for the finals.) The most disproportionately pro-TV countries are in Europe: Germany, Italy, Sweden, and Hungary.

The trend is also clear if you look at devices: TVs barely edge out smartphones as a platform where fans will watch games, 39 to 36 percent. (“Smart TV” got 29 percent, but it isn’t clear in the study whether that meant the “TV” respondents all meant, well, dumb TVs.)

World Cup data is only a small part of the overall report, which looks at live video habits worldwide. In all, 67 percent of those surveyed said they had consumed live video content on one platform or another, and 47 percent said they were streaming more live video today than a year ago.

Overall, both video and live video consumption are somewhat higher in the global south than in North America and Europe. Frequency of digital video consumption was highest in South America (where 80 percent say they watch online video at least daily); live digital video is a big hit in the Middle East (90 percent say they’ve watched a livestream, versus 67 percent in North America).

For streaming video content shorter than 30 minutes, smartphones and tablets were more popular than other devices. For video longer than 30 minutes, more people turned to smart TVs, OTT devices, gaming consoles, and their computers:

Globally, news wasn’t anywhere near the top most popular categories of live video content people were streaming. The top type of content unsurprisingly was TV shows. Live news video makes a respectable showing — but more people watch esports and Let’s Play streamers, for heaven’s sake.

Live video content preferences, though, varied by country. Among the South American respondents, live sports video was more popular, and in Saudi Arabia and UAE, live news video and video by family and friends were popular. When people more often stream live video varied country to country as well. In China, for instance, evenings are an active time:

This is an IAB study, so of course questions covered consumer behavior and attitudes towards advertising during live video. More video consumers globally would rather watch free video with ads inserted than pay for a subscription service — though this, too, varies by region, with MENA users unusually interested in pay-per-video streams:

The IAB conducted the 29-question survey in April and May of this year; the full list of markets covered is Australia, Brazil, Canada, Chile, China, Colombia, Germany, Hungary, Ireland, Italy, Mexico, Peru, Russia, Saudi Arabia, South Africa, Sweden, Switzerland, Turkey, the United Kingdom, the United Arab Emirates, and the United States. You can read the full report here.

But that budget threat turned out to be just that — CPB got its money. And according to this year’s State of the Media Report update from Pew, American public broadcasting is…actually doing pretty okay.

In public radio, the average weekly broadcast audiences of the top 20 NPR member stations continue to grow — from 8.7 million in 2015 to 11.2 million last year.

NPR’s mobile strategy seems to be working too: It’s seen monthly sessions in the NPR News and NPR One apps (which launched in 2014) spike over the past two years. The NPR News app saw on average more than 14 million sessions a month last year.

Another nugget of good news: Funding for public radio stations is up slightly (at least in 2016, the last year data is available), with increases in both individual gift giving and underwriting. Membership levels at news-oriented stations are also up, if only slightly.

On the TV side, Pew offers less data but did note that the PBS NewsHour grew its audience about 17 percent from 2016 to 2017.

Pew also released an updated state-of-the-union for digital news Wednesday. To no one’s surprise, mobile ad revenue (including on non-news websites) continues to soar, rising from about $46 billion to $61 billion last year. Mobile ad revenue is now double desktop ad revenue in the U.S.

Pew data found that 45 percent of news consumers get their news via mobile device “often,” with another 29 percent doing so “sometimes.” Meanwhile, only 35 percent of news consumers “often” got their news from desktop, 30 percent “sometimes.” That’s intuitive, as mobile is much easier to access on a more frequent basis, on the bus, at lunch, or in the bathroom.

Meanwhile, for the largest digital-native outlets, average monthly unique visitors to their websites actually dropped a bit in 2017 — more evidence of consumer shifts toward distributed content and alternative platforms.

For more detail into the numbers, read the digital news report here and the public broadcasting report here.

For those who don’t know it, Meeker — formerly of Morgan Stanley, at VC firm Kleiner Perkins since late 2010 — each year produces a curated set of data reflecting what she sees as the major trends in Internet usage and growth. It may be the only slide deck that qualifies as an event unto itself.

