Paper Cuts

With Layoffs and Fewer Readers, What’s the Future of Our Hometown Newspaper?

As newspaper giants merge, a look at the changing landscape for the Sarasota Herald-Tribune.

By David Hackett August 5, 2019 Published in the September 2019 issue of Sarasota Magazine

Editor's note: The nation’s two largest newspaper companies, GateHouse and Gannett, announced Monday that they are merging, with control going to GateHouse, the owner of the Sarasota Herald-Tribune. Our correspondent DavidHackett looks at how the changing media landscape and the demands of private equity control have affected the Herald-Tribune and what the future holds for what remains a primary source of news for tens of thousands of residents. 

In February 2006, the Sarasota Herald-Tribune was at the peak of its power and influence, or so it must have seemed to the hundreds of reporters, editors, ad sellers and support staff who strolled into the newspaper’s new headquarters, a modernist white temple to the printed word that loomed over much of a square block on downtown’s Main Street. Five years in the making, the building cost $27 million, glimmered with more than 2,000 windows, had space for 325 employees, and featured a TV studio and public meeting rooms. But as the Herald-Tribune’s longtime publisher Diane McFarlin drove to pick up the paper’s owners, Arthur Sulzberger and other top executives of the New York Times Company arriving in their corporate jet, McFarlin could not shake the thought that she had made a big mistake: The building was too small. 

“We were growing by leaps and bounds,” McFarlin recalls. “I was concerned we might outgrow this new building in 10 years and if that was the case I would either have to leave or do some very good explaining.” 

Within five months, those fears were vanquished, leaving McFarlin feeling "whiplashed." Craigslist moved into Sarasota, overnight shutting off the newspaper’s lucrative spigot of classified advertisements. In quick succession, Facebook, Google, Apple and other technology companies poached the newspaper's advertising and readers.

Today, the Herald-Tribune building is empty as it undergoes remodeling for its new owner, Sarasota Memorial Hospital. The newspaper staff, a fraction of the size it was a decade ago, works next door, renting space in a bank building, a fate one veteran reporter described as “being like a divorced guy living in a crappy apartment that looks out over your former dream home.” Most of the newspaper’s bureaus, which once operated from Port Charlotte to Tallahassee, are shuttered. 

The plight of the Herald-Tribune is anything but unique. Newspaper circulation in the United States has plunged from 60 million in 1994 to less than 35 million today, a figure that takes into account online growth. Advertising revenue, long the industry’s lifeblood, has plunged by two-thirds. A study by the University of North Carolina last year found that 1,800 local newspapers have died since 2004. The investment guru Warren Buffett, a newspaper owner himself, recently used a single word to describe the industry’s prospects: “Toast.” 

Years of cutbacks have fundamentally reshaped the Herald-Tribune. At the dawn of the 2000s, for example, the sports department had 22 reporters and editors. On Friday nights, every high school football game in the area was covered. Statistics were painstakingly recorded each week. The department was so flush that in addition to covering all the major state college football teams every Saturday, the Sarasota Herald-Tribune flew one of its reporters to the best national game on Saturdays, just because it could. Today, the sports department has three employees: the editor, a columnist and a single reporter.

Rounds of layoffs have taken a similar toll across the newsroom. For decades, Herald-Tribune reporters were as ubiquitous at government meetings as the elected officials themselves. These days, a staffer told me, the paper does not regularly cover the Sarasota County Planning Commission, where major development plans are first heard, or dedicate a reporter to covering lawsuits and trials at the county courthouse.  Stories that were routinely subjected to rigorous layers of editing are now quickly dispatched to Austin, Texas, where a hive of designers produces hundreds of newspapers. Even the Herald-Tribune’s vaunted investigative team, which has won or shared two Pulitzer Prizes and been a finalist for two more in the past decade, has been incorporated into a national unit.  

Although it is in the communications business, the Herald-Tribune is remarkably uncommunicative when questioned about its own operations. Reporters refused to go on the record or speak at all, saying they were concerned it could affect their employment. Matthew Sauer, the paper’s executive editor and general manager, did not respond to questions submitted in writing or to a request for an interview. The corporate office did not respond to multiple inquiries. One explanation for its reticence could be that its private equity-backed owners are merging with another, even larger newspaper chain, Gannett. Such a deal will create the biggest single newspaper company in the United States, and, analysts predicted, lead to still more layoffs of reporters and other cost-cutting.

Longtime readers, however, are acutely aware of how the newspaper has changed. Keith Fitzgerald, a 25-year professor of political science at New College of Florida and a former state representative, says a smaller staff and fewer seasoned reporters have hurt news coverage. Stories contain basic information, the “whats and wheres,” but often lack the “whys and hows” that inform readers why something happened and how it will affect the community.

