Hedge Fund 'Asshole' Destroying Local News & Firing Reporters Wants Google & Facebook To Just Hand Him More Money

from the really-now? dept

Have you heard of Heath Freeman? He’s a thirty-something hedge fund boss, who runs “Alden Global Capital,” which owns a company misleadingly called “Digital First Media.” His business has been to buy up local newspapers around the country and basically cut everything down to the bone, and just milk the assets for whatever cash they still produce, minus all the important journalism stuff. He’s been called “the hedge fund asshole”, “the hedge fund vampire that bleeds newspapers dry”, “a small worthless footnote”, the “Gordon Gecko” of newspapers and a variety of other fun things.

Reading through some of those links above, you find a standard playbook for Freeman’s managing of newspapers:

These are the assholes who a few years ago bought the Denver Post, once one of the best regional newspapers in the country, and hollowed it out into a shell of its former self, then laid off some more people. Things got so bad that the Post?s own editorial board rebelled, demanding that if ?Alden isn?t willing to do good journalism here, it should sell the Post to owners who will.?

And here’s one of the other links from above telling a similar story:

The Denver newsroom was hardly alone in its misery. In Northern California, a combined editorial staff of 16 regional newspapers had reportedly been slashed from 1,000 to a mere 150. Farther down the coast in Orange County, there were according to industry analyst Ken Doctor, complained of rats, mildew, fallen ceilings, and filthy bathrooms. In her Washington Post column, media critic Margaret Sullivan called Alden ?one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism.?

And, yes, I think it’s fair to say that many newspapers did get a bit fat and happy with their old school monopolistic hold on the news market pre-internet. And many of them failed to adapt. And so, restructuring and re-prioritizing is not a bad idea. But that’s not really what’s happening here. Alden appears to be taking profitable (not just struggling) newspapers, and squeezing as much money out of them directly into Freeman’s pockets, rather than plowing it back into actual journalism. And Alden/DFM appears to be ridiculously profitable for Freeman, even as the journalism it produces becomes weaker and weaker. Jim Brady called it “combover journalism.” Basically using skeleton staff to pretend to really be covering the news, when it’s clear to everyone that it’s not really doing the job.

All of that is prelude to the latest news that Freeman, who basically refuses to ever talk to the media, has sent a letter to other newspaper bosses suggesting they collude to force Google and Facebook to make him even richer.

You can see the full letter here:


Let’s go through this nonsense bit by bit, because it is almost 100% nonsense.

These are immensely challenging times for all of us in the newspaper industry as we balance the two equally important goals of keeping the communities we serve fully informed, while also striving to safeguard the viability of our news organizations today and well into the future.

Let’s be clear: the “viability” of your newsrooms was decimated when you fired a huge percentage of the local reporters and stuffed the profits into your pockets, rather than investing in the actual product.

Since Facebook was founded in 2004, nearly 2,000 (one in five) newspapers have closed and with them many thousands of newspaper jobs have been lost. In that same time period, Google has become the world’s primary news aggregation service, Apple launched a news app with a subsription-based tier and Twitter has become a household name by serving as a distribution service for the content our staffs create.

Correlation is not causation, of course. But even if that were the case, the focus of a well-managed business would be to adapt to the changing market place to take advantage of, say, new distribution channels, new advertising and subscription products, and new ways of building a loyal community around your product. You know, the things that Google, Facebook and Twitter did… which your newspaper didn’t do, perhaps because you fired a huge percentage of their staff and re-directed the money flow away from product and into your pocket.

Recent developments internationally, which will finally require online platforms to compensate the news industry are encouraging. I hope we can collaborate to move this issue forward in the United States in a fair and productive way. Just this month, April 2020, French antitrust regulators ordered Google to pay news publishers for displaying snippets of articles after years of helping itself to excerpts for its news service. As regulators in France said, “Google’s practices caused a serious and immediate harm to the press sector, while the economic situation of publishers and news agencies is otherwise fragile.” The Australian government also recently said that Facebook and Google would have to pay media outlets in the country for news content. The country’s Treasurer, Josh Frydenberg noted “We can’t deny the importance of creating a level playing field, ensuring a fair go for companies and the appropriate compensation for content.”

We have, of course, written about both the plans in France as well as those in Australia (not to mention a similar push in Canada that Freeman apparently missed). Of course, what he’s missing is… well, nearly everything. First, the idea that it’s Google that’s causing problems for the news industry is laughable on multiple fronts.

