Saving Local News in the Time of Coronavirus

Many local newspapers, including The Mercury, have been reduced

to a skeleton staff.

It should come as no surprise to any regular readers of this blog that, like other local businesses, local news is struggling to make it during this pandemic.

When you consider how many businesses have had to shut their doors, take the next step and ask yourself how many of them are advertising in the local paper?

Add to this, the fact that The Mercury and other papers in this chain have done the right thing and made our coverage of coronavirus free of charge.

That doesn't mean the print edition is free.

It means you can read about the information that may help save your life, or your flagging spirits, on our website without having to subscribe.

Needless to say, the combination of decreased advertising and "free-of-charge" is not having a positive effect on our bottom line.

It has accelerated an existing and increasingly desperate trend.

Just ask Ken Doctor. He is the "Newsonomics" columnist for Harvard's Neiman Journalism Lab and his predictions about the state of the local newspaper industry have been spot-on for the past two years. And his diagnosis is not good.

His March 31 column did not offer much hope for recovery.

Newspaper executives are "finding themselves careening right now into a future they’d thought was still several years away."

Ask an American newspaper exec a few weeks ago what they thought 2025 would look like, and they’d tell it you it would be much more digital, far less print, and more dependent on reader revenue than advertising. Some of them would have told you they think they had a plan to get there. Others, if they were being candid, would have said they didn’t see the route yet, but they hoped to find one in time.

The COVID-19 crisis has clearly accelerated that timeline — and may have ripped it to shreds altogether, depending on how long the shutdown lasts and how deep the resulting recession gets.

Make no mistake, though: Many of the decisions being made right now and in the next few weeks will be permanent ones. No newspaper that drops print days of publication will ever add them back. Humpty Dumpty won’t put the 20th-century newspaper back together again. There can be no return to status quo ante; the ante was already vanishing.

Can you guess what comes next?

You guessed right, lay-offs.

By serendipity and good negotiating, those of us who work at the papers in Alden Global Capital's Philadelphia Cluster that are lucky enough to be in The Newspaper Guild, signed a two-year labor contract in February that limits lay-offs in the contract's first year. That includes The Mercury.

That did not stop the company from asking for "voluntary separations," or from laying-off workers at non-union papers.

The latest reports indicate 19 lay-offs at The Reading Eagle, which Alden bought last spring, and ten of those are in the newsroom. That is on top of the 81 lay-offs that occurred right after the purchase.

My heart goes out to those staffers. I hate to see any local journalist lose their job at a time when we need them more than ever.

That the economic situation is exacerbating the peril facing local news is an inescapable fact.

But, as I wrote about in November, an already crumbling business model is being eroded at hyper speed due to the wealth-extracting business practices of private equity, better known as hedge funds.

Alden Global Capital, the company that owns The Mercury, is one of those hedge funds. Here is a primer on the company, put together by investigative reporter Julie Reynolds, who works for The Newspaper Guild's parent union, Communication Workers of America, and has plumbed the depths of this company like no other.

Having already strip-mined the local papers it owns of their assets, like the real estate, earning double digit profits and re-investing none of it back into the business that generated it, Alden left its papers particularly vulnerable to this latest economic shock.

Small wonder that its attempt to gain control of Tribune Company, which runs some of the nation's most revered papers like The Chicago Tribune and, more locally, The Morning Call in Allentown, has sent waves of fear through its newsrooms. So much so that in January, two Chicago Tribune reporters wrote an Op-Ed in The New York Times, pleading for a local buyer to take control.

Me visiting Heath Freeman's Montauk manse
before the security fence was installed.

True to form, Alden has responded to this reduction in revenue in the same way it sought to increase its revenue, lay-offs across the country, in California, Denver, and Boston, not just in Reading.

Perhaps most galling is the March 27 letter Alden CEO Heath Freeman -- who has since put up a security fence around his $4.8 million, five-bedroom, five-bath summer house overlooking Lake Montauk at the tip of Long Island since I dropped by unannounced two years ago to chat -- sent a letter March 27 to Illinois senators Tammy Duckworth and Dick Durbin.

In it, he claimed that rather than pillaging newspapers, he is saving them. This is hogwash, as Vanity Fair reported in February.

(You can read his full leaked confidential letter here.)

In part, Freeman wrote:

Too often, MNG is the buyer rescuing newspapers like The Reading Eagle, The Greeley Tribune, The Boston Herald or The Orange County Register from bankruptcy or liquidation or perilously close to that fate. Indeed, failing to equip local newspapers so they can adapt to the economic realities of the newspaper business in the 21st century would most certainly lead to more newspapers going out of business in your state and across the country.

I wonder if the 19 Reading Eagle employees laid off this week feel "rescued."