And a chunk from the 2014 version:

What’s useful about Meeker’s deck is that its core data serves as a punctuation mark on some big, ongoing trends. The kind of trends we all know are happening, but whose annual rate of progress can be hard to judge. Like, say, the continued demise of print.

The Meeker slide that always interests me most is the one where she shows how American attention is divided among various forms of media — and how that division lines up with where advertising dollars go. How much of our attention goes to television, say, versus how much of our advertising goes there?

It’s not absolute dogma that the two — audience attention and advertising dollars — will always be equal. But it makes sense that they would tend toward parity. More people listening to the radio should lead to more companies advertising on the radio, or vice versa.

So let’s travel back in time. Here’s Meeker’s chart for 2011:

The two things that jump out at me: Print gets a lot more advertising than it gets attention. And mobile is the opposite. You’d think that would equalize with time.

Here’s 2012:

Equalization! Or at least the path to equalization, proportionately. Print loses attention, but loses ad dollars a bit more quickly; mobile gains attention, but gains ad dollars a bit more quickly.

Here’s 2013:

The print story remains the same: down in attention and in ad dollars. But note there’s still a wide gap between the two — print is still getting far more ad dollars than its hold on American attention would seem to “deserve” in 2013.

Here’s 2014:

The mobile growth everyone anticipated is happening — moving from 4 percent to 8 percent in 12 months’ time. And print continues to lose both time spent and revenue.

Here’s 2015:

On the positive side, print’s share of attention remained steady at 4 percent. The ad-side trend, though, is unchanged — down another two points from 18 percent to 16 percent. And note another huge jump for mobile advertising, from 8 percent to 12 percent.

Here’s 2016:

Take a look at mobile! Up from 12 to 21 percent of ad revenue in one year. By 2016, we were spending about 30 percent more time looking at media on our phones than on our laptops and desktops. And mobile still had room to grow — though given that the vast majority of new digital ad revenue goes to Google or Facebook, that new money wouldn’t be going to publishers.

And then there’s print — steady in time spent for the third straight year, but another big drop in ad dollars, from 16 to 12 percent. That lines up with the evidence that the decline in newspaper print advertising accelerated in a big way in 2016.

Finally, here’s the newest slide that debuted today, for 2017 (it’s slide 96):

By this point, it’s pretty remarkable that print has been steady at 4 percent since 2014. That fact has informed a lot of newspaper pricing strategy in the past half-decade or so: The remaining people consuming news in print tend to really like it and have multi-decade habits built up. They don’t want to change.

(You’ll note, though, that when the numbers get that small, you’d need roughly a 25 percent decline in attention share to drop from 4 percent to 3 percent. So steady doesn’t necessarily mean steady — it just means a pace of decline lower than that. And of course we don’t know if any of those 4 percents are really 3.51 percent or 4.49 percent, either.)

But over that same time period, the share of ad dollars going to print has been cut in half — from 18 percent to 9 percent. In other words, we are definitely seeing what I wrote back in 2013: Over time, attention and ad dollars will equalize. Dollars follow eyeballs wherever they go.

So the good news is print’s hold on its remaining customers has been pretty stable. The bad news is that, if attention and ad dollars really do equalize, print ad dollars will probably get cut in half again — even with that loyal customer base.

Meanwhile, the party continues over in Mobile Land, where usage has now blown well past the desktop Internet. It took until 2016 for all of digital (desktop + mobile) to pass TV in total ad dollars; it wouldn’t be shocking for mobile alone to pass TV this year or next.

Let me wrap up by copying what I wrote five years ago, since the overarching trends haven’t really changed since then:

Print advertising is not coming back. It will fall further. Substantially further. All newspaper planning for the coming few years needs to reckon with that basic fact.

Mobile continues its rocket rise, and there’s still lots of room for ad revenue growth. And now it’s even eating away at the Great American Time Suck, television. Mobile is eating the world, and most news organizations make only a pittance off it.

There’s lots more interesting stuff in Meeker’s complete deck. A few nuggets that stood out to me at first glance:

— Slide 6: Global smartphone shipments aren’t growing any more. The low-hanging fruit in the West has largely been picked, and people are keeping their devices longer.