If newspapers feel that Google is causing them harm by linking to them and sending them traffic, then they can easily block Google, which respects robots.txt restrictions. I don’t see Freeman’s newspaper doing that. Second, in most of the world, Google does not monetize its Google News aggregation service, so the idea that it’s someone making money off of “their” news, is not supported by reality. Third, the idea that “the news” is “owned” by the news organizations is not just laughable, but silly. After all, the news orgs are not making the news. If Freeman is going to claim that news orgs should be compensated for “their” news, then, uh, shouldn’t his news orgs be paying the actual people who make the news that they’re reporting on? Or is he saying that journalism is somehow special?

Finally, and most importantly, he says all of this as if we haven’t seen how these efforts play out in practice. When Germany passed a similar law, Google ended up removing snippets only to be told they had to pay anyway. Google, correctly, said that if it had to license snippets, it would offer a price of $0, or it would stop linking to the sites — and the news orgs agreed. In Spain, where Google was told it couldn’t do this, the company shut down Google News and tons of smaller publications were harmed, not helped, but this policy.

This surely sounds familiar to all of us. It’s been more than a decade since Rupert Murdoch instinctively observerd: “There are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production… Their almost wholesale misappropriation of our stories is not fair use. To be impolite, it’s theft.”

First off, it’s not theft. As we pointed out at the time, Rupert Murdoch, himself, at the very time he was making these claims, owned a whole bunch of news aggregators himself. The problem was never news aggregators. The problem has always been that other companies are successful on the internet and Rupert Murdoch was not. And, again, the whole “misappropriation” thing is nonsense: any news site is free to block Google’s scrapers and if it’s “misappropriation” to send you traffic, why do all of these news organizations employ “search engine optimizers” who work to get their sites higher in the rankings? And, yet again, are they paying the people who make the actual news? If not, then it seems like they’re full of shit.

With Facebook and Google recently showing some contrition by launching token programs that provide a modest amount of funding, it’s heartening to see that the tech giants are beginning to understand their moral and social responsibility to support and safeguard local journalism.

Spare me the “moral and social responsibility to support and safeguard local journalism,” Heath. You’re the one who cut 1,000 journalism jobs down to 150. Not Google. You’re the one who took profitable newspapers that were investing in local journalism, fired a huge number of their reporters and staff, and redirected the even larger profits into your pockets instead of local journalism.

Even if someone wants to argue this fallacy, it should not be you, Heath.

Facebook created the Facebook Journalism Project in 2017 “to forge stronger ties with the news industry and work with journalists and publishers.” If Facebook and the other tech behemoths are serious about wanting to “forge stronger ties with the news industry,” that will start with properly remunerating the original producers of content.

Remunerating the “original producers”? So that means that Heath is now agreeing to compensate the people who create the news that his remaining reporters write up? Oh, no? He just means himself — the middleman — being remunerated directly into his pocket while he continues to cut jobs from his newsroom while raking in record profits? That seems… less compelling.

Facebook, Google, Twitter, Apple News and other online aggregators make billions of dollars annually from original, compelling content that our reporters, photographers and editors create day after day, hour after hour. We all know the numbers, and this one underscores the value of our intellectual property: The New York Times reported that in 2018, Google alone conservatively made $4.7 billion from the work of news publishers. Clearly, content-usage fees are an appropriate and reasonable way to help ensure newspapers exist to provide communities across the country with robust high-quality local journalism.

First of all, the $4.7 billion is likely nonsense, but even if it were accurate, Google is making that money by sending all those news sites a shit ton of traffic. Why aren’t they doing anything reasonable to monetize it? And, of course, Digital First Media has bragged about its profitability, and leaked documents suggest its news business brought in close to a billion dollars in 2017 with a 17% operating margin, significantly higher than all other large newspaper chains.

This is nothing more than “Google has money, we want more money, Google needs to give us the money.” There is no “clearly” here and “usage fees” are nonsense. If you don’t want Google’s traffic, put up robots.txt. Google will survive, but your papers might not.

One model to consider is how broadcast television stations, which provide valuable local news, successfully secured sizable retransmission fees for their programming from cable companies, satellite providers and telcos.

There are certain problems with retransmission fees in the first place (given that broadcast television was, by law, freely transmitted over the air in exchange for control over large swaths of spectrum), and the value they got was in having a large audience to advertise too. But, more importantly, retransmission involved taking an entire broadcast channel and piping it through cable and satellite to make things easier for TV watchers who didn’t want to switch between an antenna and a cable (or satellite receiver). An aggregator is not — contrary to what one might think reading Freeman’s nonsense — retransmitting anything. It’s linking to your content and sending you traffic on your own site. The only things it shows are a headline and (sometimes) a snippet to attract more traffic.

There are certainly other potential options worth of our consideration — among them whether to ask Congress about revisiting thoughtful limitations on “Fair Use” of copyrighted material, or seeking judicial review of how our trusted content is misused by others for their profit. By beginning a collective dialogue on these topics we can bring clarity around the best ways to proceed as an industry.