He goes on to note, accurately, that:

Heath Freeman

The digital transformation of the U.S. newspaper industry is in its early stages. And if local newspapers do not reset to these economic challenges they may cease to exist.

As you may be aware, a 2018 study from the University of North Carolina found that the U.S. has lost nearly 1,800 local newspapers since 2004, or approximately one in five. Clearly, if local newspapers fail to adapt to the economic realities they will continue to close.

We could not agree more. What Freeman's letter fails to indicate, because he can't, is what Alden has done with the profits it reaped from local papers to reinvest and adapt to those economic realities.

The answer, of course, is nothing.

My work laptop runs on Windows 7, which Microsoft stopped supporting on Jan. 14. The plan for upgrades, or new equipment? There isn't one.

That's because Freeman and his corporate cronies took the profits we were making and invested them in unrelated businesses like Fred's Pharmacy and Payless Shoes, both of which are now in bankruptcy putting more people out of work.

Perhaps most egregious of the letter's passages is when Freeman writes: "MNG’s goal is to operate newspapers in a sustainable and responsible way (emphasis mine) so that they will continue to exist successfully for the benefit of their local communities and shareholders over the long term."

This is more hogwash. There is no plan for sustainability. None.

There is only a plan for profitability, for as long as it lasts.

Freeman wrote to those senators at a time when many of them are not only questioning the questionable role hedge funds play in undermining local news, but also considering making the support of local papers part of the next stimulus to combat the economic devastation wrought by the coronavirus.

U.S. Sen. Bob Casey, right, visited the YWCA Tri-County Area

in Pottstown last year. With him at Montgomery County

Commissioners Chair Val Arkoosh, left, and YWCA's

Executive Director Stacey Woodland.

Pennsylvania's senior senator, Democrat Bob Casey, is among them, joining 19 others in signing a letter to other senators urging support for the move.

"The current public health crisis has made the already vital role of local news even more critical," the senators wrote in the letter. "Some of the most important guidance for families and businesses during this crisis has been highly localized.

"Local journalism has been providing communities answers to critical questions, including information on where to get locally tested, hospital capacity, road closures, essential business hours of operation and shelter-in-place orders," the letter says.

The senators said any future stimulus package must contain funding to support this important industry at such a critical time. They suggested the legislation include a provision that is tailored to benefit aid recipients who make a long-term commitment to high quality local news.

There are other suggestions for the legislation as well, coming from those of us who know the business well, and know how sudden influxes of cash can sometimes find their way into the wrong wallets if further protections are not put in place.

On Thursday, NewsGuild President Jon Schleuss wrote a letter to House Speaker Nancy Pelosi, House Minority Leader Kevin McCarthy, Senate Majority Leader Mitch McConnell, and Senate Minority Leader Chuck Schumer.

He had some pretty relevant suggestions:

News Guild President Jon Schleuss helped guide

the fledgling chapter at the Los Angeles Times

to its first-ever union contract.

• A publicly financed fund to support newsrooms and media workers to prevent layoffs furloughs and pay cuts;
• Requirements that news outlets receiving aid remain independent from partisan influence, demonstrate a need for the assistance, report on how funds have been spent and be prohibited from engaging in mergers and acquisitions resulting in job losses, leveraged buyouts and anti-union activity, and from using funds for executive bonuses, stock buybacks or dividends (emphasis mine);
• A prohibition on job cuts by participating companies;
• Requirements that recipient companies provide ongoing information on staff diversity;
• Ensuring that one-quarter of seats on boards of directors be held by non-management employees at recipient publications;
• A separate mechanism to establish a Small Business Administration program of no-interest loans for the creation of news start-ups, including nonprofits and employee-owned co-ops;
• Tax deductibility for the cost of subscriptions to any news product;
• Incentives for local ownership to encourage chains to sell to local owners and community interests;
• A nationwide federal advertising program to promote public health, participation in the federal census and other topics of national interest.

"Continuing news coverage through this pandemic must be a priority in the next stimulus package. Many publications have lowered digital paywalls to provide COVID-19 coverage for free," Schleuss wrote.

"At the same time, the news industry is seeing plummeting ad revenue created by business closures. At this moment when Americans need reliable, community-focused coverage, we risk losing it all," he wrote. "More Americans will die if they cannot access this critical information."

There's also something you can do, and it doesn't even cost any money.

Sure, you can subscribe to The Mercury or the local paper near you. I can guarantee you its struggling.

But you can also lend your John Hancock to a petition supporting Schleuss's suggestions.

Click here to sign the petition, urging Congress to help save local news at a time its needed most. 

I guarantee it will make you feel good inside. And it might just save your life or the life of someone you love.