— Slide 11: Americans spent 2.7 hours a day consuming digital media (in one form or another) in 2008. In 2017, that number was 5.9 hours.

— Slide 18: When surveyed, people in 16 countries (including the U.S., U.K., and Canada) said that roughly 60 percent of their most recent “everyday transactions” took place in some digital form rather than in an actual store. (The not-so-slow decline of brick-and-mortar retail removes a key source of the ad dollars that supported local news in the last century — among many other things, of course.)

— Slide 69: E-commerce advertising revenue is rising in a big way at Google, Facebook, and Amazon. (Amazon’s growth here — these are ads paid for by someone else appearing on Amazon listing pages we’re talking about — has been huge, doubling year over year)

— Slide 76: Advertisers say they are valuing “customer lifetime value” more and more as a metric of their ad spend. That, in theory at least, could be decent news for publishers, which are at a major disadvantage vs. the platforms when it comes to transactional advertising, but have a stronger argument to make when it comes to brand-building-oriented, long-term value.)

— Slide 81: The New York Times’ digital subscription growth rate (43 percent in 2017) is close to the growth rate at Spotify (48 percent) and ahead of Netflix (25 percent), Dropbox (25 percent), and Playstation Plus (30 percent). (Of course, they’re all growing off of much larger existing bases.)

— Slide 84: Total news-consuming sessions on mobile in the U.S. increased by 20 percent from 2016 to 2017 (thanks, Donald). Shopping and music/entertainment media grew at a higher rate; games and “lifestyle” sessions actually shrank YOY.

— Slide 97: Ad dollars in digital roughly doubled just from 2014 to 2017 in the U.S. ($43 billion to $88 billion).

— There’s also a fascinating section near the end all about the Chinese Internet, which often feels like an entire other universe from the U.S./Europe Internet. The growth is huge; today 9 of the 20 largest Internet companies by market cap are Chinese (led by Alibaba and Tencent).

(Reminder: Starting in mid-October, Facebook began tweaking the News Feed algorithm away from Page content — a.k.a. many publishers — and toward “meaningful interactions.” Some publishers have experienced such a significant drop in traffic that it contributed to the shuttering of the site or layoffs. But many of those in those affected buckets relied on Facebook’s algorithm as the core of their business model. Not the sturdiest choice.)

New data from Chartbeat shows that, while Facebook traffic has been (unsurprisingly) declining since the October 2017 change, both Google Search and direct traffic have been steadily climbing. (Note: we should clarify that this is in regards to mobile readers “arriving to a site (website or app) directly to the homepage or section front” more frequently than social platforms like Facebook.)

This less-traffic-from-Facebook trend goes beyond mobile, though. Facebook’s referral traffic across all devices has dipped below direct traffic only on mobile.

Google Chrome recommendations on mobile have been growing significantly, as Chartbeat’s CEO explained earlier this spring. It’s now the fourth largest referrer in Chartbeat’s data, after only Google Search, Facebook, and Twitter, ballooning 2,100 percent in 2017.

Basically, mobile traffic to news sites doesn’t have to dry up because Facebook is shifting its users’ attention elsewhere. But now the stakes of taming multiple algorithmic beasts at once is even higher.

Even as much of the company’s turbulence looks to be clearing, new questions are emerging about who will next lead the big metro chain.

Softbank and Apollo Global Management have reportedly expressed real interest in buying the company, but much more likely is the reemergence of one of the many characters who have have upended business as usual in the roiled daily newspaper industry. Tronc’s newspapers, staff, and readers may soon be subject to a whole new round of strategic rethinks and re-deployments.

Let’s first focus on the potential impact of Michael Ferro’s sale of his dominating Merrick Media 25 percent share in Tronc. That surprising sale prompted all kinds of speculation about the future, including mine.

The sale looked like a homecoming story: A McCormick had bought back into the Chicago Tribune’s parent company, Tronc. Sargent McCormick, described as a distant relation of the kin of Colonel Robert McCormick — whose tenure defined the Trib historically — was the buyer.

