In her recent book, Hedged: How Private Investment Funds Helped Destroy American Newspapers and Undermine Democracy (University of Illinois Press, 2024) investigative journalist and critical media scholar Dr. Margot Susca unpacks the role of hedge funds and private equity firms in dismantling the Fourth Estate. In January 2025, Center for Media at Risk Steering Committee member and doctoral candidate Louisa Lincoln sat down with Dr Susca to discuss the ‘private investment era’ of American newspapers, how private ownership has fostered increasingly precarious working conditions for journalists and what journalism scholars and researchers can do about it.
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Louisa Lincoln: To start, I’d love to hear more about what prompted you to study private investment ownership of local newspapers. What brought you to this research topic?
Margot Susca: When I started the research process, it was in early 2018, I had done an interview with NBC News’ Think. It was right after the FCC had rolled back some media ownership restrictions. And it was at a time when layoffs were getting a lot of attention from newspapers, so the host of this show asked me, ‘Well, how do you know that layoffs and ownership are as responsible for some of these issues, as you’ve said?’ And, of course, I had read so much theory — just like many other scholars — I’d read McChesney, I’d read Chomsky, core leaders in the field looking at consolidation and ownership. But I couldn’t really pinpoint what it was about ownership, specifically structure that was really causing these issues.
So when I started doing research, I was really interested in looking at the newspaper chains. I was looking at the biggest chains, Gannett Media News Group — sometimes referred to as Digital First — Tribune, McClatchy. Over time, I started noticing how big of a role private equity firms and hedge funds played, mostly as institutional investors — that is, the largest shareholders of these newspaper chains. When I first started, Alden Global Capital, a New York City based hedge fund, was an owner. But in the course of my research, they bought an additional newspaper chain in McClatchy, which has some of the most notable titles in American journalism, including The Miami Herald, El Nuevo Herald. They were also bought by a different private investment fund.
Why I knew then that I wanted to write the book was there was missing a complete volume examining the historical influence of these firms over the chains that they owned or invested in. It just became such conventional wisdom that Craigslist came, Monster.com came and all of a sudden, the loss of this advertising revenue meant newspapers were dead. Like, that was it. That was the one thing that happened. But what was missing from the record was the role that these private investment funds played at that pivotal time when the Internet was changing both the advertising revenue model as well as how readers and citizens access newspapers. It wasn’t like the Internet just got plugged in and all of a sudden, newspapers died. Certainly, the loss of advertising revenue was crucial in the state of newspapers. But what needed to be more fully explored was the role that private investment played in stopping any kind of digital innovation. They chose mergers and acquisitions and consolidation as a strategy to meet the digital moment. I think what that ended up doing was giving audiences less. They laid off thousands of journalists nationwide. Newspapers stopped being as relevant as they could have been online, because these private investment funds dismantled them.
LL: I want to follow up on this prevailing narrative that you mentioned about the decline of local journalism being due largely to advertising revenues being absorbed by these big tech companies. You make a compelling case in the book that it’s a lot more complicated than that — that private investment played a much larger role in the widespread decline of the newspaper industry. Why do you think this factor hadn’t been part of the prevailing discussion?
MS: I love your question. Penelope Muse Abernathy has mentioned what she refers to as the new media barons, and there are some scholars addressing the issue of hedge funds and private equity. It took three years for me to really dig through more than 20,000 pages of documents that included public filings with the U.S. Securities and Exchange Commission, bankruptcy court records from Tribune [Media Company] and some from McClatchy. I also did more than 100 in-depth interviews to try to get a sense of what this ownership meant to both journalists and citizens. And I think that I brought a very specific skill set to that research. As a former journalist who understood accountability reporting, it was important for me to say we need to connect the dots between ownership and investment and what’s happening to news and information in our democracy. So, the fact that I had been both a practitioner and was trained as a critical media scholar meant that I had the skill set for this book.
LL: I want to take a step back for folks who haven’t read the book. What are some of the defining features of this private investment era and how does it differ from previous areas, including most recently the mass market era?
MS: The reason I wanted to conceptualize it as an era is that I think it’s a helpful heuristic to examine periods of American journalism history. When we talk about the ‘penny press era,’ we have an understanding of what that meant. That America was industrializing, there was competition for audiences, advertising started to be more important. When we talk about the ‘mass market era,’ chains became more important. More investigative journalism got done. We also had the ‘yellow journalism’ era where we saw an increase in certain content that was meant to drive readership, to get eyeballs to the news.
