I was a bit surprised last year to read this headline: “The Peoria plan for saving local dailies.” I wasn’t surprised someone has a plan for saving newspapers. Just about everyone does, myself included. But I was surprised that:
- There even was a Peoria plan.
- It was being suggested by the The Newspaper Guild at the Peoria Journal Star.
- A lot of people are taking it very seriously.
The plan, as I understand it, is this: Get the state and federal governments to allow the creation of low-profit limited liability companies (L3C), then someone might be willing to buy newspapers companies like the Peoria Journal Star. And who can blame then? The PJS is understaffed with reporters covering multiple beats and the copy desk struggling to do it’s job, too. New owners with an emphasis on serving the public more than their pocketbooks would look very attractive.
I learned yesterday that Gov. Pat Quinn signed legislation approving L3Cs in Illinois. The Feds have yet to do the same. I decided to do a brief email interview with Jennifer Towery, president of TNG-CWA Local 34086 at the PJS. She’s been doing a lot of work developing and promoting the idea that this is good.
Peoria Pundit: Gov. Quinn just signed the L3C bill into law. This is something The Newspaper Guild has been lobbying for for some time, presumably because it could benefit union members. What does TNG want to do now that this law is in effect? But the PJS and turn it into a L3C or start a new newspaper?
Jennifer Towery: The Illinois L3C law, which takes effect Jan. 1, simply means an L3C could be formed in Illinois. It’s terrific it passed, and Senator Koehler was a big help there. But it’s only one hurdle. The bigger hurdle is acknowledgement from the IRS that a newspaper should qualify as an L3C. For that, we need a ruling from the IRS or a federal act. A federal bill has been drafted, and a lot of people are working on getting it introduced, including us and The Newspaper Guild international.
Peoria Pundit: You say this will make newspapers better for readers. How would a newspaper be better for readers if operated under an L3C than it is under existing models?
Jennifer Towery: By definition, an L3C must be operated to serve a social or educational mission. It must have a societal benefit. Profits have to be a secondary consideration. That’s a crucial distinction. It removes the profit motive from the news and returns the focus to journalism, which is after all critical to a functioning democracy. With profits taking a backseat to the product, things that aren’t important anymore — or aren’t as important as they should be — move to the forefront. Those include staffing levels, continuing training and education for staff, resources devoted to investigative work. It could include a scholarship fund to ensure people who can least afford to purchase the paper — the ones who most need some of the content — can afford it. It would mean resources devoted to trying innovative ways of serving readers, in print and on the Web. And with training, education, staffing and resources most certainly will come a better product.
Peoria Pundit: Let me be the Devil’s advocate: If there aren’t investors to start a news newspaper and/or buy the Journal Star now, why would they invest in an L3C? Would not an L3C newspaper have to survive in the same marketplace, with the decline in ad sales and readership?
Jennifer Towery: We don’t know that there aren’t investors willing to help purchase the Journal Star now. In fact, we’ve been told there are, and believe that to be true. We’re not willing to make a move to purchase the paper unless were certain we have a better model. There have been widely publicized cases of local owners “saving” newspapers, only to struggle under mounting bills and be forced to reduce the product. At least one of those newspapers is in bankruptcy now. We were looking for a model that would allow the community to purchase the paper and make it better, and we see that as possible through the L3C. An L3C also opens the door to using funding not available now, through foundations and not-for-profits. The more people get burned by bad investments and banks built on bad credit, the more appealing social investing is. People don’t just want to make a buck. They want their money to be used for good. With an L3C, they’d get a return on their investment – in many cases a guaranteed return — and they’d know their money was being used to help make the community better through a strong newspaper.
It’s no secret one of the worst problems the industry has is its massive debt. Being able to leverage non-profit dollars would mean a much larger equity stake, easing the burden of large debt payments.
The L3C structure is not non-profit. Taxes are paid on profits, so it’s not a bailout or taxpayer assisted.
Peoria Pundit: Is there a time table for your next move?
Jennifer Towery: We’re going to move as slowly or as quickly as circumstances permit. It’s been a slow process so far, but support for L3C newspapers is building, both within and outside the industry. Free Press has endorsed the business model. The Newspaper Guild International supports it. Even the Newspaper Association of America has expressed interest. Ryan Blethen, editorial page editor of the Seattle Times, wrote a column about the potential of an L3C newspaper (June 12). His family owns that newspaper.
Our end goal is long-term, stable community ownership for the Journal Star, though we aren’t ruling out a start-up product. But we also see potential for other newspapers to be operated as L3Cs, so we believe we’re working for the greater good of the entire news industry.