A Capitol Idea: Calling Out Hedge Funds

Photo by The News Guild

Mercury reporter Evan Brandt, ugly guy in the center with glasses,
speaks at a Thursday, July 18 press conference at The Capitol
about the impact hedge fund ownership of The Mercury has had
on the community it covers, and the danger the absence of local
news coverage represents to democracy.

Sometimes, shouting into the wilderness gets results.

As some of you may have seen on Twitter, last week I took a pilgrimage to Washington, D.C. to take part in a press conference announcing the introduction of the "Stop Wall Street Looting Act."

To be clear I had not read the proposed legislation and I was not there to endorse it.

I was there to speak in the hopes that the introduction of the bill by Massachusetts Senator and Democratic presidential front-runner Elizabeth Warren will help the country to wake up to the threat posed by the ownership of local news by hedge funds that have no intention of keeping the enterprise afloat.

I was invited by The Newspaper Guild and, its parent union, Communication Workers of America, I suspect, because I won't shut up about this subject.

It's about more than saving my job, which admittedly I would be happy to do.

It's about the importance of local journalism, the accountability it brings to the democratic foundations on which the larger democracy rests.

And it's about sounding the alarm about what that will do in hundreds of communities across the country, further straining the bonds that bind us together.

A long-time shop steward in the Guild, I have watched journalists, Guild and non-Guild, be cut from the staff at The Mercury, or flee when a buy-out is offered, to the point that we struggle to cover this community the way it deserves to be covered.

And yes, I understand that newspapers, local and otherwise, not owned by hedge funds are suffering from the same losses, but not at the same pace and not for the same reason.

Two years of investigation by Julie Reynolds have
revealed just a portion of Alden Global Capital's
interwoven connections, Cayman Island
shell companies and other companies
it has plundered.

Some local papers are cutting staff and selling off assets in an attempt to survive.

But as investigative reporter Julie Reynolds has revealed over the course of the past year, Alden Global Capital, the company that owns The Mercury and, most recently, The Reading Eagle, has no interest in our survival; only its own enrichment at our expense.

You can read Reynold's work here, at the Digital First Media Workers web page, and the picture it reveals is disturbing to say the least.

Here is the best link for a primer on what Reynolds has revealed about the fund;

• information about the Labor Department investigation of Alden's investing of employee pensions in its own risky funds; 
• selling newspaper offices and retail chain headquarters to its own subsidiaries and then charging rent to extract profit; 
• how Alden uses what profits its newspapers do generate not to invest in the papers or retain their remaining workers, but to gamble on other investments that have nothing to do with the preservation of local news;
• how some of those profits were used to buy co-founder Randall Smith more than a dozen mansions in south Florida. (I mean how many mansions can you live in at one time?)

These and countless other Reynolds revelations  show the company's interest is not in saving local news, not even close, but in feeding off its weakened state to extract the profit that is to be found at the expense of all else.

And that includes Pottstown's local newspaper, as well as Lansdale's local newspaper, Norristown's local newspaper, West Chester's local newspaper, Delaware County's local newspaper, Trenton, N.J.'s local newspaper and, now added to the list for a bargain price of a $5 million bankruptcy sale, Reading's local newspaper.

Like flesh-eating bacteria, the all-consuming
demand for extracting the value that remains
at local newspapers makes survival that much harder.

The metaphor I finally hit upon while part of a team explaining these facts to Congressional staffers Thursday was this: Yes, the Internet, Craig's List, Google, Facebook and newspaper management's failure to adapt quickly to those challenges to its business model have wounded local news.

Some still manage a profit, some break even, so consider local news to be a patient with a pretty serious chronic condition.

Now give that patient flesh-eating bacteria. That's the additional threat hedge fund ownership poses to the survival of the patient.

Photo by Evan Brandt

Julie Reynolds speaks at the July 18 press conference.

And it is the threat I traveled to D.C. to highlight.

I was not the only speaker. In fact, Reynolds was there as well and her comments were nearly identical to her Op-Ed titled "A Hedge Fund Stipped My Newspaper for Parts" that ran in Newsweek the same day she spoke. You can read that here.

"Since I left the Herald in 2015, things have gotten even worse. Friends there tell me deadlines are now 2 p.m. because the paper is copyedited, designed and printed in a 'hub' more than five hours away. This means city council votes and even high school sports scores rarely make it into the print edition," she wrote.

Regular readers of The Mercury and this blog recognize that pattern.

We too are designed and paginated at a "hub."

Worse yet, I was recently informed that due to the purchase of The Reading Eagle, our scheduled spot on the press (where all Digital First Media's local PA papers are printed one after the other) was moved back. 

The Mercury's print coverage of a
major flood began two days
after the fact.

To 6 p.m.

