LA Post: Saving the news media means moving beyond the benevolence of billionaires

For the journalism industry, 2024 is off to a brutal start.

Most spectacularly, the Los Angeles Times recently slashed more than 20% of its newsroom.

Though trouble had long been brewing, the layoffs were particularly disheartening because many employees and readers hoped the Times’ billionaire owner, Patrick Soon-Shiong, would stay the course in good times and bad – that he would be a steward less interested in turning a profit and more concerned with ensuring the storied publication could serve the public.

According to the LA Times, Soon-Shiong explained that the cuts were necessary because the paper “could no longer lose $30 million to $40 million a year.”

As one X user pointed out, Soon-Shiong could weather US$40 million in annual losses for decades and still remain a billionaire. You could say the same of another billionaire owner, The Washington Post’s Jeff Bezos, who eliminated hundreds of jobs in 2023 after making a long stretch of steady investments.

Of course, it helps if your owner has deep pockets and is satisfied with breaking even or earning modest profits – a far cry from the slash-and-burn, profit-harvesting of the two largest newspaper owners: the hedge fund Alden Global Capital and the publicly traded Gannett.

Yet, as we’ve previously argued, relying on the benevolence of billionaire owners isn’t a viable long-term solution to journalism’s crises. In what we call the “oligarchy media model,” it often creates distinct hazards for democracy. The recent layoffs simply reinforce these concerns.

Systemic market failure

This carnage is part of a longer story: Ongoing research on news deserts shows that the U.S. has lost almost one-third of its newspapers and nearly two-thirds of its newspaper journalists since 2005.

It’s become clear that this downturn isn’t temporary. Rather, it’s a systemic market failure with no signs of reversal.

As print advertising continues to decline, Meta’s and Google’s dominance over digital advertising has deprived news publishers of a major online revenue source. The advertising-based news business model has collapsed and, to the extent it ever did, won’t adequately support the public service journalism that democracy requires.

What about digital subscriptions as a revenue source?

For years, paywalls have been hailed as an alternative to advertising. While some news organizations have recently stopped requiring subscriptions or have created a tiered pricing system, how has this approach fared overall?

Well, it’s been a fantastic financial success for The New York Times and, actually, almost no one else – while denying millions of citizens access to essential news.

The paywall model has also worked reasonably well for The Wall Street Journal, with its assured audience of business professionals, though its management still felt compelled to make deep cuts in its Washington, D.C., bureau on Feb. 1, 2024. And at The Washington Post, even 2.5 million digital subscriptions haven’t been enough for the publication to break even.

To be fair, the billionaire owners of The Boston Globe and the Minneapolis Star Tribune have sown fertile ground; the papers seem to be turning a modest profit, and there isn’t any news of looming layoffs.

But they’re outliers; in the end, billionaire owners can’t change these inhospitable market dynamics. Plus, because they made their money in other industries, the owners often create conflicts of interest that their news outlets’ journalists must continually navigate with care.