Related:
- Conference Summary New Economic Models for News (.pdf)
- L3Cs: For-profit financing with a soul
- L3C: New type of company might be a good fit for journalism
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Billy Dennis is a former reporter and editor at small daily and weekly newspapers in Illinois and Missouri. He comments on media, news and politics. He also owns and operates 
I admit to being a complete idiot when it comes to business and to me L3C sounds like a drug I used to take back in high school. I do wonder, however why a company would try and save something that the majority of the people don’t want to buy anymore. I read all my news online and so does everyone I know. I took an informal poll a while back of about fifty people I work with and none of them buys a newspaper, everyone reads them online. I don’t know why the Journal Star and other newspapers aren’t putting all their efforts into figuring out a business model for a newspaper to make money online.
Marty: Aren’t you the guy who self publishes books and magazines?
Billy: Nope, I’m the guy who USED to self publish books and magazines. Now I have a website/show. Here’s a good example of print versus online. I published my magazine fishwrap from 1993 to 2000. It was a cult success and I was written up in Spin Magazine, USA Today, Men’s Journal, NY Post, PJS, among others. I sold between 3 to 5,000 copies every time I published one. I also lost at least a thousand dollars every time I published, guaranteeing I could never quit my night job. I started my website/show in May and I’ve had over 35,000 page views and average between 50 to 200 unique visitors a day (including a couple loyal fans in France.) I’ve also made a couple hundred bucks from Google and Amazon ads. So within four months I’ve made more money and more people have seen my work than when I had a print model for six years. So if I can do this on a small scale, why can’t a major company figure it out.
P.S. The entire cost for the hosting of my website is 11 bucks a month. A lot cheaper than my old printing bills!
Marty,
I don’t think anyone is saying the PAPER product will survive longterm. It might, I suppose. But saving newspapers would enable them to make the switch to Internet once and for all.
At the moment, there is no one out there that does what the Journal Star does for central Illinois — i.e., obituaries, local, national and international news and sports, online content including blogs, police and court news, police and court blotters, etc., all in one product.
Just because it’s on the Internet doesn’t make it any less important to the community and/or region it serves.
Terry, I wholeheartedly agree that newspapers should survive. I’m assuming your business model is based on a print version, where I’m saying I think newspapers should aggressively be thinking and working on an online version that makes money. Newspapers as a print form are doomed, especially when devices like the Kindle become affordable. I could be totally wrong here, but I bet the thinking, mindset and business model the PJS is working on is based more on trying to save the print version. Again, maybe I’m wrong, I’m just guessing, let me know.
Also, speaking of the Journal Star, when in the hell are they going to do an article about this guy doing a one man website show out in New York? (Har har, always the media whore, that’s me!)
Seriously, I wish the Journal Star and everyone who works there the best, you’ve always been nice to me!
Marty,
While I am partial to the paper product (since that’s what I helped put out for 25 years), I think the heart and soul of a newspaper is its staff or writers, editors and photographers/videographers who can deliver a unique local product that also incorporates national and international news. I believe (and I don’t want to speak for my wife here) that any business model being considered doesn’t care one way or another whether the product is on paper, the Internet or a combination of both.
The biggest hurdle for everyone, I believe, is getting over the longheld belief that the word “newspaper” applies ONLY to a product made of paper. That is no longer the case.
Oh, and I’ll pass on your one-man web show to the appropriate folks at the paper. Sounds like a story to me!
“The biggest hurdle for everyone, I believe, is getting over the longheld belief that the word “newspaper” applies ONLY to a product made of paper. That is no longer the case.”
I whole-heartedly agree, Terry! I hope the PJS survives the storm and comes out intact at the end of it.
And my prediction as to what’s said when you pass along the story idea: “Jesus, that publicity hungry son of a bitch moved away 16 years ago, isn’t he ever going to leave us alone?” (insert smiley emoticon here, I don’t know how to do it.)
Lets see … the old way is to just type : and ) …
Or you could just copy the emoticons from the bottom of the comment page: http://peoriapundit.com/blogpeoria/wp-content/plugins/wp-monalisa/icons/wpml_wink.gif
Guess I can’t print them all – Billy’s software seems to think using too many emoticons is spamming.
Trying again … this time clicking onthe emoticons on the page … (Billy, feel free to delete my foolish trials and errors) …
The difference seems to be a copy just gets the link while clicking on the emoticon inserts the additional html to show the link as an image here. {img class=’wpml_ico’ alt=” src=’ ..Place your link here … ‘ /} The {} should actually be but I was afraid that would actually try nd fail at finding an image.
Anyway, experiment over. Thanks
Thank you very much, Jennifer, for all of your hard work on this. I fully support this model and would be happy to write letters supporting any federal legislation required to my federal representatives in Congress.