Connecticut Attorney General George Jepsen says he would be concerned about the possibility that one company could gain an unfair advantage in the competition for advertising.
By HARLAN LEVY
Special to The Republican
Alden Global Capital, a little-known New York City hedge fund, became a player in Connecticut’s media market this month with its purchase of the Journal Register Co. – and could become the dominant media company in the state if it takes over the Tribune Co., owner of the Hartford Courant and television stations WTIC-TV61 and WTXX-20.
In buying the Journal Register, Alden, which has purchased distressed newspapers nationwide, acquired three daily Connecticut newspapers – the New Haven Register, Middletown Press and The Register-Citizen in Torrington – and 20 weeklies in the state.
Alden also is the lead bank in Tribune’s bankruptcy and could end up with ownership of its properties. Alden already has a stake in LIN TV, owner of WTNH-TV8 in New Haven.
Having so much of the state’s media in the hands of one company raises concerns since Alden could offer discounted ad rates across multiple media that would undercut competitors. That’s exacerbated by Alden’s ownership stake in 13 top media conglomerates and their newspapers and TV stations in two dozen states from California to the Northeast.
In Alden’s other media acquisitions, it has consolidated and merged operations, an associate professor of journalism at Quinnipiac University in Hamden, Paul Janensch, says.
“This is what they push for in all their newspaper operations,” Janensch says. “They combine the printing in a few plants. They combine business services, like human resources and accounting. They combine editing, page design, and other functions. And they push for going digital.”
That means layoffs, “but maybe not in newsgathering,” Janensch says. “They apparently think that the traditional newspaper’s days are numbered but that there’s still a market for news, advertising, and other information that’s distributed online and over mobile devices.”
Flipping its Connecticut properties after a few years, with all the turmoil that entails, is another possibility.
“Alden can own the Register and Tribune and then start picking up the Connecticut Post in Bridgeport, the Greenwich Time and the Danbury News-Times,” speculates former newspaper reporter Richard Hanley, assistant professor of journalism and graduate director of journalism and interactive communications at Quinnipiac. “They could roll up a significant part of the existing media landscape, form a separate company, embed all these newspapers in that company, and sell that company.”
An Alden employee says the company won’t comment.
“Nothing would surprise me,” Hanley says. “They’re not interested in journalism as an enterprise essential to this democracy. They’re in the financial business.”
That is a lot to contemplate for the state’s other bigger daily papers, like the Courant (daily circulation: 135,000), Journal Inquirer (32,000), and the 215,000 daily subscribers to the Connecticut Post, Waterbury Republican-American, and Meriden Record-Journal. Journal Register’s three Connecticut dailies have a combined daily circulation of about 88,000, 18 percent of the state’s total daily newspaper circulation.
Dire effects may not materialize, Janensch says. “Alden is not a rapacious operation,” he contends. “Their investments in other media companies have not created outrage, and where they’ve invested, Alden, if anything, has made it stronger.”
Indeed, Janensch says, “They haven’t flipped anything yet. They’re acquiring and pushing for change toward more digital distribution.”
Alden “has found value” in the Journal Register newspapers, Hanley says. “A lot of critics are saying that newspapers are dead. But this hedge fund, which has grown tremendously over the last few years, sees value and profit to be gained in managing the transition from newsprint to online in these properties.”
Journal Register emerged from bankruptcy in 2009 with a focus on Internet publication.
JRC’s former CEO, John Paton, who is keeping his job under Alden, has no doubt about the Connecticut operation’s presence. Paton spearheaded JRC’s multiple-platform digital focus. As a result, JRC claims, it has doubled its digital audience in the past year and is growing its digital revenues at an annual rate of about 70 percent, about seven times greater than the newspaper industry average in the first quarter of 2011.”
“Our strategy is fast becoming a model for the future of journalism that can properly serve local communities and be economically self-sustaining and profitable,” Paton said after JRC’s sale to Alden was announced.
But more growth for the JRC papers may be easier claimed than done.