“I’m both saddened and impressed by the Herald-Tribune these days,” says Fitzgerald, who teaches a course on the public sphere that includes the changing way the public gets news. “They have skilled investigative reporters who are still writing important stories. But the Herald-Tribune also used to be a really good local paper that informed you about what was going on in Sarasota. As far as being a hometown paper, it’s just not anymore.”

Yet, for all the cutbacks, the Herald-Tribune has fared better than many papers across the country, which have curtailed print editions to a few days a week or have simply shut down, leaving behind a barren landscape, where regular coverage of government, law enforcement and other institutions no longer exists. Two hundred counties in the United States no longer have a newspaper. 

“These news deserts come at a very real cost,” says McFarlin, who in 2013 became dean of the University of Florida College of Journalism and Communications. “Here’s a specific example: A recent study showed that in cities that no longer have a daily newspaper, municipal bond rates are higher because institutional investors have determined that the community no longer has the same watchdogs looking out for public corruption.” 

The Herald-Tribune, like many regional papers, soldiers on, with dedicated journalists trying to do more with less. In July, the paper won a slew of awards from the Florida Press Association, including first and second place for best investigative reporting. For many in the region, the Herald-Tribune remains the most reliable and accessible source for news, says Debra Jacobs, president and CEO of The Patterson Foundation, which is based in Sarasota and has more than $230 million in assets. Jacobs says the foundation saw the Herald-Tribune as such a vital component to addressing the region’s challenges that three years ago it began annually gifting money to the newspaper to fund reporting on education and other topics. The foundation was also intrigued because the Herald-Tribune is now part of a large newspaper chain, which helps the foundation reach audiences outside of Sarasota.

Such an arrangement would have been taboo in bygone days when newspapers were so flush that they were unwilling to jeopardize their independence. Neither Jacobs nor the Herald-Tribune would say how much money the foundation has gifted the newspaper or how many reporters it is funding. In exchange for the funding, the newspaper has agreed to report on areas that The Patterson Foundation has identified as vital to Sarasota’s future, such as getting more young students up to grade-level reading levels, boosting education for nurses and creating a healthier environment for aging. Jacobs says the foundation meets monthly with editors to ensure coverage is addressing the foundation’s target areas, but it does not dictate what can or cannot be written. 

“We understand that journalism has its swim lane and philanthropies have their swim lane,” Jacobs says. “We’re about issues such as the importance of grade-level reading and keeping those issues in front of people. If you’re in fourth grade and can’t read, you’re on the pipeline to prison. The Herald-Tribune is the source for information that many people in our region still rely on. They are a valuable partner in our effort.”

Even as the Herald-Tribune seeks outside support to bolster its diminished reporting ranks, however, it faces pressure from within to meet the voracious financial appetite of its new owners. No longer owned by a traditional newspaper company, the Herald-Tribune is facing the realities of Wall Street. 

While training in Arcadia during World War I, a young pilot named David Lindsay gazed down on Sarasota from the cockpit of his biplane and saw fertile ground for his family’s newspaper business. In 1925, Lindsay founded the Sarasota Herald, and it remained in his family for the next six decades, until it was purchased in 1982 for $86 million by the New York Times Company, whose owners, the Sulzberger family, had a vacation home on Longboat Key. By most accounts, The New York Times was a benevolent owner, investing heavily in whatever it took to cover the news, which did not entail great sacrifice during decades in which advertising and circulation revenue grew so quickly that it seemed the Herald-Tribune had a license to print money. The profit margins for its Florida papers were often more than 30 percent.  

By 2009, however, newspapers were caught between the pincers of the Great Recession and massive changes in technology. The New York Times Company stock price plunged from $50 to below $4 a share, and the Times unloaded the Herald-Tribune. Since 2011, the Herald-Tribune has been sold twice and is now owned by GateHouse Media Inc., a holding company for a publicly traded company called New Media Investment Group, which is, in turn, managed by Fortress Investment Group, a private equity company owned by SoftBank, a Japanese multinational conglomerate holding company. GateHouse owns 156 daily papers and nearly 500 weeklies and other community publications. 

At a time when newspaper revenue advertising and circulations are falling, GateHouse has been allocating hundreds of millions to reward its shareholders. New Media pays a 16.38 percent dividend, among the highest of any publicly traded company. It has authorized a $100 million stock repurchase. And its private equity overseer Fortress receives 1.5 percent of its net revenue. GateHouse has also taken on hundreds of millions in debt, the servicing of which further curtails what it can invest in its newsrooms. 

“It would not be a company I would invest in,” says one local investment manager, who asked that his name not be used. “I can’t say their financials are strong. They’re not.”