In every era of American newspaper history, dating back to the colonial times, profit has been central. Newspapers have been, throughout American history, a very profitable business. Benjamin Franklin is probably not known enough for his ownership of the Philadelphia Gazette. But he made a pretty hefty sum. Hearst and Pulitzer are two names we still know from 19th and early 20th century journalism for the huge wealth that they were able to generate from news. So profit has always been a part of it. I think what makes this era different is that the owners and the investors have such massive ties to other industry, to other issues and to politicians, that it makes this era of journalism history far more problematic. And they’re not building anything. If anything, they’re dismantling it.
I say there are five features of the private investment era. So, one is ‘profit overharvesting.’ And I borrowed a term from Philip Meyer, who looked at profit harvesting. So overharvesting was: ‘how can we maximize the amount of money we’re going to take from subscriptions and advertising?’ Remember that, even as we talk about the newspaper industry being dead, in 2020, newspapers were still a multibillion dollar business. That’s a lot of money to still spread around.
Looking at overharvesting, mergers and acquisitions were a key feature. Rather than having digital investment, news owners and news investors put pressure to merge and acquire, and you had a company like Fortress Investment Group that was a new owner of GateHouse, now Gannett, that acquired hundreds of newspapers to become America’s largest chain within a decade — a very short amount of time.
And then another feature is layoffs. As soon as they would buy these papers, almost immediately layoffs would happen. And these layoffs did not happen because these companies were not making money. The layoffs happened because people — the health insurance you pay for them, the salaries you pay to them — are the biggest line item in any company’s budget. If you’re bringing in $10 million in advertising and you did that with a staff of 100, you can get rid of 30% of that staff and you’re still bringing in that $10 million. That’s a huge bump in profit that you can give back to your owners or your shareholders.
The result of these layoffs was what I ended up calling neglected audiences. I did an interview with a former editor at the Boise, Idaho paper. She talked about finding, during an office move, a chart that showed where everyone sat in the newsroom at The Boise Statesman. And when she found that chart, it was 100 people. A few years later, it was 20. For local journalism, remember, we’re not talking about Ukraine and Russia. We’re not looking at the Gaza peace deal. Those might be AP stories that run on the front page. But you’re talking about the city council, the board of education, what’s going to happen to your kid’s school, what’s going to happen with high school football. That’s a big draw for local journalism. So what that meant was after layoffs you had fewer and fewer people who were covering those essential beats. And that’s why you pay for local news. You have CNN and MSNBC or Fox News, maybe, to cover national events. But people pay for local newspapers to get access to their community news, to get access to what’s happening at those types of meetings. That’s a key conduit between local journalism and citizenry, and it all but disappeared.
And then the fifth feature of the private investment era is debt. These investors said, ‘We’ll get bigger and bigger will be better.’ And they chose mergers and acquisitions as a strategy. So that means they were buying up, buying up, buying up and then they were billions of dollars in debt. And there was no real strategy to handle the debt. And once the advertising losses came, that debt became disastrous and private equity got involved in the swapping of the debt. And that happened at McClatchy. That happened at Media News Group. They were able to swap. You can buy the debt of a company, which is bonds, or you can buy shares of the company, which is taking an equity stake. What happened is these companies started to buy debt and they were able to shift that debt into equity ownership.
LL: As the entire book illustrates, it’s so important to understand the trajectory of this industry that has been ruled by debt for the last 15 years. And as the book argues, that is the key thing that we haven’t been understanding.
MS: Yeah, once you start looking at the debt — I mean, maybe I need to get out more — it’s fascinating because then you have these mega private investment firms like Apollo Global Management, and they financed the Gannett-GateHouse merger that essentially made the largest newspaper chain in America beholden to Apollo Global Management. Then they get a seat or two on the board of directors, which gives them a lot of say over the operations of a company. When I started looking at the debt, that was a signal to me that there’s something more to this than just the loss of advertising revenue. Why would you want to get involved in a company unless control over that narrative becomes crucial? We could look at Hearst and Pulitzer or you could look at Katharine Graham and the Graham family when they controlled The Washington Post and say, ‘Well, maybe they were cozy with politicians.’ But Katharine Graham, Ben Bradlee, Ben Bagdikian, they took down a president of the United States. What I don’t see happening under the private investment era, I don’t see the ability of these newspapers to do that kind of work. And I think that it’s intentional. You don’t want to disrupt the status quo when you’re profiting from a newspaper system that’s been dismantled and hamstrung. So, you have a newspaper system that’s now beholden to billionaires and you have a social media system that is in lockstep with other billionaires. That is a disaster for the American citizen. Really, truly.
