Can Wealthy Patrons Save Dying Industry?

(Sept. 29) - It is no exaggeration to say that the newspaper industry is fighting for its very life.

Indeed, 2009 may well become known as the year that spelled the end for paper news. According to The Business Insider, 105 newspapers have shut down this year. Major dailies in Denver, Tucson and Seattle have vanished. Dozens of other journalistic mainstays are on the brink of bankruptcy. Thousands of reporters have been laid off or fired. Page sizes have been trimmed. Whole sections of newspapers have disappeared.

Were the problem simply a matter of transferring a newspaper's content from newsprint to computer screen, one might expect the websites of daily papers to generate enough money to keep news bureaus in business. They don't.

In the first quarter of 2009, The New York Times and The Washington Post, two papers with robust online audiences, reported multimillion dollar losses as ad revenue disappeared in a perfect storm born of the merging of technological evolution and a deep economic downturn.

But amid this dire backdrop, a growing number of wealthy patrons are stepping forward, checkbooks at the ready, to try and reinvent the newspaper business for the internet age. Welcome to the age of nonprofit news.

Philanthropists to the Rescue

Warren Hellman has never worked a day in his life in the news business. According to its own figures, Hellman & Friedman LLC, the investment bank that Hellman founded, has raised an impressive $16 billion in capital in its 22-year history. But Hellman's interests are much more far flung than his company's balance sheets attest.

For starters, an abiding passion for bluegrass music led Hellman to organize the Hardly Strictly Bluegrass, a wildly popular San Francisco music festival that is now in its eighth year.

Another of Hellman's passions, it turns out, is news, and over the years he has grown increasingly upset with what he sees as the deteriorating quality and ever-diminishing quantity of local reporting in papers like The San Francisco Chronicle.

"There has been a huge downturn in the amount and veracity of local news," Hellman said.

Equally disturbing is what Hellman believes to be the overall lack of journalistic integrity found in the medium that is rapidly overtaking newspapers.

"The problem with the Internet," Hellman explained, "is that there's no real check on accountability. At least with a paper like the New York Times, you have editors, fact checkers."

Last week, Hellman announced his own course of action to try and rectify what he regards as the woeful state of news. He is donating $5 million to establish a new nonprofit news agency in the Bay Area. He has begun hiring a staff of roughly a dozen established journalists. "People whose names you'll recognize," he said.

That core staff will work in tandem with what Hellman calls the new venture's "foot soldiers," about 100 graduate students from University of California Berkeley's School of Journalism. Hellman's team will produce local content that will air on a variety of mediums and outlets. The organization has signed on to feed stories to KQED, San Francisco's public television and radio station. It will also launch an independent website, and hopes to convince The New York Times to run the group's pieces in its California paper edition, however long that platform may survive.

As it turns out, UC Berkeley has been eyed by other wealthy donors as a place from which to help launch a rebirth of in-depth journalism. In 2006, Reva and David Logan donated $1.5 million to establish a lifetime chair at the graduate school to promote the creation of original investigative reporting.

The deal was brokered by Ian Isaacs, a senior partner at the brokerage firm of Merlin Securities and a board member of the Center for Investigative Reporting, another California nonprofit that relies on grants, donations and sponsorship to support a staff of reporters and editors.

"The newspaper business model is broken, but the importance of news is vital to our society." Isaac said. "What is really at risk is investigative reporting."

Isaacs sees the nonprofit approach as crucial to helping bridge the gap between the old and new models of reporting news.

"The billionaire crowd is really coming on to this. It's wonderful to see people with financial capital stepping up."

Two other members of the aforementioned "club" who have definitely stepped up are Herbert and Marion Sandler. In 2008, they founded New York's Pro Publica, committing $10 million each year for the next three years to keep it going.

Like Hellman, the Sandlers made their money in the financial sector, not in news. The founders of Golden West Financial Corporation, which eventually became World Savings Bank, the couple hired then Wall Street Journal Managing Editor Paul Steiger to establish an independent news room.

Since then, Steiger has hired over thirty full time journalists that, as the company's website puts it, "produces investigative journalism in the public interest."

What sets Pro Publica apart from other nonprofit journalism outfits is its willingness to partner with news organizations in the reporting and editing of its stories.

"In some cases our reporter writes, and the paper edits. Other times we co-write. It depends," says Steiger.

As a result of that flexibility, Pro Publica has landed features in numerous major dailies.

Even more antithetical to the mold of past journalism models, Pro Publica encourages blogs and smaller papers to run its stories for free, so long as they are properly credited, and don't face unauthorized editing.

As far as its relationship with its benefactors is concerned, Steiger says that he and his news team have been totally free to produce the kind of stories they deem important.

"The Sandlers get it. They understand the importance of journalistic process being independent."

In the end, however, organizations like Hellman's, the Center for Investigative Reporting, and Pro Publica will need the support of a variety outside funding sources, as well the cash infusions from well-heeled benefactors, if they wish to remain viable.

"Philanthropy is a piece of the solution," Steiger said. "But just a piece. There will also be an increased role for universities and for public television and radio. The web, too, is spawning a host of entities that will no doubt help."

As the news business fully adjusts to life in the age of the internet, the nonprofit model has steadily gained prominence. While philanthropists like Hellman, the Sandlers, and the Logans may not be able to save paper editions of newspapers from the dust bin of history, they very much hope to preserve quality news reporting itself.

Will it work? It seems the only thing that is clear is that the old way of doing business isn't.

"It's a time of opportunity and of great terror," Steiger said. "Trying to get yourself on the side of opportunity is what it's all about these days."