George Kelly rallies the crowd at a protest outside Alden’s headquarters in New York, May 2018.

DOJ and FTC need to scrutinize news mergers

Yesterday The NewsGuild-CWA submitted comments to the Department of Justice and Federal Trade Commission on their “merger guidelines.” Both agencies use these guidelines to evaluate the effect a merger or acquisition might have on competition within individual sectors of the economy. 

“Local news is being murdered by private equity and hedge funds gobbling up and shutting down news organizations,” said NewsGuild-CWA President Jon Schleuss. “The federal government needs to wake up and prevent the takeover and destruction of local news.”

The Guild applauded the initial draft guidelines from the agencies and pushed them to consult with workers, labor unions and members of the public whenever the groups evaluate mergers and acquisitions. The Guild also encouraged the agencies to further restrict cross ownership, laying out several examples where hedge fund Alden Global Capital purchased shares of Gannett, Gatehouse, Tribune Publishing and Lee Enterprises before making attempts to purchase each of them. Alden bought Tribune in May 2021.

Similarly, the Guild called for more restrictions on interlocking directorships, pointing to three examples where Alden sat or proposed to sit on boards of competing news chains.

The Guild argued for more scrutiny of private equity ownership of news, which has accelerated the job cuts and wage stagnation in the news industry. The Guild cited the example of hedge fund Standard General’s attempts to acquire local news broadcaster TEGNA — a fight the Guild won — in pointing out the review process at the Federal Communications Commission, which allows for feedback from all stakeholders — unions, community groups, locally elected representatives, etc. 

The Guild also pointed out that the news industry should be considered differently when evaluating mergers and acquisitions. “For certain sectors – in particular, the news industry – a merger can have direct effects on the functioning of local government, the robustness of political engagement, the health of the local economy and the very identity of the community,” the Guild wrote.

“The news industry is the only industry specifically mentioned in the constitution because it is the cornerstone of a functional democracy,” Schleuss said. “Without further scrutiny of the hedge fund takeover of local news, we will lose our democracy.”

The Guild submitted initial comments in 2022 to the FTC and DOJ. The agencies then drafted a set of proposed guidelines and opened them up for public comment in July. The final guidelines should be issued early next year.