First it sold off all its newspapers’ buildings. Now, by closing rented offices and making reporters work from home and coffee shops, Digital First Media takes extreme cost-cutting to a new level.

 

By Julie Reynolds

When the Longmont, Colorado, Times-Call newspaper closed its offices in the spring of 2017, publisher Al Manzi told his staff, “I think you’ll be seeing this kind of thing happening all the time.”

Staff at the paper, owned by Digital First Media, were told they’d have to work out of the Boulder Daily Camera’s offices, 12 miles away.

A year later, the Fitchburg, Massachusetts, Sentinel & Enterprise announced it, too, was closing its offices and that employees would work from a “virtual newsroom” — that is, from home, coffee shops, or “in the field.” Some activities would be conducted from the offices of the DFM-owned Lowell Sun, 30 miles east.

After its massive sell-off of the real estate once occupied by scores of U.S. newspapers, the Digital First Media chain has taken the term “draconian cost cutting” to a new level. The chain is now quietly shutting down newspaper offices, leaving staff to work out of living rooms, coffee shops or far-off printing plants.

Paying rent, it seems, is too big an expense for the chain’s owner, vulture hedge fund Alden Global Capital, known for the industry’s most extreme cost cuts.

It’s a scenario already playing out at papers in Massachusetts, Pennsylvania and Colorado.

Bill Ross, executive director of the NewsGuild of Greater Philadelphia, said that in his region, three Pennsylvania newspapers have closed their offices — in Pottstown, Norristown and West Chester.

“If we weren’t talking about a company that clearly has no interest in community journalism, I might have a different view of this,” said Dan Kennedy, an associate professor at Northeastern University’s School of Journalism in Boston, and author of the Media Nation blog, “The Wired City: Reimagining Journalism and Civic Life in the Post-Newspaper Age,” and “The Return of the Moguls.”

“I don’t really know that telling reporters to work out of their homes is any worse than working in newsrooms out of their coverage area. I’d rather see DFM saving money on rent rather than reporters,” he said. “But the problem is they’re cutting both.”

 

The attic as office

On June 30, the Pottstown Mercury offices closed. Its historic downtown building —plagued in recent years with mold and a leaky roof —shut its doors after more than eight decades.

Advertising staff and management learned they’d have to work from the company’s printing plant in Exton. Depending on traffic, the plant can be a 40-minute drive from Pottstown. Reporters have the choice of working from Exton or from home.

“We know how important it is for our readers to have a quality information product at their fingertips, and a simple change in address will not change our dedication to that goal,” publisher Edward Condra said in a Mercury story about the closure.

According to the article, Condra contends that with modern technology, “it no longer takes the 100 or more people it used to produce a newspaper 365 days a year.”

Three weeks after the Mercury office closed, reporter Evan Brandt found himself working from his attic, “up here with the Christmas decorations.”

Brandt said working from home has some perks, but he added they come with a price.

“The commute is wonderful — it’s a flight of stairs. But I only live five blocks from where the office was, so that much hasn’t really changed.

“The downside is I don’t get to interact with my coworkers physically. I do like to develop ideas about coverage — we used to call it the collective. I need the wisdom of the collective. I think better when other people are thinking with me.”

The real loss for his community, he said, “is going to be spot news. The cops reporter doesn’t live in town, so that’s 20 minutes away.”

Brandt says he often finds himself reporting on days off because he is the closest reporter to the action. Recently, while officially on vacation, he wrote a story about a dramatic auto accident because he was the only reporter near the scene.

“I don’t want it to not be covered,” he says.

Dave Levengood, left; Evan Brandt, right

Dave Levengood, the Mercury’s circulation supervisor and NewsGuild unit chair, has been involved with the paper for 53 years. When he was 11 years old, he helped his brother deliver papers, and during high school, he worked in the dispatch unit. Levengood says he’s “probably the last connection” to the paper’s original owner.

These days, as the only full-timer left in his department, Levengood’s workday might start at 1:30 a.m. or 4 a.m. It’s a chaotic way of life, but Levengood says he’s used to it, even after years of enjoying the stability of an 8:30 a.m. to 5 p.m. routine.