As many of you no doubt noticed, when the July 12 print edition of The Mercury hit porches, driveways and newsstands, there was not a whisper of the flood that had caused more than $1 million in damages to Pottstown the afternoon and evening before.

At 6:15 p.m. that Thursday, I got back from wading thigh-deep into the flood on Walnut Street to take photos and interview shell-shocked residents, only to be informed that all the pages had already been sent.

The next day's front page featured a centerpiece about a police dog that had cancer. Heartrending no doubt, but certainly not the most important news of the day. The Reading Eagle, which had taken over our spot in the press, did have news of the flood in its print edition the next day.

That night I put together an on-line story with more than 20 photos and video anyway (because after all, we are supposed to be "Digital First" and some coverage was better than no coverage) but that story ran in print inside, two days later.

This was not a decision that was made by a newspaper company; a company that understands its purpose, its responsibility to inform its community; a company with even a shred of journalistic self-respect. This was a decision that was made by a company that owns newspapers; and shoe stores; and drug stores; and real estate ventures.

That is what hedge fund ownership means to local news and that was what I wanted a national audience to understand. Initially, I was told I would not be speaking, but I found out four hours before the press conference that I would. 

Here's what I said:

My name is Evan Brandt and I have been a reporter for 20 years at The Pottstown Mercury in Pottstown Pennsylvania and I love my job, but its getting harder and harder to do that job with hedge fund ownership of my newspaper.

When I started there were nine reporters in the newsroom and we now have three. We no longer have a newsroom in fact. They closed the building, sold the building and I now work out of an office in my attic.

I was even part of the "B-Roll" on Fox News.

When I began 20 years ago, I used to cover one community. Now, at election time, I keep an eye on 50. So let's just say there's some stuff that goes uncovered, and that's not the public service that community journalism is supposed to be.

Community journalism is where democracy begins; accountability that begins on the local level. The public official who doesn't pay his taxes and is exposed in the local newspaper, or the local web site, usually does not go on to become a county commissioner, a state senator of a Congressman.

All of the people who make the rules of democracy, with one notable exception, begin as local elected officials, and they grow up with this idea of accountability as they move on in their careers  and when they get to Washington, they understand how the process works.

That process is breaking down at the lower level, and is becoming invisible.
It's important to note that there are newspaper companies, and there are companies that own newspapers. Hedge funds are the latter. They don't care about the content. They don't care about the communities where their newspaper are located. And they don't care about the people who work there.

Sen. Tammy Baldwin, D-Wisconsin, speaks at the rally.

They are there for profit. Period.

And they will get that profit at any price. All too often it is the communities and the newspaper workers who pay that price, through lay-offs, through selling off newspaper offices and assets and disconnected communities, which is something Julie addressed so well.

Now more than ever, Americans need to strengthen the bonds that bring us together in our common cause, not weaken them. 

Wall Street exists to pursue profit. That's its purpose. 

But maybe it's time to recognize that some institutions in America are more important than profit; that these institutions should be in the hands of those dedicated to their preservation, not to those who willfully plunder them for a 16th mansion in Miami Beach or to put another addition to their Montauk beach house.

I am pleased to be shop steward in The Newspaper Guild, which allows me to speak this truth to power, and I hope to still have my job after this.

But I've been shouting into the wilderness for some time about this and I'm really pleased that, with this legislation, Washington is finally beginning to look at what is a crucially important issue for this country.

Needless to say, I was not the only speaker. But, Reynolds and I were the only two speakers addressing the journalism aspect of hedge fund ownership.

Click here to read her thoughts about the issue in a column she posted on a non-profit local news site she helped found in California.

You can watch video of the entire press conference here if you have an hour to spare.

Photo by Evan Brandt

New York Senator Kirsten Gillibrand, also a presidential
candidate, is also a supporter of the bill and spoke July 18.

The majority of the speakers who were not members of Congress, were former workers of retail chains which have been particularly savaged by hedge funds, also called "private equity," that, as Reynolds so succinctly put it, stripped them for parts.

Many of those chains you may know: Toys R Us; K-Mart; PayLess Shoes (plundered and run into the ground and bankruptcy by the same hedge fund that owns The Mercury); Shopko; Sears and even Caesar's casino in Atlantic City.

They are part of United for Respect, a group organized and comprised of former workers who lost livelihoods, pensions and careers to feed hedge fund bottom lines. But rather than lose hope, they banded together to fight to make sure it doesn't happen to others.

"Wall Street robbed me of what I took my entire life to build," said Madelyn Garcia, who worked for a Florida Toys R Us for 30 years.

Rebecca Cady

"When I found out Payless was liquidating I was shocked," said Rebecca Cady, whose 22 year-career saw her work her way up from part-time to a manager of two stores. She was promised 12-weeks of severance, and received four days from Alden, the company that owns The Mercury.

