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.”

A commemorative newspaper hangs in the Gazette-Mail’s newsroom to mark the moment in 2017 when the newspaper won a Pulitzer Prize for its coverage of West Virginia’s opioid epidemic. Photo by Andrew Conte
A commemorative newspaper hangs in the Gazette-Mail’s newsroom to mark the moment in 2017 when the newspaper won a Pulitzer Prize for its coverage of West Virginia’s opioid epidemic. Photo by Andrew Conte

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.

Once two newspapers, the Gazette-Mail now sits in one office in Charleston’s downtown, just a few blocks from the state capitol.
Once two newspapers, the Gazette-Mail now sits in one office in Charleston’s downtown, just a few blocks from the state capitol.

In addition to the Charleston newspaper, HD Media company owns seven other newspapers such as The Logan Banner and the Coal Valley News that serve small, isolated counties south and west of the state capital near the Kentucky border.

For older residents who lack easy access to broadband technologies or who are reluctant to change, the physical newspaper remains popular, Reynolds says.

“Even a small weekly paper like The Logan Banner: People love that paper, it means something to them, it means something to that community,” Reynold says. “So, I think if you start with any product that people are passionate about, there’s always an opportunity there.”

That kind of support has given HD Media a longer runway to convert its revenue to digital sales. The company also has remained profitable by consolidating operations, making moves to downsize (like going from a 65,000-square-foot building for the newspaper in Huntington to a 6,000-square-foot one) and taking on other printing jobs.

Unlike private equity investors who have amassed newspapers to squeeze out profits, Reynolds says his company has not tried to make a killing but focuses instead on long-term profitability.

“We know we have to make money every month, we have shareholders, we’re a private business,” he says. “But, you know, we’re trying to be long-term greedy, in the sense of, trying to put out the best product that we can every single day, that we can finance. And I feel like that gives us the best long-term chance to make this digital transition.”

As local newspapers make the transition to online publishing, however, the question remains whether they will have space to make money from their own content – or if big tech companies will make most of the profit. Depending on how that question gets answered through the legal process may determine the form that local news coverage takes in the coming decades.

Comings & Goings

 Pittsburgh City Paper has promoted Ryan Deto to be its new managing editor and Amanda Waltz as arts and entertainment editor. “Both Ryan and Amanda have been an integral part of City Paper’s growth, have great visions for the company’s future, and I’m so proud to have them by my side with the rest of our amazing team,” editor Lisa Cunningham shared on social media.

The Pittsburgh Post-Gazette hired Lydia Craver, a former sports editor at ESPN and the Miami Herald, to be its new assistant managing editor for sports. She is the first woman to lead the newspaper’s sports department.

Juliette Rihl, a reporter at PublicSource, announced that she’s leaving the nonprofit news outlet to earn a master’s degree in investigative journalism at Arizona State University’s Cronkite School.

Rossilynne Skena Culgan also is heading back to school to earn a master’s degree at Columbia University’s Graduate School of Journalism, with a focus on arts and culture reporting. She has been working as the director of Editorial & Growth at WhereBy.Us, which owns The Incline, where she previously worked as director.

WTAE reporter Chris Lovingood plans to leave the station in July for a new job at WRAL-TV in Raleigh, North Carolina.

Liz Reid, WESA 90.5’s acting managing editor, stepped away from the station in early June. She had been at the NPR station since starting as a reporter in 2013.

The founding director of the Center for Media Innovation at Point Park University, Andrew Conte writes the On Media column at NEXTpittsburgh with support from The Heinz Endowments. You can find all of his columns here, and you can email him 

Andrew Conte

Andrew Conte, founding director of the Center for Media Innovation at Point Park University, writes the On Media column at NEXTpittsburgh with support from The Heinz Endowments.