In the releases, Sargent McCormick’s name was prominent as Michael Ferro pulled his latest (final?) rabbit out of the hat ten days ago. As we learned that McCormick Media had paid an outsized 34 percent premium of $23 a share for the 25.4 percent stake in Tronc, it was a storyline that made historical sense: Despite all the tribulations of the Tribune Company, Tribune Publishing, and Tronc, the old Trib was returning to the warm embrace of Col. Robert McCormick’s heirs, safeguarding the civic asset.

But since then, here’s been no interview published in the Chicago Tribune itself about its new hometown buyer. So far, Sargent McCormick — a distant relative in the McCormick family, but the one who’s writing a family history of its International Harvester company roots of fortune — has apparently only talked to Lynne Marek of Crains Chicago Business.

McCormick told Marek he hopes the Trib can “capture, reclaim its notions of truth and trustworthiness.” But “about halfway through his interview…McCormick expressed surprise that his comments might be used in a news report. Earlier in the interview, he said in a lighthearted tone that he was finding out, presumably because of the media interest swirling around his proposed Tronc stake purchase, that reporters are like ‘spies.'” That may have been a joke, or it may raise questions about his understanding of the major stake in a major metro chain he just bought.

He said his family is “very excited” about the transaction and that he was sorry he couldn’t talk more about it yet. When he has “permission,” he said he’d be happy to be more transparent about the deal and any partners.

The partners, too, have been quiet publicly.

“That John Lynch?”

Those with good memories of the recent shifting sands of newspaper ownership will remember one of those partner names: John Lynch. As word of his involvement in the “McCormick Media” deal has increased, people have asked, “That John Lynch?” (This deal’s John Lynch is the father of John Lynch, the San Francisco 49ers general manager.)

In fact, Lynch is the first named buyer in the purchase agreement that Merrick Media filed with the Securities and Exchange Commission: John Lynch, Sargent McCormick, and Clancy Woods. Lynch served as developer Doug Manchester’s right-hand man for much of the time that Manchester owned the San Diego Union-Tribune; in 2015, Manchester sold the paper to Tribune Publishing, which a year later became Tronc. (More recently, Manchester, on the brink of being nominated as Trump’s ambassador to the Bahamas, saw his appointment derailed by sexual harassment claims.)

Following those allegations, current Union-Tribune editor-in-chief and publisher Jeff Light said in a story published in the U-T: “My take on the Manchester years was that he hired some people of low competence, and in some cases low character, I think, who damaged the U-T and damaged Manchester’s reputation and squandered the business opportunity. I will say that when they were gone, my experience dealing with him directly, I did not have any problems with him and I did not see him as some sort of Weinstein-like figure in any way.”

During that Manchester/Lynch tenure, the U-T (which ownership renamed U-T San Diego, a nod to its digital future, a move that Tribune Publishing later reversed) saw controversy after controversy. “Papa Doug,” as he insisted most people (even his peers) call him, cut quite a trail.

Ownership saw a thin line between Manchester’s major local development interests and the paper’s editorial mission. Concludes one observer, “It put a stain on the U-T.”

As CEO from 2011 to 2014, Lynch — who has Chicago roots — led efforts to transform the paper. He led a brief but big effort at news video, which won a fair amount of attention in its short life, in the press press.

John Lynch has earned a mixed reputation in San Diego. Even as he can point to career achievements, his own money management woes have been written about (here’s Lynch’s response).

“McCormick needs to do his homework,” an executive at one of the companies with which Lynch has been associated told me. “If they are trusting John, then they’re making a big mistake.”

Reached in San Diego on Monday, Lynch replied to me that “we are not talking to the press until we go through regulatory issues.” That regulatory review isn’t likely to stop the deal, for which the purchase agreement specifies a May 15 deadline.

My efforts to reach Sargent McCormick have been unsuccessful. Tronc declined to comment.

Consequently, we’re left with more questions than answers. Though early attention focused on the Chicago Tribune itself, Lynch’s involvement suggests a wider interest in all of Tronc’s chain properties, post–Soon-Shiong sale.