Ah, yes, let’s throw fair use — the very thing that news orgs regularly rely on to not get sued into the ground — out the window in an effort to get Google to funnel extra money into Heath Freeman’s pockets. That sounds smart. Or the other thing. Not smart.

And “a collective dialogue” in this sense appears to be collusion. As in an antitrust violation. Someone should have maybe mentioned that to Freeman.

Our newspaper brands and operations are the engines that power trust local news in communities across the United States.

Note that it’s the brands and operations — not journalists — that he mentions here. That’s a tell.

Fees from those who use and profit from our content can help continually optimize our product as well as ensure our newsrooms have the resources they need.

Again, Digital First Media, is perhaps the most profitable newspaper chain around. And it just keeps laying off reporters.

My hope is that we are able to work together towards the shared goal of protecting and enhancing local journalism.

You first, Heath, you first.

So, basically, Heath Freeman, who has spent decade or so buying up profitable newspapers, laying off a huge percentage of their newsrooms, leaving a shell of a husk in their place, then redirecting the continued profits (often that exist solely because of the legacy brand) into his own pockets rather than in journalism… wants the other newspapers to collude with him to force successful internet companies who send their newspapers a ton of free traffic to pay him money for the privilege of sending them traffic.

Sounds credible.

Filed Under: , , , , , , ,
Companies: alden capital, alden global capital, digital first media

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Comments on “Hedge Fund 'Asshole' Destroying Local News & Firing Reporters Wants Google & Facebook To Just Hand Him More Money”

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31 Comments
This comment has been deemed insightful by the community.
That One Guy (profile) says:

'I care about journlists, if by journalists you mean me.'

Buys and guts newspapers, rakes in tons of money for his own pockets, and now whines that popular services sending newspapers free traffic should be paying him? Yeah, how about ‘no, jackass’?

Hopefully the other newspapers who got his pathetic joke of a letter have at least some decent journalists who are capable of doing the barest slice of research needed to see how attempting to shake down Google for money has worked out in the past, though I can’t help but think that the repeated attempts to do so might have Google and Facebook rethinking the olive branch they’ve apparently handed out to newspapers.

This comment has been deemed insightful by the community.
John85851 (profile) says:

Charge newspapers

At what do Google and Facebook say "we won’t link to any newspapers unless you pay us a small fee for the traffic we sent you". Maybe it’s only $1 or $2 a month (far below the rate for Google Ads). And then if a newspaper doesn’t want to pay, they don’t get indexed and they get no traffic. There, problem solved.
Oh, and a special thanks to Spain, France, Australia, Canada, and this guy for changing Google’s policies so now even small newspapers have to pay to be on Google News instead of getting traffic for free.

P.S. How come NONE, NONE of these complainers ever mention Bing, Yahoo, or DuckDuckGo? Those sites have news sections that presumably send traffic to newspapers. Or does Bing/ Microsoft not have as much money as Google? Then how about Apple News? Do they pay newspapers a fee to run snippets? Or is Apple too small to worry about?

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re: Charge newspapers

Google and Facebook are just the first targets as they have the most money and it also allows them to use the narrative of the ‘small’ newspapers fighting against the ‘evil giant’ internet companies (Various people are upset with Google and Facebook for various other things, which is something the legacy media companies are happy to inflame and then frame it as a way to punish the big bad internet companies by forcing them to hand over money to other companies – you just need to look at what happened with the EUCD where anyone who pointed out the flaws were denounced as Google Shrills).

However once they have got Google and Facebook to pay up they’ll move onto the smaller sites – and you’ll eventually end up with a situation similar to patent trolls and music collection societies that go around demanding people pay up regardless of whether they have infringed the rights or not.

This comment has been deemed insightful by the community.
PaulT (profile) says:

Re: Charge newspapers

"At what do Google and Facebook say "we won’t link to any newspapers unless you pay us a small fee for the traffic we sent you"."

The thing is, as much as these guys pretend the news is what’s driving the profits for these companies, they don’t give a shit. Google don’t monetise news directly, while Facebook would likely still generate a lot of profitable traffic if they blocked news posts. They’re more likely to go "OK, you’re blocked" than try to put in a system to placate them. Then, they’ll whine that not carrying them is evil as the Spanish and Germans did.

"P.S. How come NONE, NONE of these complainers ever mention Bing, Yahoo, or DuckDuckGo? "

Because they’re not interested in facts, they have to paint it as a David vs. Goliath situation, not a "we’re too stupid to use robots.txt and too incompetent to monetise free traffic" situation.

Wyrm (profile) says:

Re: Charge newspapers

P.S. How come NONE, NONE of these complainers ever mention Bing, Yahoo, or DuckDuckGo?