GateHouse has squeezed profits by consolidating production and laying off journalists. (After nearly 15 years as a reporter and editor at the Herald-Tribune, I was laid off in 2016.) Like other newspaper owners, GateHouse is also seeking to make up for declining advertising revenues by charging more for the newspaper. In 2005, a mid-week July edition of the Herald-Tribune in July had 58 pages. It featured six editions from Charlotte County to Manatee, all staffed by robust bureaus. The paper cost 25 cents. In July of this year, the Herald-Tribune had the equivalent of 40 full pages and cost $2 at the newsstand. 

Other GateHouse papers have fared worse. In Springfield, Illinois, the state capital, the newspaper has just five reporters, compared to three times that number a few years ago. The Herald-Tribune will not reveal its current staffing level, but sources say fewer than 50 journalists remain, a quarter of the number that worked there before the decline. The paper’s circulation fell from a reported 123,000 in 2006 to less than 50,000 in 2018 while the region’s population grew, according to the Florida Bulldog, an online publication that spent two years tracking the decline of Florida newspaper circulation records using information obtained through public records requests from the U.S. Postal Service. 

GateHouse has also employed tactics that have raised eyebrows. In 2016, GateHouse reporters at its Las Vegas paper were ordered to begin investigating judges who had been a thorn in the side of billionaire casino owner Sheldon Adelson. The company even inquired, unsuccessfully, about getting the Herald-Tribune’s investigative team involved. Weeks later, GateHouse sold the Las Vegas paper to Adelson for $140 million, more than double its book value. 

“Their business model is to pay themselves first, and whatever happens, happens,” says Bernie Lunzer, president of the NewsGuild, part of the Communications Workers of America union, that has added 20 GateHouse newsrooms to its membership in recent years, including the Herald-Tribune. “It is simply not sustainable at this trajectory. They’ll kill off the product.” 

GateHouse’s tumultuous reign could be heading for a denouement: The company’s net revenue declined in the last quarter to less than 1 percent. At a time when the stock market is at record highs, GateHouse’s stock price has fallen by half in the past year, which, in turn, fueled the sharp increase in its dividend. Its newsrooms have already been cut to the bone. Herald-Tribune reporters say privately that they are distressed by GateHouse’s approach, which was a big factor in the newsroom voting to unionize. But none would agree to an on-the-record interview.

With the August 5 announcement of GateHouse Gannett merger, more newsroom cuts are likely. The Wall Street Journal reported that the proposed deal reflected GateHouse’s belief “that a big chunk of the overlapping costs is ripe for cutting. It is likely that a substantial portion of synergies would stem from layoffs.”

Flinty-eyed capitalists may see such financial maneuvering of hedge funds and private equity companies as the inevitable vulture feeding on bones that comes with an industry’s demise. The same forces of progress that made the horse and buggy, the typewriter and the Instamatic camera obsolete are transforming the way we gather and receive the news. But there is one significant difference: Cars, word processors and digital cameras all offered obvious improvements in efficiency and performance. As newspapers have declined, disinformation has grown. 

As dean of a journalism college, McFarlin is focused not on what journalism has been, but where it is headed. Her college recently was awarded $1.25 million in startup funding for a major initiative focused on trust in media and technology. Called the Trust Consortium, the initiative is bringing together professors and other researchers from a multitude of disciplines, including psychology and anthropology. Attempts by Russia and other foreign governments to influence the 2016 presidential election through fake news stories on Facebook and other social media sites were likely just the beginning, McFarlin says. A more disturbing stage she expects to see in 2020 involves so-called “deep fakes,” in which computer-generated images are seamlessly woven into real ones to create an altered reality. 

Although the future for papers such as the Herald-Tribune looks challenged, to say the least, McFarlin says that she is actually hopeful that disinformation and other forces that threaten our democracy may help save newspapers. Communities are recognizing the importance of reliable, accurate coverage. Journalists know that they no longer control the platform and cannot dictate the news. Instead, they must engage the communities they cover in a collaborative way, as the Herald-Tribune is doing with The Patterson Foundation. 

“If you ask me what will be the leading source for news coverage in Sarasota in a decade, I’m going to put my money on the Herald-Tribune,” McFarlin says. “It will never be as large and ubiquitous as it was 10 years ago. But because it excels at journalism, because it understands how to produce and distribute content, it will have a leg up. That heritage is not something that just disappears.”

When it comes to technological change, however, past is rarely prologue. The Herald-Tribune's decades of dominance as Sarasota's news source buys it time, but little comfort as it tries to meet the demands for profits imposed by its owners and to satisfy the changing habits of a new generation of consumers who want information that interests them available when they want it. The Herald-Tribune, if it survives, is likely to look very different a decade from now, molded from a model that has yet to be formed, its glory days, like its former building, a memory growing ever more distant.

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