St. Louis Dispatch
A man walks past a St. Louis Post-Dispatch newspaper box as the Gateway Arch is seen in the background in St. Louis. Hedge fund Alden Global Capital, one of the country's largest newspaper owners with a reputation for intense cost cuts and layoffs, has offered to buy the local newspaper chain Lee Enterprises for about $141 million. (AP Photo/Jeff Roberson)

With the news that Alden Global Capital, notorious for gobbling up newspapers and laying off reporters, is moving to acquire Lee Enterprises, one of the nation’s largest newspaper chains, it feels like the hedge fund takeover of local news is inevitable. Even without this acquisition, half of the daily newspaper circulation in the United States is already owned by hedge funds.

Hedge fund annexation can be stopped, but only if we look at the problem in new ways and accept that it will require government involvement.

First, antitrust regulators need to look at the newspaper business differently. In general, antitrust law for the past three or four decades has focused on whether mergers would hurt consumers by raising prices or reducing competition.

But before that, antitrust regulators looked at mergers more broadly, including whether they would hurt communities. And that’s what needs to happen here. Senator Estes Kefauver, the author of antitrust amendments in the 1950s, explained that “local independence cannot be preserved in the face of consolidations such as we have had during the past few years … The control of American business is steadily being transferred … from local communities to a few large cities in which central managers decide the policies and the fate of the far-flung enterprises they control.”

Insert the phrase “local news” in there and Kefauver could have been talking about the consolidation of the news industry.

In the past, Alden has tended to cut local reporting staff, leaving communities with less coverage about their government, their hospitals, their schools. Academic studies show that cities with less local news have more corruption, lower voter turnout, and even lower bond ratings. Why shouldn’t the Justice Department consider factors like these, too?

There is some sign that the Biden administration’s DOJ is opening the aperture on what factors it weighs. It recently moved to block a merger between two big publishers—not just on the grounds that it would hurt consumers but also because it would hurt authors and reduce the diversity of voices. This suggests that the DOJ might be looking at harms in a more reasonable and holistic way.

Second, we need a strategy to replant newspapers in communities. Part of why newspaper chains sell to Alden is that no one else will buy the papers. Both government and philanthropic entities could help.

For instance, the U.S. government or states could offer tax credits to local nonprofits that want to buy newspapers. Many of these publications could break even if they didn’t have to support the stock prices of publicly traded companies, generate returns for financial institutions, or pay off the debt used to finance mergers.

Third, we need to strengthen the business models of the local news organizations that are struggling to make it on their own. That would enable them to avoid needing to sell, or, in other cases, to fill the gaps that tend to open up in communities when Alden comes to town.

The Build Back Better bill just passed by the House of Representatives includes an important step: a payroll tax credit to newsrooms to help retain or add local journalists. This will strengthen local news organizations of all shapes and sizes, making them less vulnerable to vultures. The legislation could be a powerful antidote to the sickness spreading within local communities.

The hedge funds didn’t create the problems with local news. But they are making them harder to solve. Individual players—especially the News Guild and a handful of local civic leaders—have been trying to fight this wave on their own for several years. It’s time that public policy gave them some help.

A personal note: I have been writing for the Washington Monthly for more than 35 years, since I was a young editor, along with Paul Glastris and Matt Cooper, editing pieces by people like Phil Longman. Most of what I know about antitrust policy has come from reading these pages. While most media outlets have either ignored the issue or accepted narrow boundaries of what is acceptable debate, the Monthly has consistently gone where few others have—exploring how reconceived competition policies can help spur innovation, raise wages, and revive local economies.

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Steve Waldman

Steven Waldman, a Washington Monthly contributing editor, is the co-founder of Report for America, a national service program for journalists.