In the year before Doug Manchester sold the U-T to Tribune, Manchester, Lynch, and Soon-Shiong tried to buy more newspapers. First, they set their sights on the Orange County Register, then failing and later to be bought by Digital First Media. Unable to make that deal work, say sources, they aimed for bigger prey. The buying effort failed, and Manchester became a seller rather than a buyer.

Given that history, Lynch may well want to run the chain. If so, we’ll probably see a new direction for Tronc (if it keeps that name). What would happen to the recent transformation strategies headed by Tim Knight and to the executive corps built over the last 18 months? Would we see a new Tronc pivot to digital video, given the broadcast backgrounds of Lynch and Woods? It’s anyone’s guess, as, predictably, CEO Justin Dearborn would be likely to exit quickly.

How likely a scenario is that? McCormick Media is buying the Ferro-controlled 25.4 percent share in Tronc. That stake has meant control of the company in every aspect of the business. Ferro had controlled the board; according to the documents filed so far, it’s unclear whether McCormick Media would assume a similar dominance. Even after Soon-Shiong buys the southern California newspapers, he’ll have a 24 percent stake in Tronc himself. Together, they’d certainly have an effective majority.

Of course, the buyers may have other plans. They could sell some Tronc properties — or become buyers, presumably fueled by McCormick money.

Those plans, though, are unlikely to include the two big names mentioned in recent press reports. You may have read those stories about Softbank and Apollo Global Management lusting after Tronc. In those reports, it hasn’t been clear whether that reported interest would kick in before or after the Merrick Media/McCormick deal. Sources close to the action tell me they haven’t seen any displays of real interest, though it’s possible non-disclosure agreements have been signed.

In addition, there’s the financial reality. Apollo’s deal to buy Digital First Media three years ago foundered on a valuation that was less than half of what McCormick Media is paying Ferro. So it seems unlikely that any other buyer would displace this deal.

Further, there’s the non-monetary rationale beyond a mere$100 million in profits that Merrick investors will take home.

Merrick’s investors want out — and want separation from their investment champion Ferro. The who’s-who of Chicago’s elite has made a good money of money investing with Ferro over the years, from Merge Healthcare to Tronc, but the recent sexual harassment charges against him have unnerved them.

One source said Ferro is “holed up in Florida.” If he is, it’s with the $5 million he received in January as part of a new “consulting” contract. His next payment (the contract continues at this point) is due in January 2019.

The pain of “transition”

In Los Angeles, Soon-Shiong had been expected to close his close-to-$600 million deal for the Los Angeles Times and San Diego Union-Tribune by now. That expectation had been set by Tronc itself and others involved in the agreement.

Sources say that the deal will soon close and that it’s been held up due to the nitty-gritty of a transition services agreement that has stalled final signatures.

In short, Soon-Shiong wants to emerge from the signing as independent of Michael Ferro and Tronc as he can. As he told staff about the company’s planned major move to a modern, built-for-digital media office park, he wants to establish the Times as a new, revitalized independent voice.

It will be a massive transition away from Tronc’s technology, affecting ad, circulation, content, financial, human resources, and other platforms. Almost all of Tronc’s top executives go with the mothership.

Soon-Shiong continues to meet confidentially with a number of the news industry’s top change agents. These publishers share what has worked for them and what hasn’t. It’s still unclear whether he’ll act as his own publisher, but he understands what a big statement his hiring of the Times’ next editor will make.

Could the Times rocket from digital laggard to the national news elite, as Jeff Bezos has made possible with the Washington Post? It’s possible, with a lot of lost (Tribune Publishing, Tronc) time to make up. Stealing away a top editor would make that statement — and could be the first step in attracting a new generation of talent to LA.

In any event, the Tronc, or post-Tronc story, no longer threatens to disappear, but rather to divide into two 2018 storylines to follow.

Michael Ferro loved nothing better than entertaining a room of people with his wit and wisdom. Many of those entertained tell stories about how no one else had to even worry about coming up with their own tales; they only had to sit back and take it in.

