Report: Local Newspapers Could Fold Without Aid

Seattle Times Co. received a nearly $10 million loan last week as part of the federal government’s rescue program for small businesses. The money is helping the publisher avoid layoffs and payroll cuts for its staff of 700, despite a plunge in advertising revenue during the coronavirus pandemic.

However, The Wall Street Journal reports The Arkansas Democrat-Gazette is in essentially the same financial distress as the Times, with a similar size workforce among its parent’s publications. Yet it isn’t eligible for the aid and had to furlough or cut pay for 10% of its 900 employees this month.

The reason: its parent company, WEHCO Media Inc., has more than 1,000 employees—the Small Business Administration’s maximum size for newspapers to qualify for the forgivable loans.

Papers representing more than 80% of U.S. circulation are disqualified from the government’s Paycheck Protection Program because of the way their companies are structured, according to data from the Alliance for Audited Media.

The issue has prompted a bipartisan push in Congress to either amend PPP rules to make an exception for local news, or get news organizations other forms of aid in the next stimulus bill.

The steps many struggling papers took over the past 15 years to stay afloat—round after round of mergers and consolidation, selling to private-equity buyers, taking on mountains of debt—now prevent the industry from getting meaningful federal help.

While many local papers are now owned by big chains or other conglomerates, they still see themselves as local businesses, staffed by local journalists, reliant on local business for advertising and driven by a mission that advocates say has grown more important amid the pandemic.

The thirst for local information during the pandemic has boosted web traffic and subscriptions at many news outlets. But the shuttering of the retail businesses that have long been their biggest advertisers has sent revenue into free fall.

Layoffs, furloughs and pay cuts have affected roughly 33,000 news organization employees nationwide since the start of the crisis, according to a tracker compiled by the NewsGuild-CWA, the largest journalists’ union.