‘Local news is not a business anymore’ — Observers react to The Salt Lake Tribune going nonprofit

(Leah Hogsten | The Salt Lake Tribune) Paul Huntsman, owner and publisher of The Salt Lake Tribune has applied with the IRS to switch the newspaper to a nonprofit company, relying on donations large and small. Huntsman met with the staff of The Tribune Tuesday, May 7, 2019, to announce the move and field questions.

Observers of U.S. journalism reacted Wednesday to news that Salt Lake Tribune owner Paul Huntsman was seeking nonprofit status for the newspaper after years of financial losses, with some saying it raises new risks and others seeing it as forging a new future for struggling newsrooms.

Huntsman, who bought the state’s largest daily in 2016, announced to newsroom staffers Tuesday that he will soon apply for IRS approval of the switch, saying it was the only sustainable path for keeping the 148-year-old paper alive long term.

The wealthy businessman followed that with a note to Tribune readers, published online Wednesday.

“Roughly 1,800 communities across the U.S. have already lost their local newspapers, tearing a hole in their civic and democratic fabric,” Huntsman wrote. “We are taking proactive, innovative and swift action to pioneer a new model so that this does not happen in Utah.”

Tribune Editor Jennifer Napier-Pearce, who let out a cheer when Huntsman had finished his 40-minute talk with staffers Tuesday, said later she was “thrilled and grateful” for his “vision and courage to secure our future in this new way.”

“While our business model is changing,” Napier-Pearce wrote in an email to staff, “our mission and your role in all of this remains the same: Keep providing the best damn journalism in the state.”

And while few industry observers were surprised by the announcement, some raised questions about the Pulitzer Prize-winning paper’s news coverage, independence and finances going forward as readers in large numbers continue to access news on a variety of digital platforms.

Jay Rosen, a news critic and journalism professor at New York University, called The Tribune's move "a big step" that changed rather than solved the newspaper's business problems.

“One of the advantages of a market model is that the discipline of the market makes sure that your journalism is relevant," Rosen said. “You have to understand your community.”

But the NYU professor added that under a nonprofit model, “you could also devise other ways to make sure you’re in touch with the community that may be better than what the market does.”

Near term, Tribune executives acknowledged moving to a nonprofit brings some uncertainty to the paper’s bottom line as Huntsman and Fraser Nelson, newly hired vice president of business innovation, seek to raise an endowment adequate to yield enough interest to cover the cost of newsroom operations. Those funds would continue to be bolstered by subscriptions, both print and online, and advertising.

Tribune executives have declined to publicly specify what size of endowment they are seeking over what time period, pending IRS approval.

Utah Policy, a political website, first reported The Tribune’s conversion to nonprofit late Tuesday, based on a copy of Napier-Pearce’s email to staffers. The site and others raised concerns about The Tribune remaining independent when governed by a nonprofit community board.

But an analyst at Harvard University’s Nieman Journalism Lab, which studies standards in journalism, said the paper would be arguably less vulnerable to board interference than it was now from a wealthy individual owner.

“Being able to transition to nonprofit status means having a much broader base of support than just one person driving the newspaper,” said Christine Schmidt, a staff writer at Nieman who focuses on innovation in journalism.

Huntsman told newsroom staffers he intends to build a “firewall” between the board and the newsroom into the nonprofit’s bylaws, with a view to ensuring the paper’s independence can withstand changes to board membership after he is gone.

Huntsman, who bought the paper at the urging of his father, the late Jon Huntsman Sr., and comes from one of Utah’s most philanthropic families, also said he intends to raise funds for The Tribune for the rest of his life.

Richard Tofel, president of ProPublica, the New York-based news nonprofit devoted to investigative projects, called Huntsman’s pursuit of nonprofit status “an act of great generosity and real civic statesmanship.”

“All of us should wish him and The Tribune the very best in this move,” Tofel tweeted Wednesday.

The Tribune has partnered with ProPublica to collect and analyze data on hate crimes and incidents of bias, one of several collaborations the newspaper already maintains with nonprofit organizations.

Rick Edmonds, a media business analyst for The Poynter Institute, noted that Huntsman had warned of The Tribune’s deteriorating finances when he laid off a third of its staff nearly a year ago.

"It's not too surprising," said Edmonds, who noted that The Tribune and its rival, the Deseret News, continue to compete for advertising and paying readers in one of the few remaining U.S. cities with two daily newspapers. "There are some pretty significant expenses there."

And while the move was being touted as a first for U.S. legacy print outlets, Edmonds and others pointed to other news outlets that have deployed a nonprofit model, including the British newspaper The Guardian and magazines such as Mother Jones, The New Republic and National Review.

The Guardian's approach of soliciting reader donations at the bottom of all of its online articles, Edmonds said, "has been very, very successful."

A handful of U.S. legacy publications are partially funded by nonprofits but maintain a for-profit business model, such as The Philadelphia Inquirer.

A recent Wall Street Journal article, meanwhile, included predictions that half of surviving U.S. newspapers would be forced to close within two years as circulation and revenues from print advertising continue more than two decades of dramatic declines.

To stem Tribune losses, Huntsman said his strategy was not only to turn the paper into a 501(c)(3) supported by charitable donations, but also to create a new nonprofit foundation with the broader mission of financing independent journalism in Utah, with The Tribune as a major recipient.

"Not only is this the only decision for The Tribune," Huntsman said, in light of declining revenues from advertising and subscriptions, "but morally it is the right thing to do as well."

David Cay Johnston, an investigative journalist, media observer and author who specializes in tax and economic issues, said the U.S. news industry had not yet found a successful nonprofit model, "though I think we will."

"There's no reason they can't do this and make it work," Johnston said of The Tribune.

Schmidt said that while nonprofit status had recently been pursued by a number of news startups, shifts in the prevailing media landscape are nudging legacy papers down this road.

“Local news is not a business anymore,” Schmidt said. “It’s a public good for a lot of people, and it’s hard to find a sustainable for-profit business model for that.”

She noted that the French-language daily newspaper La Presse in Quebec moved a year ago to sever ties with its wealthy owners, the prominent Desmarais family, and seek to go nonprofit, though it will reportedly target government support along with private donations.

Along with that trend, Schmidt said that as more newspapers in the U.S. close, national and community-based foundations and wealthy individuals are becoming increasingly comfortable with donating to media organizations, seeing their importance to communities.

Johnston, the investigative journalist and media observer, warned that a nonprofit newspaper reliant on an endowment could be vulnerable to costly legal attacks aimed at depleting its finances resources.

"There could be a litigant who will say, 'I want to destroy the newspaper' and bring lawsuits whose real purpose is to force the paper to spend its endowment," he said.

Despite those concerns, he and others underscored the benefits and importance of sustaining independent news coverage of public institutions in Salt Lake City and Utah.

“People forget the policing function of journalists,” Johnston said. “Just having beat reporters who are hanging around City Hall, the county government and the schools have an effect. People know that they’re being watched. And that doesn’t mean there’s no crime. It just means that there are a lot of people who are not going to run the risk.”