Commentary - 02/27/2009 [Updated 3/1/2009]

The Planned Collapse of the Newspaper Industry

Having been around newspaper publishing for over 40 years, it saddens me greatly to see what is happening to the important newspaper industry.

Colorado's oldest newspaper closes (E.W. Scripps - owner of Rocky Mountain News)
Hearst seeks changes at Chronicle
Seattle daily newspaper will be sold or closed in 60 days, owner says
Post newspapers close after 126 years
Dutchess, Putnam weekly newspapers to close
Journal Register Co. Latest Newspaper Casualty
[Updated 3/1/2009]
Decline in newspapers renews idea of nonprofits
As sharp revenue reductions put the future of many U.S. newspapers in doubt, one idea gaining attention is the conversion of newspapers into tax-exempt nonprofits supported by large endowments.
. . .
Four newspaper companies, including the owners of the Los Angeles Times, Chicago Tribune, The Philadelphia Inquirer and the New Haven Register, sought Chapter 11 bankruptcy protection in recent months, while the Rocky Mountain News published its last edition Friday. Newspapers in Seattle and Tucson, Ariz., are threatened with closure if buyers aren't found, and the San Francisco Chronicle also faces closure or sale if it can't slash expenses.
And so on.
Investigative journalists were our foot soldiers in economic warfare. They exposed those who used finance to lie, steal and murder. The newspaper losses have little to do with the business cycle, and everything to do with a planned collapse of informative sources. If it was only the current economic downturn, the newspapers should be doing exceedingly well. In bad times, folks especially need access to the truth of what's happening, and independent companies would benefit from advertising. But therein lie the two reasons for the planned collapse.

Reason #1.
The truth of what's really happening is a rare find in your local newspaper anymore. Why? It's for the simple reason that there is a sword hanging over every journalist's head. If the journalist investigates, connects the dots and figures out the truth, will it be printed? If it's printed and offends the oligarchs, will the paper be reprimanded and the journalist fired? Where else in a tightly-controlled industry could the competent journalist find comparable work?

The newspaper doesn't lie directly; it lies by omission. The truth simply doesn't get printed. Readership drops because subscribers sense something is not right, and there are no explanations to be found in the local paper. So why bother to subscribe?

What would be an example of such an event? What would be the sword over every journalist's head? Such an example took place over a decade ago. It's the story of Gary Webb, an award-winning journalist who ". . . found a lifelong passion in investigating government and private sector corruption."

Webb was best known for his 1996 "Dark Alliance" series of articles written for the San Jose Mercury News and later published as a book. In the three-part series, Webb investigated Nicaraguans linked to the CIA-backed Contras who had allegedly smuggled cocaine into the U.S. which was then distributed as crack cocaine into Los Angeles and funneled profits to the Contras. Webb also alleged that this influx of Nicaraguan supplied cocaine sparked and significantly fueled the widespread crack epidemic that swept through urban areas. According to Webb, the CIA was aware of the cocaine transactions and the large shipments of drugs into the U.S. by the Contra personnel and directly aided drug dealers to raise money for the Contras.

Webb's reporting generated a large controversy and the Mercury News backed away from the story, effectively ending Webb's career as a mainstream media journalist. In 2004, Webb was found dead from two gunshot wounds to the head, which the coroner's office judged a suicide.

As said above, Gary worked at the San Jose Mercury News.
In the late 1990s, as Silicon Valley and the Mercury News soared in national prominence, then-owner Knight Ridder moved its headquarters from Miami to an office tower in downtown San Jose to be closer to its rising star.
Licking its wounds, the oligarchs financed McClatchy to take over the Knight-Ridder chain of newspapers. As a consequence, MediaNews Group (a private entity so we won't know who really owns it) was financed to acquire the San Jose Mercury News. The problem with private entities is that the media mindlessly promotes the agent who heads the firm as its "owner." Unlike a public company which is required to list shareholders, the private entity hides real ownership. That's why there's so many private equity firms and hedge funds these days. It's difficult to figure out who they front for. However, we all know that when you have debt, the debt holder has the real control. Funding these acquisitions had to come from the money center banks, and here's who controls them. Same major holders. Hmmmm.

That leads us to reason #2.
The oligarchs who wish to "own the earth in fee simple" finance these takeovers in order to consolidate ownership into fewer and fewer hands. The borrowers are also suckered into paying these enormously high prices simply because the oligarchs made extensive credit available, and told them just how smart they were to be buying these newspapers. The oligarchs short the stock, letting the other shareholders whom they're supposed to be looking out for take the losses. They not only profit from the fall; they eventually end up with the title, too.

Astute journalists saw it coming in June of last year: Tribune, MediaNews May Wind Up in Default as Ad Sales Evaporate. The Tribune owns these properties, and MediaNews owns these properties. Gannett, the largest newspaper chain, owns these properties. Perhaps you wondered why that almost everywhere you turned, the same stories appeared, and the stories about Madoff and Stanford only appeared when they were too big to be hidden anymore.