"I 100 percent blame Alden Global Capital, which owned us for the last two years. They loaded us up with debt, sucked out all the value and threw us away when they were done with us," Cady said.

"I worked for Payless for almost half my life. It's part of who I am. I haven't just my job, it's like a lost a family member, or a part of myself," she said.

Sad'e Davis

Sad'e Davis worked at the Toys R Us in Van Nuys California for four years, along with several other jobs.

A single mother of two daughters, Davis said she lived across the street from the store and worked second shift.

For her daughters, the store was "an escape. It was a home away from home for them," she said.

"I worked three jobs at the time I was offered this job, and I was excited to work at a store I loved so much, and also that it would work around my schedule for my other jobs," Davis said.

"Until the day before my store closed, I was in disbelief. I was numb," she said. "Since Wall Street killed my job at TRU, I've been struggling to provide for my daughters, and my mother and my grandmother on my part-time hours at Burlington Coat Factory. Every day is a struggle to figure out how to pay my bills, and the constant worry that this can happen again, it terrifies me."

Ruth Ann Joyce and her husband were among 2,100 workers who lost their jobs when Caesars Casino in Atlantic City was closed in 2014. She now works three jobs, including as a banquet bartender at Harrah's. It took her husband, who suffered from depression because he felt he was not providing for his family, a year-and-a-half to find a new job.

Ruth Ann Joyce

"He was a different person. A person none of us has ever seen before," said Joyce. "Job loss does very bad things to good, hardworking people," she said.

"When companies take on too much debt; when they stop investing in the business. When they end up shutting down properties, lucrative properties, families suffer. Communities suffer. We need to hold private equity accountable. Now Washington, do something."

These hedge funds are all about cutting cost, but the human cost never seems to count in the accountant's ledger.

These workers also suffered from the same practices we've seen sinking newspapers; huge fees for managing a company they just bought; 20 percent shares skimmed off the top of company profits and huge debt loads that burden the company they are supposed to be "saving," but which the hedge funds have no responsibility for re-paying.

The members of Congress who introduced The Stop Wall Street Looting Act say it is designed to curb the worst of these abuses.

Here are some of Elizabeth Warren's comments on the subject:

According to a press release from Warren's office, the primary provisions of the bill include: 

• Require Private Investment Funds to Have Skin in the Game. Firms will share responsibility for the liabilities of companies under their control including debt, legal judgments and pension-related obligations to better align the incentives of private equity firms and the companies they own. In order to encourage more responsible use of debt, the bill ends the tax subsidy for excessive leverage, and closes the carried interest loophole.
• End Looting of Portfolio Companies. To give portfolio companies a shot at success, the proposal bans dividends to investors for two years after a firm is acquired and ends the extraction of wealth from acquired companies through excessive fees.
• Protect Workers, Customers, and Communities. This proposal prevents private equity firms from walking away when a company fails and protects stakeholders by:

1. Prioritizing worker pay in the bankruptcy process, and improving rules so workers are more likely to receive severance, pensions, and other payments they earned.
2. Creating incentives for job retention so that workers can benefit from a company's second chance.
3. Ending the immunity of private equity firms from legal liability when their portfolio companies break the law, including the WARN Act. When workers at a plant are shortchanged or residents at a nursing home are hurt because private equity firms force portfolio companies to cut corners, the firm should be liable. 
4. Clarifying that gift cards are consumer deposits, ensuring their priority in bankruptcy.

• Empower Investors by Increasing Transparency. Private equity managers will be required to disclose fees, returns, and political expenditures so that investors can monitor their investments and shop around.
• Require Regulators to Address Risky Leverage. The Dodd-Frank provisions that require arrangers of corporate debt securitization to retain some of the risk will be reinstated.

Here is video of comments by Ohio Senator Sherrod Brown, a co-sponsor of the bill:


"Our laws should reward hard work and persistence, not loopholes and financial looting," said U.S. Rep. Ro Khanna, D-17th Dist. in California, who spoke Thursday and is co-sponsoring the bill in the House. 

Photo by Evan Brandt

U.S. Rep. Ro Khanna, D-17th Dist., California.

Instead, hedge funds "are shifting money around and getting paid millions of dollars for it," he said.
"Who do these paper shufflers think they are? Are they curing cancer? Founding a university? That's not what built America."

Hedge funds, "take a company, suck the value out of that company, then walk away," said Sen. Tammy Baldwin, D-Wisconsin, who is a co-sponsor of the bill and defended it later in the day on Fox News Business. "We need to rip up the predatory playbook Wall Street uses to leave workers with nothing but pink slips."

"Wall Street leaches buy up struggling companies, saddle them with debt, pay themselves first, and then strip those companies for their parts," said Sen. Sherrod Brown, D-Ohio. "It's exactly what's wrong with this country."

