Money as main Factor in the New Media Arena

The media barons of the 21st century – hedge funds, private equity firms and other investment entities – swept onto the scene in the years immediately following the 2008 recession when they began aggressively purchasing hundreds of distressed newspapers and chains, many in bankruptcy proceedings. Their rise displaced the media barons of the 20th century – the large publicly traded and privately held chains – such as Gannett, Knight Ridder, Hearst and Advance. They employed the same disruptive business models they used in other industries – many of them adopted by the surviving chains as the fortunes of the newspaper industry continued to decline. They financed their acquisitions with significant debt and managed their highly leveraged newspapers through aggressive cost-cutting and revenue goals, paired with financial and pension restructuring, including bankruptcy. To reduce costs, they laid off staff, froze wages, reduced benefits and consolidated sales and editorial functions in regional hubs, far removed from the community where the paper was located. Profits derived from cost cutting were not reinvested; instead, they were used to pay loans, management fees and shareholder dividends.

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