March 1, 2024

It wasn’t all that long ago that a billionaire buying a storied news publication was a sign of hope and optimism. After all, they had money to lose, and they earned their fortunes by creating something new. Maybe they could figure out how to make media work?

And what about private equity? It’s an industry premised on turnarounds: acquiring underperforming companies, reimagining them and making them succeed.

Or the classic family-owned publication: Keeping a business in the family with no goal of excessive profits, just a certain amount of stability to keep the legacy alive.

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Unfortunately, it seems, no category of owner appears able to salvage a media business in decline, with business models still stuck in the past (programmatic, anyone?) and editorial models built for a world before Facebook, TikTok and artificial intelligence.

The media sector is facing a crisis unlike anything seen since the 2008 financial mess, with layoffs and cost-cutting at every turn. The cuts have all occurred in the backdrop of declining web readership at many major publishers over the past year, as tech giants like Meta (Instagram, Facebook) and Google try to keep consumers on their own platforms while old standby referrers like Twitter/X no longer deliver as many readers and the social media landscape fractures.

The Washington Post, Los Angeles Times, Time, Condé Nast, Sports Illustrated, Business Insider, New York Daily News, National Geographic and The Baltimore Sun have all been in the news just this month for layoffs, cost-cutting, labor walkouts or bleak prognosticating.

While a sale to private equity has never been greeted by welcome banners from any newsroom, the emergence of wealthy buyers a decade ago largely was, premised on the idea that with a bottomless bank account, the news business would have time — and funding — to figure out its future.

The most notable deal, of course, involved the world’s richest man: Jeff Bezos’ $250 million acquisition of The Washington Post in 2013. But it was far from the only one of that era.

Remember when Facebook co-founder Chris Hughes acquired The New Republic? Or when eBay founder Pierre Omidyar pumped millions into a new venture called First Look Media? Or when BuzzFeed turned down a $1 billion offer from Disney? Or when The New York Times was worried about HuffPost?

Those early deals are largely a distant memory, with Hughes dumping TNR in 2016, First Look Media shedding staff at its business like The Intercept and Topic Studios, and BuzzFeed trading at 22 cents a share after shutting down its news division and acquiring HuffPost.

And of course Bezos’ Washington Post cut hundreds of jobs last month, achieving it through staff buyouts to avoid layoffs.

Of course, a decade ago may as well be a lifetime ago, as far as the media business is concerned. But even more recent deals have shown signs of stress, or in some cases collapse.

Just look at the Los Angeles Times, owned by Dr. Patrick Soon-Shiong, the biotech billionaire who acquired the Times from Tronc (remember it?) for $500 million in 2018.

But Soon-Shiong’s fortune has come under stress, with reports indicating that the value of his stock holdings has fallen by billions of dollars in the past few years.

Soon-Shiong’s flagship hire, ESPN and Washington Post veteran Kevin Merida, resigned this month ahead of substantial and painful job cuts (and amid clashes with the billionaire’s daughter). “Today’s decision is painful for all, but it is imperative that we act urgently and take steps to build a sustainable and thriving paper for the next generation. We are committed to doing so,” Soon-Shiong told the Times as the layoffs began.

The Times on Thursday said that Terry Tang would become interim executive editor. Staffers at the outlet found out about the hire not from Soon-Shiong, but from TheWrap, according to sources.

And then there’s Time magazine, the flagship publication of the late Time Inc., which was sold to Salesforce founder Marc Benioff in 2018 for $190 million. The company has made progress, with its Time Studios division now accounting for more than $100 million in revenue, about one-quarter of the company’s business, per CEO Jess Sibley.

But as Sibley told staff in a memo Tuesday announcing layoffs at the company: “Over the last 12 months, we have diligently reduced our expenses. There is still more work to be done.” Time, she noted, is not yet profitable.

Forbes, now owned by a Hong Kong-based investment group, announced plans to cut 3 percent of its workforce Thursday. And even rival Bloomberg Businessweek, with its deep-pocketed owners that make money by selling terminals for tens of thousands to Wall Street firms, is going monthly.

And then there’s Sports Illustrated, Time founder Henry Luce’s other big bet. The storied publication is now in the middle of a tug-of-war between 5-Hour Energy drink founder Manoj Bhargava, who controls publisher Arena Group, and Authentic Brands Group founder Jamie Salter, who controls the SI brand and licensed it to Arena.

The staff of SI are stuck in the middle, with Arena laying them off as it talks to ABG about a deal and as ABG simultaneously seeks a new licensor.

The premise of wealth providing an off-ramp to media decline appears to be falling apart.

But private equity has not fared much better. At the New York Daily News, staffers walked out this week to protest owner Alden Global Capital’s cost cuts. And Alden sold The Baltimore Sun to David Smith, the chairman of Sinclair Broadcast Group. “What is left to say about American newspapering?” former Sun reporter and The Wire creator David Simon said in response.

Recurrent Ventures, the owner of brands like Popular Science and Field & Stream (which it has just sold, per AdWeek), raised $300 million from Blackstone and has since laid off some 80 people. And at Business Insider, which is owned by KKR-backed Axel Springer, the news organization laid off 8 percent of its staff Thursday.

At Condé Nast, the esteemed owner of Vogue and The New Yorker controlled by the Newhouse family, executives have been laying off about 5 percent of its workforce and folded Pitchfork into GQ, though the union representing editorial staffers has pushed back on some of the proposed cuts.

The media business has been battered on the business side, where programmatic advertising and legacy brand deals still make up a disproportionate amount of revenue, and on the consumer side, with people who used to get their news from legacy outlets choosing instead to get their news from TikTok, Apple News or more niche digital publications.

Marketers need to be well-served in order to have a functioning advertising business, and consumers need to be served to have a functioning subscription business, and it seems the moment is meeting neither of them.

And the looming threat of generative AI still hasn’t taken its toll on the business, though executives at every company see what’s coming, as The New York Times’ lawsuit against Microsoft and OpenAI demonstrates.

That may be the key: In 2008, the ad market was battered by the market crash, and new platforms like Facebook, Twitter and YouTube posed a novel threat to legacy media businesses. It’s just that those traditional businesses didn’t see what was coming at the time.

In 2024, we are in another ad recession, but everyone is more clear-eyed about the state of affairs. And, unlike in the past when it was buoyed by lucrative carriage deals, the TV news industry won’t be immune from the revenue misses that have plagued newspapers and websites. As CNN CEO Mark Thompson wrote to staff Jan. 17: “The traditional TV universe is shrinking steadily. The shift from linear broadcast to digital means that the audience for all news channels on US cable has fallen by roughly a fifth in just the past two years.”

It just seems like no one, not the billionaires, not the private equity turnaround experts, not the family legacies, have a sure sense of how to make it work.