LL: Given the focus of the Center for Media at Risk, I also want to hone in on how individual journalists are experiencing this kind of ownership. In the sixth chapter of your book, you wrote about Kristin Doerschner in Western Pennsylvania, how her paper was purchased by GateHouse Media in 2017 and had successive rounds of layoffs. And then eventually, she decided to leave the paper as well. I wonder if you could tell me more about how private investment ownership of local newspapers contributes to increasingly precarious working conditions for journalists.
MS: Kristen Doerschner is an excellent example. She was the kind of person that newsrooms should be thrilled to have, right? She was an accomplished investigative journalist. She had a dedicated beat covering law enforcement, where she determined that a public defender was not doing their job and ultimately wasn’t even coming in to work. And through her investigative work, was able to get certain funds returned to victims’ families because there was this complete breakdown in the system. She won awards for that work. So, she then rose to become managing editor at a newspaper in Beaver County, Pennsylvania. And once there were more and more cuts. So GateHouse — which was operated by Fortress Investment Group, a New York City private equity firm — almost immediately started laying off journalists. [Doerschner] described herself as a human Swiss Army Knife of skills, that there were a lot of things that she was able to do. But with layoffs what she could not do was staff a newspaper that helped a community understand itself. In terms of the risk to journalists, she talked about a huge decline in her mental health. She said her hair was falling out from the stress.
A lot of news organizations sell young journalists — and I don’t mean young in age, but potentially young in age or young in experience — they sell this idea that you’re passionate about journalism, that you’re passionate about what we teach in journalism schools. Give voice to the voiceless, try to be a crusader for what’s right and document the first draft of history. It does take a certain kind of student to be passionate about that work and to go into a field where, especially recently, all you see is negativity and layoffs. I think that selling young journalists on that passion and idealism automatically puts them at risk because they’re doing the work now of two and three people.
I talk in the book about one of my former students who had an undergraduate and graduate degree from American University, where I teach. And I helped her get a job in South Florida where I used to work. I used to be one of three education reporters. When I left in 2007 to get a doctorate, they gave my beat to another, so that was two education reporters in a region of roughly 70,000 kids, dozens and dozens of schools. By the time this student took that job, the education job, she was the only education reporter in a region roughly the size of Rhode Island. I know Rhode Island is a small state, geographically, but you’re one person in your Honda Civic trying to make the rounds and getting to know principals, teachers, parents, members of the PTA. When I was an education reporter, once every couple of weeks I’d have coffee with a group of parents. I had teachers who I would see socially. I tried to meet with people to source them. And that is all but lost in this ownership structure when you have one person doing the work of three.
I think that puts journalists at risk of burnout. And it puts communities at risk of not having a watchdog on their leaders. Or anyone even telling the positive stories from their communities, either. It’s a very precarious time for journalists. And I’ve seen the students that I teach — I taught reporting in the fall, they’re just such a dedicated, hardworking group of students who really want to tell stories. And I think that there will be opportunities for them in nonprofit outlets, small for-profit, independent outlets. But I think we put young journalists at a risk when we sell them on passion and fighting the good fight and then we create working conditions that are just unsustainable.
When I was at my first paper, I joked that investigative journalism was my hobby. I had a beat and I covered that beat and I would stay late at night, I’d work on weekends and I would do that work. I did that for the five years that I was a local journalist and did some great stories — got people voted out of office that were corrupt, documented secret spending, those kinds of things. Other journalists have put people in jail, right? I mean, this is important work. But I now tell students that you cannot work for free. You cannot maintain that pace. And it’s a hard reality. You want to tell them the work is hard — and it is hard. It’s tough work. It’s not easy work. I’ve been screamed at at meetings by people who have been the subject of investigative work. That alone is tough. But when you’re worried about whether or not you’re going to be able to keep your job or whether or not you’re going to be furloughed, that’s a tough cocktail.
