Chain sees opportunity in purchase of Transylvania Times despite recent history of contracting coverage elsewhere
CNHI LLC, the company that purchased the Times last week, has closed or merged 16 of its papers during the Covid-19 pandemic, according to a media analyst.
By Dan DeWitt
BREVARD — CNHI LLC’s purchase of Transylvania Times last week was its first acquisition of a newspaper in 14 years and came after a dramatic contraction that included the closure or merger of 16 of the company’s papers since the start of the Covid-19 pandemic.
Some academic media experts see the shutterings as a troubling willingness to slash coverage by a company that previously had a strong track record of supporting local journalism — at least compared to other chains controlled by investment interests; CNHI is owned by the Retirement Systems of Alabama (RSA).
The company’s reputation as a steward of its news operations “has gone from good to questionable” because of the recent closures, said Al Cross, a University of Kentucky journalism professor and director of the school’s Institute for Rural Journalism and Community Issues. He also called the five closures and mergers in his state, blamed on pandemic-related revenue losses, “a permanent solution to a temporary problem.”
But Bill Ketter, the company’s senior vice president for news, said the contraction bolstered the company’s finances and allowed it to seek potentially profitable news outlets in attractive markets such as Transylvania County.
“We were just sort of trying to get organized into a stronger overall company,” he said. “We did that and now we are looking for strategic locations.” The company is still seeking to add to its holdings, he said, “but this may just be a one off.”
CNHI owns 91 news outlets in 21 states in the East and Midwest and as far west as Texas, according to its website. A press release posted on the Times website said that the paper traces its history back to 1887 and has been owned by the Trapp and Anderson families for 80 years. Sean Trapp, who served as co-publisher of the family-owned paper, declined to comment on the May 6 sale.
Though Ketter didn’t reveal the terms of the deal or details about the Times’ financial footing, he cited the circulation of more than 7,500 as “the kind of penetration that we look for in an acquisition” and described the Times as “a strong, viable and healthy community paper.”
“It has a very integral role in the community,” he said, “and we feel we can do an enormous amount of good for the paper to assure its long-term future.”
Penelope Abernathy, now a visiting journalism professor at Northwestern University, lumped CNHI in with other “newspaper chains . . . owned by hedge funds, private equity firms and other types of investment groups,” in a 2018 report, The Expanding News Desert, she wrote while serving as the Knight Chair in Journalism and Digital Media Economics at the University of North Carolina.
Promising to find profit in struggling properties through innovative management, these investors instead ushered in a profit-first approach that led to dramatic staffing cuts, unpaid time off for employees, advertiser-friendly coverage and “a willingness to sell or close underperforming papers,” wrote Abernathy, who has documented the closure of 2,100 papers nationally since 2004 on a website that tracks “news deserts.”
RSA, the pension fund for Alabama state employees, had originally been attracted by the high profits of community newspapers, especially in non-competitive markets, she wrote, but “the digital revolution and the 2008 recession interceded, dramatically depressing margins.”
Even before the onset of the pandemic, she wrote, “the pension fund responded by expecting financial efficiency from all its newspapers, selling or closing those that were losing money.” By 2018, it had cut the number of papers in its portfolio from a high of 149 to 114, and that same year the chain itself was put up for sale.
“I assume they’ve had no takers,” she wrote in an email.
Ketter called this portrayal of CNHI “a misrepresentation.”
The company, originally called Community Newspaper Holdings Inc., was formed by newspaper executives in 1996, more than a decade before the spree of hedge-fund newspaper acquisitions.
It was backed by RSA not only because of the money-making potential of local newspapers, but because the fund’s director, David Bronner, valued their mission.
“He’s a very strong supporter of community journalism, and he’s said many times that is why RSA invested in community journalism,” Ketter said.
The company was on the market for only about six month before RSA, already the majority owner, doubled down on community journalism by buying out other investors.
Abernathy also noted distinctions between CNHI and other investment groups. The company was historically less likely to “flip” papers and more likely to hold on to them in an effort to generate long-term income.
Both she and Cross said the chain had a record of paying for state government coverage in states where it owns large numbers of papers.
It has also hired highly regarded journalists such as Ketter to run its operation, Cross said. And if it is driven primarily by profits, it recognizes that these can only be realized by providing solid coverage.
“I believe that CNHI believes, as I do, that there is no future for newspapers that don’t have quality,” Cross said. “They’ve got to provide journalism that people want and journalism that people need.”
The Locally blog, published by the Florida-based Poynter Institute for Media Studies, has documented 16 closures of CNHI papers among the total of 70 papers that shut down across the county during the pandemic.
