Photograph Source: Jon S – CC BY 2.0
It has become a truism that the One Percent despises democracy, that it would like to see democracy go the way of the Great Auk. Democracy means sharing power with the masses, and the One Percent would obviously prefer to have all the power to themselves.
Now consider this. Alden Capital, a New York-based hedge fund founded by Wall Street tycoon Randall D. Smith, is currently seeking to purchase Lee Enterprises, the owner of 77 newspapers nationwide.
Smith’s hedge fund is notorious for buying daily newspapers, slashing jobs, gutting staff, then selling off the remaining hard assets–buildings, vehicles, printing presses, rolls of old newsprint, whatever they can get their greedy hands on.
From a financial point of view, Alden Capital’s hostile takeover seems to make little sense. Take one Lee Enterprises paper, the once venerable St. Louis Post Dispatch. Staff there has been cut to the bone, the landmark Post-Dispatch building sold off to a tech startup. Other assets like parking lots have been sold. The newspaper is already a shell of its former self. Where once the paper’s reporters covered most municipal governments in the St. Louis metropolitan area, they now barely cover the city of St. Louis and St. Louis County. The remainder of these local governments operate without an independent watchdog, so who knows what crimes local politicians are getting away with? Yes, there is a state watchdog (the state ethics commission) but, Missouri being a red state, the commission has been historically underfunded and understaffed.
Alden Capital has proposed a cash purchase at $24 a share, about 30 percent more than the company’s closing share price of $18.49 at the time of the proposal. Additionally, Alden Capital will have to pay a premium to Warren Buffet’s Berkshire Hathaway which sold Lee Enterprises its Nebraska newspapers and loaned the company the cash with which to buy them—a debt that will also have to be paid off.
The only way this makes sense for Alden Capital is if its real goal is not to gut an already gutted newspaper, but rather to render the two dozen newspapers toothless, if they want to kill the watchdog. To paraphrase The Washington Post’s motto, if they want democracy to die in darkness.
World-Herald News (Omaha) Guild president Todd Cooper seems to take this view. “It is not hyperbole to say that parts of democracy die when a hedge fund is allowed to run local news into the ground,” he said.”Trust in government erodes as our watchdog function gets stripped down.”
Kathy Kiely, the Lee Hills Chair of free-press studies at the University of Missouri School of Journalism, recently told Poynter.org that Alden’s purchase of Lee would be “a dagger to the heart of democracy.”
According to the article, Kiely said the motive behind hedge funds like Alden’s attraction to local newspapers has become less and less clear as those hard assets have disappeared or been sold off.
In other words, hedge funds probably aren’t buying already gutted newspapers for financial reasons.
That leaves ideological reasons.
During an interview with investigative reporter Kavahn Mansouri, Kiely said, “If there is no further revenue there is the question of why continue doing this.”
Said Mansouri: “Kiely said to me at one point, if she were to come up with a recipe for getting rid of democracy, getting rid of newspapers would be one of the first things she would do.
Nobel Prize-winning economist Paul Krugman once said that democracy means there is always the fear that “the great unwashed will vote in left-wingers who will tax the rich, hand out largess to the poor, and destroy the economy.”
If Krugman is correct, then the only way the One Percent can save the economy is to destroy democracy.
Mind you, newspapers, which are often owned by giant corporations like Lee Enterprises, or billionaires like Jeff Bezos, are poor guardians of democracy at best. Their sole purpose is to make profits for their shareholders. Any social responsibility comes after that or despite it. But they are all we have. And when they are gone, democracy will go with them.