The article below originally appeared on MediaPost on March 28, 2022. The full article can be found here.
In the next few months, a high-profile, highly anticipated, digital-only newspaper, the nonprofit Baltimore Banner, will open for business, and it might represent a significant development in the deeply distressed newspaper industry, especially for local news.
The Banner won’t be the first nonprofit media endeavor. At least two major newspapers, the Philadelphia Inquirer and the Salt Lake Tribune, have gone nonprofit in recent years, in effect becoming community assets and relying less on ad revenue and more on donors in the same way that NPR and other publicly supported media organizations do. The trend is accelerating among local media.
But the Banner might be the best-funded nonprofit local-media startup. It’s being launched by the billionaire hotel magnate Stewart Bainum Jr., who has committed substantial funding. Bainum came onto the newspaper scene a year ago, when the notorious hedge fund Alden Global Capital was in the process of buying the Tribune Co., publisher of nine major metropolitan dallies, including such marquee brands as the Chicago Tribune, the Baltimore Sun, the New York Daily News, the Hartford Courant, the Virginian-Pilot and the Orlando Sentinel.
Bainum had agreed to buy the Baltimore Sun in a $65 million side deal from Alden. At the time, he indicated he wanted to run the paper as a nonprofit. But then in March 2021 he lost confidence in Alden, which he said was changing the terms of their agreement. Instead, he put together a $680 million deal for the whole company, teaming up with the Swiss billionaire Hansjörg Wyss and exceeding the Alden offer.
But Wyss pulled out in mid-April of 2021, and in May, Tribune shareholders approved the Alden deal. Bainum promised to proceed with a digital startup, and now The Banner’s objectives are taking shape. “The overall mission is to make life better for the people of Baltimore, especially those who have been ignored,” Bainum told Northwestern University’s Local News Initiative earlier this month. “The local goal is pretty obvious: to create a news outlet that strengthens the community, that tells the stories of the people of Baltimore and holds our leaders to account.”
”Secondly,” he continued, “is the national goal: to do that in a financially sustainable way, at scale, so it can be replicated by others in communities in all 50 states, as a public good.”
Bainum has committed to donating or raising $50 million over five years for the Banner, which now has a CEO and an editor in chief. As of February, it had hired 10 editors and reporters, Poynter reported, with a goal of 35-40 reporters in place for the launch and 60 by the end of 2023. The goal is 100,000 paying subscribers in four years. Advertising will comprise 15% of the mature company’s revenue, the Local News Initiative noted in a separate 1,680-word report on the Banner’s launch.
Why does all this matter? Because it’s one of a handful but growing number of nonprofit journalism operations, and this one is in a major metro region with significant financial backing.
In the end, with the commercial newspaper model having contracted or collapsed in many markets, there may be just three viable capitalization paths left for many local-news operations: billionaire, financial, or nonprofit ownership.
The first — where millionaire or billionaire investors leverage wealth and community stature into media ownership — seems to work.
Among the examples: Jeff Bezos’ 2013 acquisition of TheWashington Post, Red Sox owner John Henry with the Boston Globe, Sheldon Adelson with the Las Vegas Review-Journal, and Patrick Soon-Shiong’s purchase of the Los Angeles Times in 2018.
But it can’t scale. There aren’t enough billionaires looking to buy newspapers.
The second — well, we know how that’s working out.
That leaves nonprofit models, and that’s why the Baltimore Banner experiment has attracted so much interest.
This article was originally published on MediaPost by Tony Silber. Find the full article here.