Because they don’t need to. They just need to showcase Google for their little project, and a law will be drafted that targets them all anyway. Google is well-known, so they are the perfect example.

Also note that they don’t need to tell too much. Just criticize Google and lots of people will pile reasons to target it. Tax evasion, tracking, ad placements, more tracking… People like using Google as much as they dislike some of Google’s behavior, justified or not. With this, some people will defend anyone trying to get money from Google as a form of revenge by proxy.

Later on, things will be worse for everyone involved, because this kind of law doesn’t do any good, is not even intended for it. But it will still be Google’s fault, somehow.

With this in mind, naming more companies would only make the issue more confusing for the public, some of which might not have any resentment towards DuckDuckGo, if they even know of it. That would in turn make things more difficult for them to push for a link tax.

This comment has been deemed insightful by the community.
Tim R (profile) says:

Even if Google News were monetized, he makes it sound like Google is in competition with newspapers, trying to wipe them out. It’s a news aggregator. It aggregates news. Without the newspapers and other online media, Google News doesn’t exist. It’s in their best interest for online properties to be successful. And there’s no better way to do that than sending them traffic. You know, that very metric that any other advertising web site on the planet treats like gold.

This comment has been deemed insightful by the community.
PaulT (profile) says:

"Their almost wholesale misappropriation of our stories is not fair use"

They display a headline and a short excerpt of the start of the article, with a link to read the remaining words at the original source. Perhaps it’s not their fault people aren’t clicking through?

"Twitter has become a household name by serving as a distribution service for the content our staffs create"

Hmmm…. I thought it was because they host an orange idiot who goes on incoherent rants when he doesn’t get the correct level of fealty.

"Google alone conservatively made $4.7 billion from the work of news publishers"

Given that Google News is not directly monetised, I’d like to see the figures on that one. Is he referring to the ads they provide on those sites after people click through?

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RD says:

‘Third, the idea that "the news" is "owned" by the news organizations is not just laughable, but silly. After all, the news orgs are not making the news.’

It’s laughable all right. It’s laughable that someone would make this assertion with a straight face. Has no one see any mainstream news from the past several years? Lies, invention, and exaggeration are about the only things they produce now.

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Anonymous Coward says:

Fourth Estate

This seems to be a direct attack on the Fourth Estate. The local Media is there to keep an eye on corruption and power disputes so that the public can be informed.

This guy is single-handedly destroying that ability in many places and profiting off of it.

It sounds to me like there is a real local media vacuum that someone needs to fill with free alternatives. The internet allows us to distribute the old office into our how offices.

This comment has been deemed funny by the community.
Anonymous Coward says:

To be impolite, it’s theft.

First off, it’s not theft.

Mike, I think what Rupert is saying here is that the new’s articles are under and exotic quantum entanglement with his own brain cells. Other people reading them robs him(of brain cells). This is certainly an interesting theory he’s put forth, and may shed some excellent light on entanglement.

(If you haven’t realized by now, this is definitely humor, also not at all how entanglement works)

Richard M (profile) says:

Wire Services

A good share of the news is coming from AP and Reuters rather than local reporters anyway. Even more since he is getting rid of most of the local employees.

Since he does not want Google "stealing" his content Google go ahead and oblige him and deindex every site he owns and very publicly say why.

Something along the lines of:

Since the "dumbass" who owns the following newspapers has said publicly that he does not want us stealing his content we have removed all his sites from our index and are no longer doing so.

This comment has been deemed insightful by the community.
That One Guy (profile) says:

Re: Re: Re:

Ultimatum first, making clear from the outset that the nuclear option will be deployed if needed.

‘First, let’s clear something up: At no point will we be paying you for the traffic we send you nor for listing you on our services. We will delist you entirely before that happens, and as I’m sure you are aware having done your research we can and will follow through with that if pressed. Now then, what were your concerns again?’

Stephen T. Stone (profile) says:

Re: Re: Re: Mutually Assured (Inequal) Destruction

The nuclear option would destroy (part of) the usefulness of Google News. And yes, Google could ultimately survive without Google News, whereas smaller newspapers likely wouldn’t. But when have the assholes who run those newspapers (into the ground) ever seemed to understand that?

Anonymous Coward says:

Re: Re:

This sounds like a thinly veiled, "That’s a nice Newspaper you have there, it would be a shame if something happened to it, like say a hedge fund buying it, laying off 80% of the staff, and stealing the profits without any investment in journalism.

Now if you just support me in my quxiotic quest against Google and Facebook, I may just let you survive, but if you don’t support me, it will be a shame what happens to you.

Or I could be wrong and he could have everyone’s best interest at heart…. /s

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