Late Friday, ironically just after his beloved stock market close, Mr. Ferro’s many associates and former associates found themselves shocked by his passing from the news publishing world. As word spread rapidly across Mr. Ferro’s most prized means of transformation, the Internet, many tweeted and shared their wonder of a world shaken by the early departure of Mr. Ferro from his earthly publishing delights.

“To whom will we now turn to enliven the continuing conflagration that is the American newspaper industry,” one queried near audibly. “What will Tronc be without him!”

“I hope we won’t forget Michael Ferro,” said media analyst Ken Doctor, who had tracked in voluminous detail the short but spirited 26-month run of Mr. Ferro.

“Call it the audacity of cupidity,” he observed. “In an industry where the pace of change is so remarkable, I hope his name doesn’t disappear into the dust like his most important recent predecessors — like Sam Zell, Doug Manchester, Aaron Kushner, or those of an earlier age like Canada’s Conrad Black, Australia’s Kerry Packer, and the U.K.’s Robert Maxwell.”

In fact, even as Mr. Ferro departs the scene, he had been eclipsed by the attention recently showered on Alden Global Capital’s Heath Freeman, who runs Digital First Media.

The story of how Mr. Ferro mesmerized his peers by turning a minority stake in Tribune Publishing into an industry-shaking tens of millions of dollars in profit — even as his company and the industry cratered — is a unique one. In his final days, he sold his stake in the company. In so doing, he returned his beloved Chicago Tribune to the back-to-the-future ownership of the local McCormick family — an act of civic conscience that will be hard to equal.

It was, though, in his ability to advance his own selfless interests that his publishing life distinguished itself.

In February 2016, then Tribune Publishing CEO Jack Griffin brought Mr. Ferro into the company fold. Mr. Griffin needed financial capacity to make an offer on the bankrupt-and-for sale Orange County Register.

Mr. Ferro and his Chicago associates bought a 17 percent stake in the company for $44 million, obtaining their first tranche of shares at a meager $8.50. In what seems like a New York minute, Mr. Ferro’s adroit people-handling allowed him to dispatch Griffin, and the team that Griffin had assembled, and bring his damn-the-history, let’s-transform command to what was then America’s third largest regional publisher. He self-made himself chairman of the company within weeks.

Mr. Ferro soon found himself fending off the unwanted advances of the Gannett Company. Who can forget his moral outrage at the time? “They are trying to steal the company,” he cried, just four months after dispatching Mr. Griffin in a coup.

With astounding energy — and aided and abetted by Gannett’s own miscalculations — Mr. Ferro beat back the hostile offer.

At his side, though largely silent, was always the loyal Justin Dearborn. Though Dearborn had no publishing experience, Mr. Ferro believed both in Mr. Dearborn’s ability to take direction and his off-the-charts note-taking ability and named him CEO. Mr. Dearborn also worked extremely well with Mr. Ferro’s loyal-to-a-fault board members. Given that work, and perhaps one other minor issue, Mr. Dearborn had assumed Mr. Ferro’s board chair role less than a month before Mr. Ferro’s final leave-taking.

As the almost-six-month battle waged on, Tronc — the new dramatic new name for Tribune Online Content — emerged. Given the all-consuming nature of that battle, Mr. Dearborn wisely halted almost all actual digital transformation work, letting the name change itself stand on its own. By 2017, with Gannett humbled, its own share price halved, Mr. Dearborn could finally move forward to restart the engines of change.

Curiously, just months before Mr. Ferro’s sudden demise, he had mused about his grandest dream: consolidating and leading the digital transformation of the entire U.S. newspaper business.

“I’m going to buy Gannett,” he had told colleagues as recently as December. Then, in a twist of events that could only be captured in his second home, Hollywood, Mr. Ferro made Los Angeles medtech billionaire an offer he couldn’t refuse. Reluctantly, he would — for the greater Los Angeles community good — relinquish the Los Angeles Times and San Diego Union-Tribune, for close to $600 million, including pension obligations. Was that sum twice what the market said the properties might fetch at auction? It made no difference, as Mr. Ferro’s selfless civic act is what is likely to be most remembered.