LL: You talk about some of the strategies that might bring about an end to the private investment era of local newspapers. And you point to two main solutions: one being nonprofit, alternative ownership and business models; and the other being finding policy measures or levers that can ensure that this kind of ownership concentration doesn’t happen. Could you talk about those two solutions and what they offer us?
MS: I think that there is an opportunity for antitrust enforcement. We don’t have a monopoly, certainly, but I think that there is an oligarchy. I think when you look at such a small number of papers that are operating as owners — or, when you look at just those institutional investors – that represents a very small group, I think a smart attorney at the Department of Justice or the Federal Trade Commission would be able to tackle looking at this small group that’s operated for the last 20 years. Certainly in my view, that could be a structure that works.
But, I mean, there’s always a but —we’re about to have a billionaire hedge fund guy at the head of the Treasury Department. I think we’re about to see a revolving door between agencies and industry that’s about to become even — not to say that that only happens in Republican administrations — but the guardrails of the Federal Communications Commission, the guardrails of the Federal Trade Commission and the U.S. Department of Justice are there for a reason. And it’s to protect lower quality goods from being put out into society, essentially. And that’s what we have in the newspaper market — we have a lower quality good. Those guardrails are there and they’re being dismantled. What’s going to happen in the next four years with this FCC? I don’t think it’s going to be good. I’m smart enough to recognize that antitrust enforcement, a Federal Communications Commission with teeth, will not happen. And if I was hopeful about that in the book, I’m less hopeful about it now on January 20th, 2025.
That leads us to the nonprofit market. I also talk about URL Media in New York City, which is a for-profit, independent umbrella group for several [news] organizations in the city. I’m hopeful about the amount of attention that the local news crisis has received, because I think that in any crisis, that creates opportunity. And what we’ve seen since the book came out is this pledge from Press Forward, $500 million given by almost two dozen philanthropic organizations trying to get local foundations involved in their communities, and that’s really forced people to say, ‘Wow, this really is bad.’
When it comes to the nonprofit news space, some of the questions that I have as a researcher are if you’re a small nonprofit doing investigative work or doing even just local community work, will it have the same impact that maybe a Miami Herald investigation would have had? Will politicians or citizens ignore it because they didn’t see it? I was a journalist for years, and I think that I was a little close-minded to the idea of public funding for journalism because it seemed as if independence is a core feature of journalism ethics, and we want to be independent from the government. But I think what we’re seeing is ‘is the market alone going to be enough for what Americans need in the future, when you have so much usage of social media sites that are rife with disinformation and misinformation? Since I wrote that conclusion, I’m hopeful about the nonprofit market, but I’m also concerned that as a market feature, philanthropy alone won’t be enough. And I’m concerned about the dismantling of any regulation that exists.
I’m always encouraged when I meet people who are taking pieces of these issues and trying to find solutions. And maybe one of the things that we need to arrive at is an understanding of this ultra-fragmented media marketplace. What does it mean if we have successful news outlets that serve 4,000 people instead of a Hartford Courant, which was my hometown newspaper, that would serve 250,000? How do we measure whether or not it’s working? Is it more voting? In that certainly we want to see people participating in the democratic process, but you want to see them participating with all of the tools that they need to be citizens. I think a lot of questions remain. And I’m encouraged by the number of researchers who are trying to tackle those questions.
LL: You just got to my last question so perfectly, which was what can we as journalism scholars and educators do to create a post-private investment future for local journalism?
MS: We need practical solutions. One of the things that I was most encouraged by at the Local News Researchers conference last year was how much of the research is out in communities, talking to funders, talking to leaders. I think this is the kind of work that we need to get out of the ivory tower and recognize that the research we do can be very meaningful for policy solutions. I think journalism researchers need to recognize that we must be part of a solution. This isn’t the time for more theory. I think this is the time for more action. We know the problems. Whether you’re a political economist, whether you’re studying media death, whether you’re studying news avoidance, whether you’re studying text. We need practical solutions.
LL: I’m right there with you. Thank you so much, Dr. Susca.
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Margot Susca is Assistant Professor of Journalism, Accountability and Democracy in the School of Communication at American University in Washington, D.C. Her research combines investigative reporting techniques and political economic methods to study journalism and civic engagement in U.S. democratic society.
Louisa Lincoln is a doctoral candidate at the Annenberg School for Communication and a Steering Committee member at the Center for Media at Risk. Her research examines sustainable funding models for nonprofit news and public media organizations in the U.S.
