CHARLESTON, W. Va. – Here amid the coalfields of southern West Virginia, Doug Reynolds, publisher of the Gazette-Mail, imagines something like a second tobacco settlement — but this time for newspapers.
Alleging that cigarettes caused significant health problems in the 1990s, individuals and states sued the four largest American tobacco companies and ultimately got them to pay more than $200 billion and make structural changes, such as supporting anti-smoking campaigns.
Newspapers — led by the Gazette-Mail — have a different target in their sights: two big tech companies that soak up the most digital advertising revenue, Google and Facebook.
The Gazette-Mail made a down payment on that argument in January by becoming the first newspaper to file an antitrust lawsuit against the companies in federal court. Since then, more than 100 newspapers — including the Butler Eagle, northwest of Pittsburgh — have joined the fight that lawyers expect will cost them collectively at least $10 million.
The lawsuits come as the federal government has taken aim at the tech companies with the U.S. Department of Justice suing Google in October and the Federal Trade Commission (FTC) suing Facebook two months later, and as states have filed their own lawsuits against both companies.
The path got a little more complicated in June when a federal judge tossed out lawsuits by the FTC and most states against Facebook, which were based on the company’s mergers and buyouts of its competitors. The newspapers’ case, however, relies on a separate argument that Facebook and Google cooperated unfairly in a secret operation known as “Jedi Blue.”
The companies deny they have colluded, that they operate monopolies or that they are deliberately hurting local newspapers. Google called the federal government’s lawsuit “deeply flawed,” adding that “people use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.” Facebook applauded the judge’s ruling in the FTC case by saying, “We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”
Both Google and Facebook also have programs to support local journalism. For example, I recently attended Newsgeist, an annual invitation-only conference hosted by Google to focus on news and technology, and I spoke there about Facebook’s grants to local newsrooms.
Critics argue the tech companies’ efforts do too little to correct the damage they cause by selling advertising around content generated by local newsrooms. Small publishers need at least a fighting chance to compete for online advertising, says Reynolds, managing partner of HD Media Co., which owns the Gazette-Mail and other newspapers.
Even if the tech companies agree to pay newspapers a large settlement, it will not mean much unless they also agree to structural changes, Reynolds says.
“Everybody would like to have a large cash payout so that’s part of the pitch,” he adds. “But the more important thing is if you give us a whole bunch of money, and you don’t change the system, maybe we go out of business in twenty years versus ten.
“It may change the trajectory by a decade, but if you don’t change the system, it appears to me we are going into a future where there is going to be no local journalism or only local journalism that’s financed by philanthropy or something that’s clearly not independent.”
The Gazette-Mail’s lawsuit started with a text to Reynolds last July from Lee Wolverton, vice president of news and executive editor of HD Media, and a former editor at the Pittsburgh Tribune-Review. After Australia had moved to make Google and Facebook pay media companies for news, Wolverton sent a lengthy message that said, “To save ourselves, we need to save the whole industry … If we did this [lawsuit], we’d make history. Let’s roll on this!”
The lawsuit lays out just how much disruption has hurt the newspaper industry nationwide: Advertising revenue declined to $16.5 billion in 2017 from $49 billion in 2006; more than 30,000 newspaper jobs have been lost since 1990; one in five newspapers has closed over the past 15 years.
Yet, Reynolds still sees opportunities in local news. As a lawyer, the head of an energy pipeline company and a former Democratic state lawmaker, he has invested in local newspapers by purchasing them out of bankruptcy and from the brink of closure.