Add Mr. Ferro’s sale of his Tronc stake to the McCormick family to his sale of the Times to Mr. Soon-Shiong, and his memory will be well-scented. “He came out of it all like a stinkin’ rose,” concluded Mr. Doctor.

Though described by many as “a much nicer guy” than President Trump, Ferro shared many characteristics with the most-watched person of his publishing years. Like Mr. Trump, his capacity to consume most of a room’s oxygen amazed all he met. His self-assurance knew no bounds. His cat-like ability to find a way out of every jam defied reason. His incendiary personality won him the accolade of leading a company considered “the Chernobyl of corporate governance.”

It is unclear, at this reading, whether Mr. Ferro’s unexpected demise will affect the planned production of “American Hustle 2,” with Christian Bale rumored to portray the entrepreneur.

“He would so have wanted to be there, at least in the first 20 rows at the Dolby, to take pride in the recognition of his work,” said one Hollywood-friendly colleague with great hair. “He long thought of journalism and entertainment as being indistinguishable.”

While that movie is in question, syndication plans move forward on two of Ferro’s legacy projects. “Troncked: The Unbelievable Story of Digital Transformation” has been greenlighted for cable. Scripting of “Tronc Bloopers” — a reality re-telling of some of the company’s hilarious misadventures in naming and even trying to operate — has begun. Both Malcolm CasSelle, Tronc’s former chief technology officer, and Anne Vasquez, Tronc’s current senior vice president of strategic initiatives, are rumored to be consulting on the project.

Services and a memorial for Mr. Ferro’s publishing career are being planned, with Air Ferro, Mr. Ferro’s leased aircraft, likely involved, as the numerous golden parachutes he offered for his most favored executives deploy from Los Angeles to Chicago to New York.

The list of those likely to serve as pallbearers, both honorary and burden-carrying, include a literal pantheon of those Ferro touched in his too-short publishing career. From the Gannett Company, it’s understood that company chair John Jeffry Louis and CEO Bob Dickey are discussing whose involvement may be most appropriate.

Both former U-T San Diego owner Doug Manchester and former Orange County Register chief executive Aaron Kushner find themselves on the list. They can only stand back and admire Mr. Ferro’s accomplishment.

“We thought we had taken the chaos theory of Southern California news publishing to a new level, but we stand in awe of what Michael did in just two years,” said Mr. Kushner. “There may never be another like him — though I have to admit that Patrick Soon-Shiong’s out-of-the-box moving of the company to El Segundo does hold promise for building on our collective legacy.”

Los Angeles representatives of the News Guild actively consider who among them can best do justice to what Mr. Ferro has meant to their work.

“Without Michael, the 137-year-old Times might still be union-free. We appreciate this unprecedented partnership with a company that worked so actively to assure our positive vote,” said one local union leader.

There’s no word yet of whether News Guild national president Bernie Lunzer will be able to participate, as the groundwork Mr. Ferro laid in Los Angeles has enabled the Guild to ramp up its organizing efforts in Chicago and other cities.

In lieu of flowers, the Guild is asking mourners to send contributions to the Michael Ferro/Heath Freeman Memorial Fund for the Renewal of Journalism.

There’s no word yet on the participation of Oaktree Capital principal Bruce Karsh, who could only thank Ferro for the wild investment ride his company enjoyed — and the discounted price he was paid, $8 a share less than what Ferro got from McCormick Media — until selling a year ago.

It is unclear what role, the now twice-discharged Lewis D’Vorkin, who three-month tenure as editor-in-chief of the Los Angeles Times set its own record, will want to play.

Meanwhile, Mr. Ferro’s many Chicago friends wonder where to put their increased wealth now that his publishing adventures have come to an end.

In tribute, as spring arrives, they are expected to gather soon, perhaps with their wives this time, at Mr. Ferro’s Lake Geneva retreat, the site of so many memorable times.

In the end, Mr. Ferro’s leaves a company a little worse than he found it, save for a couple more years of digital disruption wear and tear. In his wake, he has opened anew adventures of transition and restructuring for the grateful buyers of his holdings. We may not hear it publicly, but behind the scenes, they will be thanking him for a long time.