San Diego Philanthropist Launches Newspaper Bid
Wednesday, September 24, 2014
An octogenarian philanthropist launched a bid to buy San Diego's dominant newspaper and turn it into one of the nation's largest nonprofit news organizations, while another major Southern California publisher ceased publication of its Los Angeles newspaper after only five months.
Malin Burnham's bid for U-T San Diego is the latest effort to frame a newspaper investment as a gesture of civic goodwill. Analysts compared the San Diego businessman to a new breed of owners at The Washington Post, The Boston Globe and Star-Tribune of Minneapolis who act largely on a belief that newspapers perform a public service.
Burnham, whose background is in commercial real estate and insurance, said U-T San Diego owner and publisher Douglas Manchester encouraged him to seek nonprofit status from the Internal Revenue Service, which may take about 90 days.
Burnham, 86, told The Associated Press that he and Manchester each proposed prices and that he believes his offer can be "in the ballpark." He declined to be more specific.
Manchester, a San Diego businessman who spent heavily on an ill-fated cable television venture and used the newspaper to promote conservative views after buying it in 2011, said he was ready to talk with Burnham after he gets nonprofit status. He added that a deal was a long way from complete.
"I have always admired and respected all that Malin has done for our community and continues to do," Manchester wrote in a brief statement in response to a list of questions.
San Diego would join a small group of established, metropolitan newspapers owned by nonprofit companies, including the Tampa Bay Times in Florida and the Deseret News in Utah. Nonprofit news organizations tend to be startups.
A big question facing any print newspaper is whether the owners have enough financial muscle to survive an anticipated drop in revenues as readers move online, newspaper analyst Ken Doctor said.
"If you don't have the financial resources to do it, you just continue to see this downward spiral of staffing, especially in the newsroom, which means less content, and you do not have a growing business," Doctor said.
Freedom Communications Inc.'s decision to stop printing the Los Angeles Register is another setback for Aaron Kushner and Eric Spitz, who bought the company in 2012 and went on a hiring spree at its flagship Orange County Register with a contrarian, print-centric strategy that has yet to attract imitators.
Freedom also said it sold the Santa Ana headquarters building of the Orange County Register for $27 million and will lease space there. The company said it will focus on markets in Orange, Riverside and San Bernardino counties. It owns the Riverside Press-Enterprise, which it bought in November.
A memo to employees from Kushner and Spitz on Monday night said there will be "staff changes," but it didn't give specifics. Some employees took to social media to say they lost their jobs. The company declined to give a number.
"Pundits and local competitors who have closely followed our entry into Los Angeles will be quick to criticize our decision to launch a new newspaper and they will say that we failed," Kushner and Spitz wrote. "We believe the true definition of failure is not taking bold steps toward growth."
Doctor said the Los Angeles Register, which was launched after sharp cuts to Orange County coverage, never had enough journalists to compete against the Los Angeles Times.
The Long Beach Register, which debuted last year and published six days a week, was scaled back in June to a stand-alone publication on Sundays only. Freedom imposed two-week furloughs at the time.
"The bigger story of Kushner is he's playing a game of whack-a-mole," Doctor said. "He never had the money to stay a course and this, by its nature, is a long-term investment."
Burnham, who devotes himself full-time to philanthropy, said he has no quick fixes, but the transition to digital will greatly reduce costs over time. He said he could see U-T San Diego reducing daily print editions in two to five years and going to a Sunday-only print edition in 10 years - words that may be surprising for someone who has never turned on a computer and doesn't own a cellphone.
"Nobody is predicting there will be less news in the world," Burnham said. "We believe the delivery of news is a long-term prospect."
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