Last December, the media world was abuzz with speculation about who was behind the mysterious News + Media Capital Group LLC after an announcement that the Delaware-based company was in the process of purchasing the Las Vegas Review-Journal from New York-based New Media Investment Group Inc. A political power move was suspected, and, sure enough, days later Fortune magazine revealed the buyer: Sheldon Adelson, the Las Vegas casino magnate and GOP megadonor.
There was also a lesser noticed local angle to the story: Since March 2015, New Media — operating under the name GateHouse Media LLC, its newspaper chain headquartered in Pittsford, New York — has owned the Ames Tribune, which it took over as part of its $102.5 million acquisition of Las Vegas-based Stephens Media LLC. The Tribune was one of eight dailies acquired by GateHouse through the purchase, in addition to over five dozen niche publications and weekly newspapers including several in Iowa. (Through such acquisitions, GateHouse has come to own 125 daily newspapers in the U.S., more than any other media chain in the country, although many of the papers are small-circulation.)
When the pending deal was announced the month before, memos from the CEOs of both companies were circulated to Stephens Media employees (myself included — I worked at the Tribune at the time). “We believe the Review-Journal provides us with a strong Western U.S. property that can serve as a catalyst and platform for aggressive expansion of digital products and services,” GateHouse CEO Kirk Davis wrote.
But less than a year later, in December, GateHouse closed on a deal it couldn’t refuse: to sell the Review-Journal and two other publications in the state of Nevada for a staggering $140 million, nearly three times what they were valued at when the company bought them and $37.5 million more than the entire cost of acquiring Stephens Media. (GateHouse continued to manage the Review-Journal until the end of January, when Adelson took full control.)
“journalistic misconduct of epic proportions”
The announcement that month of the sale was the latest in a bizarre sequence of events in the Review-Journal’s unfolding transition. Michael Schroeder, the manager of News + Media Capital Group and the company’s only employee mentioned in the announcement, told reporters at the paper not to worry about who had just bought it. They disregarded his advice and began digging.
The month before the paper’s acquisition was publicly announced, they reported, GateHouse management approached the executive editor of one of the company’s Florida papers, the Sarasota Herald-Tribune, with a strange request: that three reporters drop their other work for two weeks to investigate three judges in faraway Clark County, Nevada, whose county seat is in Las Vegas. One of the judges, Elizabeth Gonzalez, was hearing a case over a high-profile wrongful termination lawsuit against the Las Vegas Sands Corp., which is owned by Adelson. When the Herald-Tribune declined, GateHouse asked the Review-Journal, whose reporters visited the judges’ courtrooms over the course of a week and ultimately wrote 15,000 words in diary form that were never rewritten for publication in the paper.
On Nov. 30, however, a small paper in Connecticut not owned by GateHouse, the New Britain Herald, ran an article criticizing Gonzalez for her “inconsistent and even contradictory” handling of the Las Vegas Sands case and another one involving Steve Wynn, who is also a Las Vegas casino magnate. The article was written by a reporter named Edward Clarkin — or so its byline claimed. In reality, Clarkin did not exist. The article was plagiarized, and sources it quoted were never contacted by any reporter. The article’s actual author was Schroeder, the News + Media Capital Group manager, who owned the Connecticut paper and whose poorly concealed pseudonym was just a combination of his middle name and mother’s maiden name. The story, as a reporter at the paper who resigned in disgust put it, was “journalistic misconduct of epic proportions.”
When Review-Journal reporters asked David Arkin, GateHouse’s senior vice president of content and product development, about his company’s requests to investigate the judges, Arkin replied in a prepared statement claiming that the Adelson connection was merely a coincidence. GateHouse reached out to the Florida paper, the statement said, because the Review-Journal was new to the company, which was more familiar with its veteran investigative reporters in the Sunshine State. In doing so, the statement claimed, GateHouse was simply “engaged to tackle an investigative story in Las Vegas with no knowledge of the prospective new buyer.” That was surely a lie. In early January, the New York Times reported that the Review-Journal had been asked to monitor Gonzalez two days after Adelson’s lawyers failed to have her removed from the Las Vegas Sands case, while negotiations over the paper’s acquisition were nearing completion.
(And that’s hardly where the story ends.)
Last month, GateHouse CEO Kirk Davis reflected on the “extraordinary offer” and subsequent sale of the Review-Journal for $140 million, telling Columbus Business First that he would tread more carefully in the future. “It was highly unusual,” he said. “I think many of us were a little out of our element figuring different aspects of that transaction out.” Davis added that GateHouse pursued the offer with the interests of its stakeholders in mind — but apparently without concern for upholding any journalistic standards in the process.
The corporate gibberish riddling Davis’ letter to Stephens Media employees — the sort of cheery vapidity found in unsolicited emails from flacks that journalists cynically call bullshit on every day — further illustrated how GateHouse prioritized its bottom line over journalism: “Equally important [as the Review-Journal] are the additional seven daily newspapers and dozens of weekly papers and niche products in other states that are part of Stephens Media,” Davis wrote. “They represent a nice combination of synergies with our adjacent properties and/or increase our presence in other attractive states.”