“The downside for Alden is that there are numerous nonprofit and for-profit start-ups that are blossoming in this space that don’t have the overhead that traditional media companies have,” Hanley says. “The digital space is already competitive, and although Alden certainly has an advantage, just because they’ve been successful in the past doesn’t mean they’ll have success here, particularly in an environment as chaotic as news.
From the standpoint of Alden’s competitors, Hanley says, “I wouldn’t be afraid of this.”
Connecticut Attorney General George Jepsen says he would be concerned about the possibility that one company could gain an unfair advantage in the competition for advertising. A giant newspaper chain could use its size and diversity to offer anti-competitive rates that undercut other newspapers’ offerings, he said.
“Consolidation of the industry is a legitimate concern when a single company can effectively monopolize local media,” Jepsen said. “It does raise some issues.”
The Connecticut Unfair Trade Practices Act “could come into play if the company pushed down advertising rates below competitive levels artificially because of its size and arguably was competing with other newspapers unfairly,” the attorney general said.
“If a business is in a position to dominate local media and local news coverage, it’s troubling because the public may end up getting only one point of view,” Jepsen says. “If free speech and the First Amendment are about the market of ideas, it’s not an open and free market if one player effectively dominates it.”
Of the recent wave of media consolidations, Federal Communications Commission board member Michael Copps says, “Every time you have one of these deals, at the end of the day it means one newsroom closes, another lost voice, less local coverage, and less diversity of perspective.”
In July 2010 the FCC began reviewing its controversial media ownership rules – as it is required to do every four years – most significantly the three-decade-old rule barring ownership of a TV station and a newspaper in the same market.
For more than a decade Tribune has violated that rule by owning both the Courant and the two TV stations in the Hartford market, though it has a waiver running through this year. Then the company may face an order either to sell the paper or the TV stations. If Tribune’s bankruptcy ends up with Alden owning an interest in the Courant and the two Hartford-market TV stations, Alden may be the one forced to divest one or the other.
Alden also may face that issue by its purchase of the New Haven Register amid its part ownership of WTNH-TV8.
In a status update on Tribune’s waiver request and progress on reviewing the media rules, FCC spokesman Neil Grace said last week, “The Tribune’s waiver request is still pending. As for the media ownership rules, we’re not commenting on the timing of the proceeding at this point.”
The FCC’s media rules are supposed to “promote the goals of competition, localism and diversity.”
But a debate is under way between public interest pro-regulation forces and large media companies claiming that restrictions on media ownership will impair them and eliminate media outlets.
In large part because of the Internet the media today include countless sources, unlike the 1960s, when the cross-ownership rules were written to moderate the threat of domination by media giants. Now some of those giants are humbled, suffering seriously declining revenues if not bankruptcy and dwindling influence.
‘So the key question is whether a cross-ownership ban and other constraints remain necessary to protect society, economic competition, and diversity of opinion or have become counterproductive.
“Allowing consolidation would let media companies build larger audiences to attract advertisers and spread hefty newsgathering costs by re-purposing content across more platforms,” says former FCC member Harold Furchtgott-Roth.
“If we want robust local news, we need to give media companies the opportunity to achieve scale, since producing local news is not cheap,” LIN Vice President Rebecca Duke says.
But Andrew Schwartzman, head of the Media Access Project, is skeptical of such arguments.
“I am concerned about enacting policy changes based on temporary economic conditions,” Schwartzman says. “We don’t yet know what the new normal is.”
The FCC’s Copps comments: “It is difficult to fully quantify the harmful effects that media consolidation has had on the news, information, and entertainment we receive. Fewer and fewer voices do not an informed electorate and robust democracy make.”
The FCC has not indicated which way it will go, but the agency has a third choice, observers say: adopting a case-by-case approach to match the particular marketplace to the public interest instead of instituting general rules applying everywhere.
Springfield Superintendent of Schools Alan Ingram, left, is at the center of a controversy over a $30,000 bonus he received when he signed his contract. School Committee member and mayoral candidate Antonette Pepe, right, is among a group of School Committee members saying Ingram should return the money because, she and others contend, it was intended for Ingram to purchase a home in Springfield, which he hasn't done.
Christopher Collins