Plantation managers and journalists that don't go along with the oligarchs' plans find themselves with no place to go if they blow the whistle. The problem is that they will find themselves out of a job anyway due to declining advertising revenues. However, the real reason advertising revenues are declining is because the real owners of the media chains are the same real owners of the major retailers. Now that major retailers have put most independent shop owners out of business and have divided the territories among themselves, there's simply no reason to spend as much as they did before.

In the 11/11/2007 commentary Sarkozy: "I wish to reconquer the heart of America" there are many links to advertisers that use newspaper inserts. Don't take my word for it. Take any public corporation advertising in your newspaper and look up its Major Holders on Yahoo! or Microsoft's Money Central. By the way, check out these links to Major Holders of Microsoft and Yahoo!. Yep, same major holders.

Sometimes The Dragon Wins, but it's everyone else that suffers.

Symbol Name Of Corporation

Gannett Co Inc. (As of 31-Dec-2008) [And Owns What Else?]
Top 10 Institutional HoldersSharesPct.Value
AXA (Paris, France)30,847,65213.52$246,781,216
Brandes Investment Partners L.P.23,469,39910.29$187,755,192
Barclays Global Investors UK Holdings Ltd14,985,6256.57$119,885,000
Ariel Investments, LLC11,121,9774.88$88,975,816
State Street Corporation9,823,3454.31$78,586,760
Vanguard Group, Inc. (The)9,651,1784.23$77,209,424
Fairfax Financial Holdings Limited8,144,4003.57$65,155,200
Prudential Financial, Inc.6,983,5323.06$55,868,256
Arrowstreet Capital, L P6,825,2032.99$54,601,624
Capital World Investors6,410,0002.81$51,280,000
% of Shares Held by All Insider and 5% Owners:0%
Top 10 [2.4%] of 411 Institutional Holders Control56.23%
Percentage of Barclays and "Associates" Control13.94%
NOTE: Ariel Fund manages two funds that controls 3.20%.
Vanguard manages three funds that control 2.68%.
T. Rowe Price manages a fund that controls 2.63%.
Washington Mutual manages a fund that controls 1.75%.
State Street manages two funds that control 1.70%.
Capital Group manages a fund that controls 1.05%.
Therefore, the TOP 10 Major Holders control 69.24%, and
Barclays/Associates control 20.02% of Gannett Corporation.

Symbol Name Of Corporation

The McClatchy Company (As of 31-Dec-2008) [And Owns What Else?]
Top 10 Institutional HoldersSharesPct.Value
Ariel Investments, LLC15,220,63118.43$12,176,504
Chou Associates Management Inc.5,571,0776.75$4,456,861
Brandes Investment Partners L.P.4,340,3775.26$3,472,301
Barclays Global Investors UK Holdings Ltd3,533,8994.28$2,827,119
Vanguard Group, Inc. (The)1,529,4511.85$1,223,560
Royce & Associates, Inc.1,388,9001.68$1,111,120
Wells Fargo & Company1,075,1411.30$860,112
Morgan Stanley1,059,3391.28$847,471
State Street Corporation1,007,1211.22$805,696
GW Capital Management, LLLC839,3751.02$671,500
% of Shares Held by All Insider and 5% Owners:18%
Top 10 [8.0%] of 125 Institutional Holders Control43.07%
Percentage of Barclays and "Associates" Control9.76%
NOTE: Ariel manages a fund that controls 8.36%.
Therefore, the TOP 10 Major Holders control 51.43%, and
Barclays/Associates control 18.12% of The McClatchy Company.

Symbol Name Of Corporation

E. W. Scripps (As of 31-Dec-2008) [And Owns What Else?]
Top 10 Institutional HoldersSharesPct.Value
Barclays Global Investors UK Holdings Ltd3,688,3268.86$8,151,200
Plainfield Asset Management LLC1,758,3774.22$3,886,013
Citadel Limited Partnership1,709,0294.11$3,776,954
Artisan Partners Limited Partnership1,649,8233.96$3,646,108
Eagle Capital Management LLC1,543,8883.71$3,411,992
AQR Capital Management, LLC1,523,2313.66$3,366,340
Gamco Investors Inc1,393,2383.35$3,079,055
Arbiter Partners, LP1,367,2303.28$3,021,578
Vanguard Group, Inc. (The)1,167,8352.81$2,580,915
JP Morgan Chase & Company1,035,4772.49$2,288,404
% of Shares Held by All Insider and 5% Owners:38%
Top 10 [6.9%] of 144 Institutional Holders Control40.45%
Percentage of Barclays and "Associates" Control11.35%
NOTE: T. Rowe Price manages a fund that controls 2.55%.
SunAmerica (AIG) manages a fund that controls 1.55%.
Vanguard manages two funds that control 1.51%.
JPMorgan manages a fund that controls 1.36%.
Therefore, the TOP 10 Major Holders control 47.42%, and
Barclays/Associates control 16.81% of E. W. Scripp.

2009 by Edward Ulysses Cate
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