Wall Street declares war on the Associated Press
Gannett and Reuters come for one of the final corners for legacy media that had resisted the financialization of journalism.
It’s not particularly well-written corporate press release, but the one that rolled through the transom this morning was compelling nonetheless:
Gannett Co., Inc. (NYSE: GCI) and Reuters today announced an agreement to provide media brands and publishers with a unique offering that includes ready-to-publish local, regional, state, national and international multimedia news and content. The new offering will combine Reuters extensive national and international coverage with Gannett’s USA TODAY Network coverage of local news from more than 200 publications across the country. This enables media companies to focus their efforts on the stories that matter most to their communities, while relying on Reuters and the USA TODAY Network for relevant content including breaking news, entertainment, sports and lifestyle coverage.
There is a story about the macroeconomic trend in local journalism that goes like this: The labor that makes news possible, original reporting, is expensive and inefficient. It’s so expensive and inefficient that original reporting is usually unsustainable as a consumer good at a small scale, particularly if you can’t really support it with advertising anymore. Hence local journalism's shift toward various dependencies: 501(c)3 tax exemptions, philanthropic contributions, direct government subsidies.
But after the death of the 2010s venture-capital boom in digital media (RIP BuzzFeed News and VICE), there’s still a narrow lane for commercially supported journalism: Be McDonald’s. If you suppress labor costs and consolidate as much as possible, even the low margins you can eke out can become more tolerable for investors at scale. Gannett wants to be the McDonald’s of journalism. You don’t have franchisees, but you do have the “USA Today Network” that includes the formerly family-owned local newspaper in your town.
This economic attractiveness of consolidation in local news isn’t limited to your private-equity Nosferatus, sticking their fangs into the carotid arteries of some young journalism school grads near you. Nonprofit newsrooms face the same harsh labor realities as their commercial forebears and must also explore mergers and shared-services agreements. There’s a great noncommercial model for this already: The Associated Press, the most successful news cooperative in the history of the United States.
The AP purchases journalists’ labor and distributes it to commercial and noncommercial publishers around the world who have paid to join the cooperative. Instead of having 3,000 publishers trying to hire freelancers in New Orleans at 4 a.m. on New Years Day to cover an apparent terror attack on Bourbon Street, the AP’s already got a worldwide network of journalists on the clock producing journalistically sound work that can be delivered to billions of consumers almost immediately.
The AP’s model has been so successful, in fact, that it’s masked the extent to which many local publishers have taken the partnership toward its logical conclusion and retreated from also employing their own journalists. When I crack open the front print section of my alma mater, the Los Angeles Times, it’s filled with pretty good AP stories about international and national news. I only really notice because those print holes used to be filled by original stories from me and the other departed journalists from the L.A. Times’ national desk.
Some corporate news chains have taken this AP swap-out to such an extreme that they don’t employ any of their own journalists at all. We call them “ghost newspapers.” They just run wire stories, and whether any of it actually touches on a local news story is dependent on whether the wire had somebody cover a local story that day. Generative AI-powered digital sites are just a techy riff on the same concept.
The only thing that’s really made this AP-ification of local news even remotely tolerable from a consumer perspective is that the AP is good. It hires talented, principled journalists who take their mission extremely seriously. And the AP has been able to hire and sustain a lot of those journalists because they were attached to a cooperative business model that made sense.
But what if you’re Gannett CEO Mike Reed? Your publicly traded company’s survival plan in a shrinking sector is to be McDonald’s. If you aren’t getting bigger, you are dying in the hospital bed with everybody else. You already merged with one of the other largest news chains in America, GateHouse — probably destroying more journalism jobs than anybody in human history in the process — and are running out of journalism stuff to consolidate. You can’t buy the AP, since it’s a nonprofit membership cooperative serving the competitors you’ve got left. So you withdraw from being an AP member after a century-long partnership, team up with one of AP’s global wire service competitors, Reuters, and try to become a more commercially minded, financier-dominated, less democratically operated AP — by killing off AP. “The primary target customers for the offering are U.S. regional and local publishers and broadcasters,” Axios reports. Those are AP’s customers.
The Associated Press and its cooperative nonprofit structure has been one of the final pieces of the legacy news ecosystem to resist the financialization of journalism. Maybe those days are over. Gannett and Reuters’ play here is for Wall Street to move in on and capture the less savory element of AP’s business — helping local news outlets paper over the loss of local reporters with filler journalism, ironically in many of the communities that armies of laid-off Gannett journalists used to serve. It’s just the wrong kind of competition. The logical outcome here isn’t the net creation of more local journalism jobs, but to undercut AP’s prices and make AP’s own journalists redundant. (What happens to a cooperative once its members decide to stop cooperating?) The endgame is to eventually diminish consumers’ options and put fewer people in charge of America’s journalists and the news Americans see. Gannett deserves to be rooted against.
Thank you for this wise analysis. The comparison to McDonalds is right on target. My online AP stories ask for donations, and your column has convinced me that I should donate.
As a Gannett reporter, I'm never going to stand up to defend Gannett's corporate practices. But to offer another perspective: AP used to employ four journalists in my state. By the time we dropped our partnership lastyear, that was down to (supposedly) one, our state AP feed was managed from an office two states away, and the answer to the question "is AP moving anything on that" was invariably no. We were paying quite a bit of money for it, and when we dropped out last year, I can say that at our level, the only pain point was having to root old AP photos out of our CMS.
So, again, without defending the motives of Mike Reed, worth noting that AP's service, at least in some markets, was declining well before Gannett decided to go it's own way.