Photo by Evan Brandt

U.S. Rep. Rashida Tlaid, D-1th Dist., Michigan.

"People who have worked hard their whole lives to earn a pension deserve to be able to rely on that money still being there when they retire," said U.S. Rep. Rashida Tlaib, D-13th Dist. in Michigan.

"They do not deserve greedy Wall Street firms raiding their earnings and playing games with their futures," said Tlaib. "We need to stand up for workers and communities in the face of toxic corporate greed and the Stop Wall Street Looting Act is a powerful tool in that fight."

The bill's chances of passage while Republicans control the Senate and the White House may seem slim. Ultimately, the voters may determine its chances.

But at least its introduction and what I hope will be the subsequent debate about its merits, has brought the dangers hedge funds pose to workers and local news to a wider national audience.

And that's something to shout about.

(Click here to see a Twitter recap of the days events and the reaction afterward.)

Spotlight on the Labor of Local Journalism

I know, I know, I'm a bad journalist.

I had not seen the Academy Award winning movie "Spotlight" until last night.

I'm not sure it surpasses my other favorite Michael Keaton newspaper movie, "The Paper," on my list, but it is definitely up there.

I told myself I would not write about it, that I would just enjoy it like a regular Joe, and then I did a stupid thing. I started thinking about it.

For those of you who don't know, the movie is about a the team of investigative reporters from The Boston Globe who finally told the world about the Catholic Church's problem with priests molesting children.

So of course I would like it.

Gallant and persistent newspaper people doggedly digging out the evidence to reveal a wrong, it's enough to make you love newspapers again.

Except love is not enough.

Newspapers, as we all know and as I've written here before, are not healthy.

Fewer people read them and even fewer people pay for them, which is the crux of the problem. Given that in order to, as Liv Schreiber's character says in the movie "the newspaper should stand alone" (among Boston's great institutions), it has to make its own money.

If you haven't seen it yet (and you have 20 minutes to spare) comedian John Oliver explained it all pretty well on his HBO show "This Week Tonight:"



The fact that Oliver uses "Spotlight" as the basis for his parody at the end of the piece only makes it that much more relevant for my purposes.

When newspapers were making money by the bucket, it was easy for them to convince themselves that they could be capitalists and protectors of the public trust. But money has become an issue.

I could not help, while watching this movie, thinking about Oliver's piece, which I had seen prior to the movie, and thinking about how expensive it was to keep this team of reporters and editors, focused on this one story for month after month.

First page of the first day of the "Do or Die Time" series.

I can tell you this, in case you didn't already know, we don't do that kind of thing at The Mercury any more.

We used to.

When I began at The Mercury in 1997, it was not long before I was assigned "a project," which grew into the five-day "Pottstown: Do or Die Time" series, which some of you may recall and is now so old I cannot provide you with a link because it was never on a web site.

During the four or six weeks I was given to research that project, my beat was covered by another reporter -- even, rather painfully -- when Mrs. Smith's Pies announced it was closing its Pottstown plant.

Page 2, Day 1 of said series

Since then, however, any big projects I've worked on at The Mercury have been cobbled together in addition to covering my regular beat. And since then, my
beat has grown larger as the staff has grown smaller and I don't think our readers can expect too many "Spotlight" worthy investigations landing on their doorstep any time soon.

For as money gets tighter, ad revenues drop, staffs get cut and the capitalism part increasingly overshadows the government watchdog part.

The Mercury, and its sister newspapers in what we call "the Philadelphia cluster" are owned by Digital First Media, a company that is owned or controlled by a hedge fund named Alden Global Capital.

Hedge funds, as you probably know, are a little more focused on capitalism than they are on journalism. And so as our owners cut photographers, editors and reporters in a self-immolating effort to slice their way to double-digit returns (we manage single digit returns with old staff levels but remember -- hedge fund), the question  arises: can newspapers survive?"

Jim Rutenberg tackled that question Sunday in The New York Times, and yes I see the irony thank you. (Also ironic, you may have to pay to read that link).

The answer is in the long run, probably not. The more vital question, in my mind, is can the function of newspapers survive?

Although the romantic in me loves the feel and legacy of newspapers, I am not so naive as to believe they must exist forever. Already many of us, perhaps most of us, read our newspapers on-line, for free if we can.

But more disturbing is how we end up reading them.

Chances are they come to us in some kind of social media feed and studies show readers view a New York Times expose about increased flooding due to global warming with the same level of interest (importance) as the photo their friend just took of the ice cream cone he is about to eat.

Further still, consider what happened when our friends at Facebook recently fired all the human beings overseeing their "trending topics" function -- and within two days had identified a fake news story as trending.