Levengood has a laptop, a desktop computer, and a Mercury phone in his apartment now. Working at home can be distracting, with things like undone chores and unwatered plants clamoring for attention.

“You have to have discipline,” he says. But mainly, he says he misses the camaraderie of his coworkers. Since its offices closed, the Mercury hasn’t held any staff meetings, he said. “So we’re scattered. That is the part I don’t like.”

Meanwhile, the paper’s distribution team is still “working out of a carport” in the back of the Mercury building. “They can’t find a place to rent,” he said. “And they don’t want to sign a year lease, it has to be month-to-month.”

Levengood says readers notice the paper has lost its presence in the town. “We used to be so community oriented.” He recalled a time “when every manager had to belong to a civic group. The idea was it gave you that community presence.” It was an era when newspapers gave away free concert tickets, when residents saw the Mercury’s company cars everywhere. “You were seen around,” at school board meetings, at sports events, he said. “I think we’ve let down our community.”

And when readers ask who to complain to about the paper, Levengood says he doesn’t know anymore.

“If they call Alden, they don’t care,” he said. “All they want to do is squeeze as much blood out of that rock. They don’t care about anybody but the dollar in their pocket.”

Levengood says he believes Alden is going to shut down more offices throughout the chain. “I think it’s going to happen in other places.”

 

“Avaricious owners”

The irony is that the profit margins at these now office-less locations are among the very top of the industry. According to news media analyst Ken Doctor, the Philadelphia-area cluster that Pottstown is part of earned a 30 percent margin — that’s a profit of $18 million — in fiscal 2017.

In Massachusetts, the Fitchburg Sentinel & Enterprise and the Lowell Sun together earned a stunning 26 percent profit margin (netting $5 million) during the 2017 fiscal year, Doctor reported.

In comparison, Doctor says, “Four major publishers — the New York Times Co., Gannett, Tronc, and McClatchy — each post operating margins under 10 percent.”

Kennedy says the closure scenario has more to do with newspapers’ owners — and their propensity to incur massive debts — than with market forces.

“Publicly traded corporations have been very bad news for newspapers,” he said. “Now the chains are in such bad shape that shareholders want nothing to do with them. So you move over to the private equity side, and you can squeeze out the last few dollars.”

The sad part about such extreme cuts, he said, is “I don’t think it’s necessary.”

He points to the Berkshire Eagle in Western Massachusetts, which local owners bought from DFM in 2016. “It’s having something of a renaissance… If you take papers that have no debt and have local ownership, they’re doing OK.”

Another Massachusetts paper, the Woburn Daily Times Chronicle is “still owned by the same family, and they’re doing OK. They’re subject to the same economic factors as everyone else, but they have no debt.”

When a private-equity controlled chain like DFM own the local paper, Kennedy says, communities are often left without a robust source of local news.

“You have these avaricious owners out there who don’t care about journalism, making it difficult for somebody else to come in and serve the community,” he said. “They’ve got the readers, they’ve got the advertisers.”

Kennedy says it’s very hard to know where the trend of private equity ownership is heading. He closely follows another national chain, GateHouse. Although that company is also known for aggressive cost-cutting, Kennedy says GateHouse at least appears to want to keep its papers alive.

“I think GateHouse has convinced themselves that they’re in the newspaper business,” he said. “Digital First, I don’t think they’re in the news business. They’re harvesting these papers for their organs and once they do, they’ll move on.”

He’s quick to add that the remaining DFM journalists on the job give their all to their communities.

“The reporters are still doing God’s work. The editors are still doing great work — that has nothing to do with the ownership,” he said.

Dave Levengood agrees. “We’ve got dedicated reporters,” he said. “But they can’t do it all either. They can’t be in all places.

Kennedy remains hopeful that if more civic-minded local owners are able to buy DFM papers — as happened with the Berkshire Eagle — they will have a future.

“I think the papers could do fine if you could take the dead hand of Digital First off them.”