The issues facing San Francisco Bay news organizations are the same ones facing newspapers nationwide — decreased circulation and lowered advertising revenues, leading to downsizing. But the Bay Area isn’t just any other metropolitan area — the nine counties that make it up generated $781 billion in gross domestic product in 2016. That makes the Bay Area the 18th largest economy in the world. And while the Silicon Valley economy has continued to grow — around 6 percent in 2017 — its news organizations have gotten smaller. The Pulitzer-winning San Jose Mercury News went from a 400-person newsroom in the 1990s to having less than 50 reporters in 2018. And Bay Area News Group, the largest publisher of daily and weekly newspapers in the Bay Area, no longer has reporters covering higher education, K-12 education, Santa Clara county government, or health.
Local media must shift to a nonprofit or not-purely-profit-maximizing model to thrive. While the Bay Area has the resources — specifically, a concentration of wealth that would allow for nonprofit investment in local media — this kind of investment hasn’t happened. Instead, private equity and investment firms have scooped struggling media outlets up, slashing funding in order to maximize profit margins. This has led to diminishing local coverage, despite a booming economy.
According to Stanford media economist Jay Hamilton, it’s puzzling why there isn’t more investment in media in the Bay Area. “Why hasn’t there been good nonprofit media about our local area, given our density of billionaires?” he asks, pointing to publications like the Texas Tribune in Austin, Texas — local investigative journalism funded by wealthy donors. “We don’t really have a Texas Tribune of Silicon Valley, and we could, given the number of people.”
CALmatters, based out of Sacramento, is a new nonprofit website focused on state-level journalism, but it’s only a start in what could, and ought to, be the development rather than contraction of a strong Bay Area and California local media environment.
There are good examples of newspapers changing hands from private equity to personal nonprofit ownership. Glen Taylor, owner of the Minnesota Timberwolves, purchased the Minneapolis Star-Tribune from the investment firm Avista Capital Partners in 2014. Unlike private equity firms, Taylor restructured the paper to be sustainable but without slashing costs and reducing the quality of content in order to ensure large profit margins. Hamilton describes both purchases like this one and newspapers of yesteryear — owned personally by families — as having a “psychic income,” adding to the reputation of a family or operating as a public good rather than solely being profitable. Jeff Bezos’s acquisition of the Washington Post could be framed similarly — he has helped The Post succeed, without focusing first on slashing costs.
Silicon Valley purports to be a place focused on social entrepreneurship and corporate social responsibility. If local media’s role as a public good or social service, rather than as another private, profit-based industry is to be emphasized, it seems feasible that another Bezos or Taylor -style purchase of a local media outlet would be possible. Local media’s role in encouraging civic engagement, local democracy, and acting as a whistleblower for local government agencies and nonprofits is well-documented. Investing in or donating to a local paper should be seen in the same light as donating to a foundation — the preservation of a local public good, but one that must crucially be maintained separately from government.
Specifically in the Bay Area, private equity buyouts are a major culprit of decreased funding for media and decreased coverage of local issues. Lower revenues, due to decreased circulation and moves toward online advertising, have led to the kind of financial “distress” that attracts private equity firms and hedge funds. These firms then cut spending, which means, in many cases, laying writers off. Alden Global Capital, under the aegis of a conglomerate called Digital First Media, bought and shuttered the Alameda Times-Star, the Fremont Argus, and the Hayward Daily Review. In 2016, it closed the 142-year-old Oakland Tribune. The Tribune and former Contra Costa Times were collapsed into sections in a new publication, the East Bay Times. Digital First Media has also aggressively acquired and contracted newspapers elsewhere — including the Boston Herald, Denver Post, and Orange County Register, among many other newspapers around the country. While the problem of private equity and investment firms preying on “distressed” local news outlets is happening nationwide, the Bay Area has the resources to fight back against the contraction of local news media but hasn’t.
It may seem that the Bay Area would be immune to lower revenues and consumption of local news because of its concentration of wealthy, college-educated people. However, both wealth and education may be irrelevant to local media consumption. As the New York Times and Washington Post continue to grow their readership among coastal, college-educated people, the local news outlets these same readers used to support have come into financial difficulty. More than ever, the New York Times has begun to try to cater to its California audiences — in June 2016, it began a daily column, California Today, that aggregates California-specific news. The publication has also increased its targeted coverage of the state, including the Bay Area. However, increased coverage of state-level issues by national papers like the New York Times doesn’t fill the same void that local papers like the Oakland Tribune and Fremont Argus once did — hyper-local investigative journalism that covers city councils, local schools, and public services often requires reporters and resources on scene.
In part, Hamilton says, The Times may reign king over local papers in the Bay Area because of a lack of “identity consumption.” Hamilton argues that people are motivated to consume news media as part of their political identity — they consume media as a Sanders, Obama, or Trump supporter, but not as a resident of San Jose or Santa Clara County. His theory about the decline of local media consumption is drawn in part from the theory of rational ignorance, coined by Stanford economics graduate student Anthony Downs in the 1950s. Rational ignorance is the idea that, when economically assessed, there are no rational benefits of being politically informed as a voter. Identity consumption based on one’s allegiance to county or city is a hard sell in a place like Silicon Valley, which is “more about business than a place you call home” as Hamilton puts it. Instead, Bay Area readers want to read about national issues, and usually along partisan lines.
Despite the seeming lack of personal motivation to consume local media, there is a quantifiable price to the lowered consumption and production of local media. Not only does local news play the role of watchdog for school boards, local politicians, and businesses, but local news has been proven to increase political engagement. A 2002 paper from researchers at Michigan State University and the University of Pennsylvania entitled “Does the NYT spread ignorance and apathy?” shows a correlation between the delivery of the New York Times to an area, a subsequent drop in local media subscriptions, and the phenomena of “college-educated individuals targeted by the Times becom[ing]less likely to vote in local elections.” And a 2011 study from the National Bureau of Economic Research showed that when the Cincinnati Post closed in 2007, civic engagement in municipal elections decreased in areas served by the newspaper — fewer people ran, less people voted, and campaign spending fell. The same effect has been observed all over the country — but particularly in Seattle and Denver, where civic engagement by many measures dropped significantly when local newspapers shut down.
Lack of funding is motivating the shutdown of newspapers, but donation or nonprofit based models for media are working. At the Texas Tribune, a mix of individual and foundation donors contributed over $6 million in 2016, allowing the newsroom to operate outside of purely profit-based concerns. In this light, there’s no good reason why Silicon Valley doesn’t have a thriving media environment.
Nonprofit, donation-based media seems both feasible and ideal for the preservation of local media. Barring that, while potentially counterintuitive, a tech billionaire buyout of a local paper, with the intention of nurturing local investigative journalism and local reporting rather than slashing costs, may actually foster more local political engagement. Facebook, a new media behemoth itself, claims to be supporting local news media through prioritizing those stories on its News Feed — but without reporters to cover the full gamut of local news, and without local news to highlight, this initiative does little. Without funding local media itself, civic engagement and accountability from local organizations and government cannot be maintained, let alone increased.
Emily Lemmerman, a junior studying sociology, is a senior staff writer for Stanford Politics. Roxy Bonafont contributed research and reporting. This article appears in the April 2018 issue of Stanford Politics Magazine