Private Equity Acquisitions Lead to 11% Decline in Local Governance News

The landscape of local journalism is undergoing a significant transformation as independent newspapers increasingly fall under the ownership of private investment firms, a trend highlighted by a recent tweet from Trace Vertical Ai Cohen stating, "Independent newspapers disappear as private investment firms take over." This shift, driven by a pursuit of profitability in a struggling industry, has profound implications for news content, staffing, and civic engagement, despite potentially preventing outright closures.

Research indicates a measurable decline in local news coverage following private equity buyouts. A National Bureau of Economic Research (NBER) working paper, "Local Journalism under Private Equity Ownership," found that private equity acquisitions lead to a 3.6 percentage point reduction in articles focusing on local governance—a decrease of 10.8% from the average. Concurrently, there is an 8.3% increase in national politics content, and the total number of articles published by these papers drops by 16.7%. This reorientation of content away from local issues is often attributed to cost-cutting measures, as local reporting is more expensive to produce than syndicated national content.

The impact extends to newsroom staffing, with the NBER study revealing a 7.3% decrease in reporters and an 8.9% reduction in editors at newspapers acquired by private equity. This reduction in local journalistic resources directly correlates with the observed shift in content. While print circulation declines by 9.8-11.1% post-acquisition, private equity ownership is also associated with a 44% increase in digital circulation, suggesting an investment in modernizing platforms.

Despite the concerns regarding local news quality, private equity involvement also presents a complex picture regarding newspaper survival. The NBER paper notes that private equity-owned newspapers are 75% less likely to shut down entirely and 60% less likely to transition to weekly publications compared to their non-private equity counterparts. This suggests that while content and staffing may change, private equity can offer a lifeline to financially distressed newspapers.

The broader consequences for communities are significant. The NBER study links private equity ownership to a 9% decrease in total votes and a 0.82 percentage point drop in turnout for local elections. Furthermore, public awareness of local politicians tends to decrease. Firms like Carpenter Media Group, Boone Newsmedia, MediaNews Group, and O’Rourke Media Group have been active in consolidating local media assets, as reported by "The Target Report." This trend underscores the evolving challenge of maintaining robust local journalism in an era of increasing financial pressures and changing ownership models.