Now to be fair, it was revealed before that decision was announced that the humans who had been in charge of "trending topics" apparently had been letting their bias show in what topics were trending, so its a kind of six-of-one-half-a-dozen-of-another conundrum.

But left to choose between outright falsehood or human bias in what Facebook tells us people are reading, put me squarely in the fallible humans column if for no other reason than because I'm not sure how you get accountability from an algorithm.

Which brings us back to the human equation, i.e., that imperfect species of human known as "journalist."

If you agree that A) they are currently preferable to machines in producing the news you consume and, B) its preferable to have people who know a thing or two about the business in charge, than you reach the inevitable conclusion that C), you're going to have to pay them; preferably a living wage so they can concentrate on their work and not the need to leave early for their second job bagging groceries.

Which brings us, inevitably, to the Labor Day portion of our tirade.

The Mercury is among several newspapers in our cluster, and among many more across the country, who are members of a union -- The Newspaper Guild.

Our Guild is part of a larger union, The Communications Workers of America, or CWA.

A grant from the CWA helped pay for an effort by Digital First Media guild workers to mount a media campaign highlighting not only the plight of news workers who had gone without raises for as long as 10 years, but also how hedge fund ownership of your local newspaper affects what news you get and what that means for your community.

In fact I was researching an article for the effort's web site on what happens to a place when its local newspaper goes under when the unprecedented happened -- Digital First Media sat down in Denver with every Guild unit within its newspapers and negotiated a three-year contract that included the first raise in years and a 5 percentage point reduction in our share of health insurance premiums (from 40 percent to 35 percent).

This is obviously good news, and good news to share on Labor Day.

But let's be honest.

It is an overdue battlefield victory in a long war of attrition which ultimately news workers and, even more ultimately, small towns like Pottstown, are bound to lose unless something changes in the basic equation.

Unless an economically sustainable way can be found to provide the local journalism function, it simply cannot continue as it is now.

 And while I cannot tell you how to fix it -- smarter people than me haven't succeeded yet -- I can tell you what it means.

Simply put, it means more corruption, fewer voters, more incumbents being reelected.

In 2007, the Cincinnati Post closed, and had the good grace to announce it ahead of time. This allowed Princeton Assistant Professor of economics and public affairs Sam Schulhofer-Wohl and Miguel Garrido to study the before and after affects on civic life in the northern Kentucky towns where the Post's coverage dominated.

As Time magazine summarized: "in towns the Post regularly covered, voter turnout dropped, fewer people ran for office and more incumbents were reelected. That is, when there were fewer stories about a given town, its inhabitants seemed to care less about how they're being governed."

Another Princeton study found a director correlation between the circulation of newspapers in a democracy, and the level of corruption in its government.

"Free circulation of newspapers has a very strong effect on the level of corruption," the study authors found.

"A change in the level of circulation in newspapers from its median to its maximum level would reduce the level of corruption."

And if you're looking for a real life example of this hypothesis, look no further than the City of Bell, California.

Elected city council members were being paid $80,000 and approved raises for the city administrator, Robert Rizzo, that paid him $880,000 per year and would have gained him a pension of $1 million.

Robert Rizzo

This, while the city was laboring under huge tax increases and huge deficits.

The state pension system should have realized the problem when those papers were filed but, surprise!, it didn't.

How did they get away with it for years? One factor was the closing of the local newspaper in 1998, the same year tRizzo was hired. No one knew what was happening.

And it took a team of reporters from the Los Angeles Times, Jeff Gottlieb and Ruben Vives, to uncover the corruption and publicize it in 2010, an effort that won them a Pulitzer Prize.

The Los Angeles Times celebrates its Pulitzer.

As newspapers fade, such scandals will become
more common and less reported.

But ask yourself, how many others are there out there? How many more towns and cities, small and large, which no longer have an independent watchdog in the local media, are looting the taxpayers?

They wouldn't even know, and neither do we.

Because there is no one being paid to tell us.

And although Pew Center for Excellence in Journalism studies increasingly show that the public does not recognize, or appreciate, the role local media plays in making their lives better, as Conrad Fink, a former journalist who teaches newspaper management and strategy at the University of Georgia puts it: "The American public doesn't realize it, but they're going to miss us if we're gone."

It's a Deal

Well, it looks like the staff of The Digital Notebook will be around to fill your in-box for another two years with local news and photos.

Seeing as many of the larger organizations in town received the WARN letters issued to employees at The Mercury, which stated that the entire work force could be laid off, we here at The Digital Notebook thought it only proper to let you know what's going on.

WARN letters (WARN stands for Worker Adjustment and Retraining Notification act) are required by the federal government requiring any employer with 100 employees or more to give 60 days notice of the possibility they will be laid off.