The takeaway from these numbers, Kettner said, is that CNHI faced the same financial pressures as the industry as a whole and was hardly unique in cutting coverage.
He also pushed back on the use of the word “closure,” saying that the company typically merged struggling weekly papers with nearby dailies that the company owns and continues to operate. And when CNHI discontinued print editions of newspapers, it often maintained their websites.
But many of these sites, including those of four weeklies in northeastern Kentucky, link to the former anchor paper and offer no additional content, Cross said.
Another CNHI paper, the Glasgow (Ky.) Daily Times, is still listed on the company’s website and is still accessible online, but the paper, which was founded in 1865 and was once classified as a daily, published its last print edition on June 9, 2020. The most recent stories on its website — a wedding announcement and an anniversary announcement — are dated Jan. 7, 2021.
“It’s a ghost newspaper, just like the weeklies they closed,” Cross said.
Kristen Hare, editor of Locally, wrote that even if a closure is framed as a “merger,” it “means the end of news dedicated to those communities, the evaporation of institutional knowledge and the loss of local jobs.”
“Economies of Scale”
CNHI’s purchase of the Times is also “intriguing,” Cross said, because it runs counter to the company’s usual practice of buying clusters of papers in the same region, which allows it to save money by consolidating news gathering and editing.
The Times’ office in Brevard is about a three-hour drive from CNHI’s nearest properties, and the paper is the company’s only news outlet in North Carolina, according to the company’s website.
“That’s not the usual modus operandi for a newspaper group these days,” said Cross, who writes The Rural Blog about trends in community journalism. “They like to emphasize economies of scale through geography.”
That was the case for the four weekly papers in northeastern Kentucky anchored by a daily in Ashland. And a comment on Cross’s story last year about the merger of these papers from a former reporter, Jeremy D. Wells, shows how far this model could be stretched after extensive cutbacks.
In the previous two years, Wells wrote, the company had closed the “physical offices” of two papers in Carter County, “consolidating editorial duties, advertisement and distribution in the Ashland office.”
Wells operated as a “one-man band” to fill both papers, he wrote, “deciding on the content each week and where it should be placed, compiling event calendars, and covering local government and community events . . . CNHI filler content or content from Ashland writers was used in lieu of local content.”
CNHI owns papers throughout the Southeast, Ketter said, and portrayed the Times’ access to its regionally generated copy as an asset. But he also pledged that the paper’s focus will remain on Transylvania.
The Times’ “content is very local and we looked at that and we liked that,” he said. And when it does run stories written elsewhere in the region, he said, these “should be localized to show the effect on local readers.”
Abernathy and others have pointed out that the community papers most likely to falter are in impoverished communities.
The fate of a paper depends heavily on the “demographics of the community (and) . . . how quickly they bounced back from the 2008 recession,” Abernathy said. “The places that have lost newspapers tend to be places that are struggling economically.”
Transylvania, on the other hand, offers a lack of media competition, a thriving economy and steady if not dramatic population growth, including from a large influx of retirees who tend to be good newspaper customers.
“Our surveys show there is still very strong readership among senior citizens in rural areas,” Cross said. “They like to get that weekly and they like to know what’s going on.”
The Hendersonville Lightning is proof of the viability of papers in healthy markets, even when facing intense media competition, said Editor/Publisher Bill Moss, who founded what he said is a profitable news website and weekly newspaper nine years ago.
The sale of the Times initially struck him as the loss of another “small, independent family owned, really well-regarded community newspaper,” Moss said. “One more bites the dust to corporate journalism. I just fear that it can’t be good for the community.”
But after considering the lack of competition, as well as the number of retirees and longtime subscribers, Moss said, “I would say that is a pretty attractive market.”
“CNHI might look at that in an opportunistic way and say, maybe we’ll put more reporting horsepower . . . into this little community and maybe we can grow,” he said.
That’s the CNHI’s general outlook on the county and plan for the paper, Ketter said, though he said the company has not yet made decisions about staffing levels at the Times or who among the current editors and reporters would remain.
He did say the company intends to upgrade the technology and expand its online reach to appeal to younger readers while maintaining its base of print subscribers. Otherwise, he expects the Times will do the work that makes local newspapers such valuable institutions — and, the academic experts say, their closures so devastating to the communities they served.
“We look upon our papers as having sort of a dual role, to cover the everyday news and to develop enterprise that keeps the community informed,” Ketter said. “And then we also want it to be a watchdog. One of the responsibilities is to keep an eye on local government and other institutions of influence to make sure public officials are held accountable.”
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