Davis concluded his memo under a boldface subheading that read, “You do excellent work, too!” adding, “We’ve had an opportunity to carefully review all of your products and you certainly deserve much credit.” (For what, exactly, he didn’t say, but his memo made no mention of journalism and included the word “news” just a single time.) “So, taken together – attractive products, produced by a wonderful employee complement, all in attractive markets. Great formula. We’re in!”
At the time, GateHouse’s reputation was questionable enough already given the company’s penchant for buying up newspapers in bulk (the company’s goal now is to double the number of dailies it owns to 250 within three years), then squeezing them for profits by gutting their staffs and outsourcing design jobs to a central location in Austin, Texas, launched in 2014 by Arkin, the GateHouse senior vice president. (Mike Reed, the CEO of GateHouse parent New Media, has cited the investment in the design center as an example of how GateHouse is “doing more to further local journalism than any other company in the country” — the idea ostensibly being that the expertise and resources available there enhance the quality of local newspapers’ reporting. By 2014, Reed and Davis had been collecting six-figure bonuses for several years while leaving reporters without raises for seven years, forcing one to get a weekend job at McDonald’s.)
In the wake of the Adelson affair, GateHouse knew it needed to try rebuilding lost trust, and reportedly even considered hiring a crisis management firm. “Anything less than a publicly released investigation of its journalistic missteps might fail to satisfy the industry and knowledgeable readers of its papers,” news industry analyst Ken Doctor reported in early January. “At a minimum, though, this week the Review-Journal will seek to begin stabilizing itself, looking internally at what happened and why, and set out more industry-standard rules of journalistic conduct and engagement.”
But in the time since, it appears that GateHouse still has a dubious interpretation of just what those industry-standard rules are. Earlier this month, exposing another brazen display of the company’s willingness to shrug off clear conflicts of interest, CommonWealth magazine revealed details about a bid proposal GateHouse submitted with the city of Quincy, Massachusetts, where it owns the Patriot Ledger newspaper, for the task of marketing the recently redeveloped downtown and presenting a positive image of the city in part by generating favorable media coverage for it. The bid, Quincy’s mayor told the magazine, was “absolutely not something the city would have entertained” because of the ethical conflicts that would arise if the city’s major newspaper and government marketing firm were owned by the same company — particularly because, in its bid proposal, GateHouse suggested that the city marketing contract would be used to deliver “measurable results” for the Patriot Ledger:
This expertise includes delivering measurable results for our partners in traditional media, digital media, and digital services as well as having considerable content generation serving The City of Quincy tourism, news, and business. Further, we have extensive knowledge and relationships within The City of Quincy and the surrounding communities that may be leveraged to achieve the desired results.
It’s no surprise for a giant media conglomeration like GateHouse to have an interest in expanding the reach of its marketing arm, especially given the sharp decline of the newspaper industry over the past decade that the company has taken advantage of to quickly grow that side of its business. For the third year running, CareerCast.com’s popular Job Rated report recently listed newspaper reporter as the worst job in the country, with advertising sales person not far behind in the top 10 for the first time. “Declining prospects tied to the stability — or instability — of media impact the outlook for the profession,” the website reported. “Add high stress from the growing pressure to drive profits for increasingly less profitable outlets, and advertising sales person’s place in the worst jobs of 2016 makes sense.”
Many newspaper chains, GateHouse among them, have only contributed to this instability, opting for job cuts, consolidations, and reactive, short-term revenue streams like easy-to-skirt paywalls instead of trying to adapt to a changing industry and implement innovative, more sustainable business models (although, to be fair, even those on the forefront of digital media haven’t quite figured that out). Many are years behind the digital media curve, as was Stephens Media, which left the Tribune with a website rife with design flaws and dependent on an outsourced IT department in Las Vegas that often took days to respond to pressing troubleshooting requests.
It’s not yet clear how the GateHouse acquisition will affect the Tribune. There weren’t immediate newsroom staff cuts, and the newspaper’s corporate owners have typically been relatively hands-off about editorial and management decisions. It’s still publishing some quality reporting. GateHouse’s websites are even more of a cluttered mess than the ones designed by Stephens, but Arkin, the GateHouse senior vice president, wrote last Thursday that his company was working on modern redesigns. “It’s important to try and fail because the old models of journalism just aren’t working,” he wrote. “We have to be innovative and learn — we have to develop new products, solutions and experiences that work for today’s readers.” Encouraging words, but words deserving of skepticism considering GateHouse’s recent track record.
Instead of out-of-state executives who play fast and loose with ethics to make a quick buck, perhaps what the Tribune and other newspapers like it need are their own, more well-intentioned Sheldon Adelsons — benefactors with the resources to make enticing buyout offers, interested not in shady political power grabs but in quality, hard-nosed journalism fully managed within their own communities at a time when the continued decline of the industry has been diminishing the traditional role of local watchdog journalism. It’s an idea that has been discussed before in Ames, albeit probably fancifully.
Photo: Las Vegas Review-Journal owner Sheldon Adelson. Bectrigger/Wikimedia Commons