They were issued because the company that owns The Mercury (Journal Register Corp.) will emerge from bankruptcy shortly and be sold to a buyer in an asset sale that raised the possibility of all union contracts being negated.

The good news in the above is that The Mercury still has 100 employees and no, not all of them are in the union. But the letter applied to all, union and non-union alike.

So not to worry, this good news...sort of.

On Thursday, the membership of The Mercury's Newspaper Guild unit voted unanimously to approve a new two-year contract with the new owners of the bankrupt Journal-Register chain -- 21st CMH Acquisitions Co.

"I'm pleased our members recognized how important it was to reach a fair two-year contract with 21st CMH, protecting wages, benefits and jobs," said Bill Ross, executive director of The Newspaper Guild's Local-10 office in Philadelphia.

The ever-lovin' Mercury building at High and Hanover.

"We want the new employer to be successful, and to thrive in this economy, so we can share the success with them in the form of long overdue pay raises. Our members pride in what they do, and the important role they serve in our communities, cannot be replaced," Ross said.

Mercury Publisher Ed Condra did not reply to a request for comment.

The terms of the contract allow for only one lay-off in the first year but also provides no raises for the two years of the contract. At the end of this newest contract, it will be five years the union members at The Mercury have gone without a raise.

However, their seniority, pension and severance rights were preserved in the new pact.

The vote followed on the heels of approval of similar contracts at The Times-Herald in Norristown and The Delaware County Daily Times.

Those three, along with The Trentonian in Trenton, N.J. are the only papers in Journal-Register's "Philly Cluster" of papers to be represented by The Newspaper Guild, which is itself part of the much-larger Communication Workers of America union, or CWA.

The contract vote at The Trentonian is scheduled for 5:30 p.m.Monday night.

Other Philadelphia-area newspapers in the chain, such as the West Chester Daily Local News and The Reporter in Lansdale, are not union papers as thus will work at the will of the new owners when they take over.

Current estimates put the final sale of JRC's holdings to the new company sometime in April.

Journal-Register filed for Chapter 11 bankruptcy protection in September, barely two years after emerging from a previous bankruptcy.

The Company exited the 2009 restructuring with approximately $225 million in debt and with a legacy cost structure, which included leases, defined benefit pensions and other liabilities that turned out to be unsustainable.

John Paton

"Many of those obligations, such as leases, were entered into in the past when revenues, at their peak, were nearly twice as big as they are today and are no longer sustainable," CEO John Paton wrote when the second bankruptcy was announced in 2009.

Revenues in 2005 were about two times bigger than projected 2012 revenues.

From 2009 to 2011 Journal Register Company’s print advertising revenue declined 19% and print advertising represents more than half of the of the company’s revenues. Digital revenues are up, but have not yet filled the gap left by declining print ad sales.

21st CMH Acquistions is a spin-off of the current majority owners of JRC, a hedge fund called Alden Global Capital.

The bid by which the new company purchased Journal-Register is called a "stalking horse bid," which is Wall Street's way of echoing the line from The Who anthem "Won't Get Fooled Again" -- "meet the new boss, same as the old boss."

The negotiations with the Guild were swift and somewhat gruff and have not gone well at all properties.

At JRC newspapers in Detroit and Kingston, N.Y., which are also represented by The Newspaper Guild, reaching a contract agreement has proven difficult.

Claiming the company is engaged in a "warpath" of union-busting tactics, the Detroit warned its members it may soon seek a vote to authorize a strike.

Letters sent to union members in Detroit, Kingston (and at the Delaware County Daily Times prior to the contract agreement there), threatened mass lay-offs and individual re-hires with 15 percent pay cuts; employees paying 50 percent of health insurance cost and 50 percent of future premium increases; the elimination of all pension plans; a reduced vacation schedule and reduced severance pay if jobs are eliminated.

These are not healthy times for newspapers.

Consider the announcement just last month that Tribune Company, which owns the mighty Los Angeles Times and the Chicago Tribune, is exploring the sale of all its newspaper properties.

In the past decade, traditional newspapers have continued to lose revenue to digital competitors, this despite the fact that many of those competitors actually deliver as their product, the original journalism undertaken by newspaper reporters.

The on-line Pottstown Patch site is a good example when you consider that more often than not, that site's news is re-written from on-line Mercury stories and includes links back to The Mercury web site.

The employees of The Mercury (and, not-so-coincidentally, The Digital Notebook) continue to believe in the mission of original, local journalism and are exploring every viable platform from which to deliver it.

Whether its on a piece of paper, on your lap-top, your phone or beamed directly into your pre-frontal cortex, what is important and vital to democracy at the local level is the mission -- providing local readers with independent information about their government, and their lives, to help them to be better informed citizens -- at least for the next two years.