What lies ahead for North Carolina's biggest newspapers?
The Charlotte Observer and News & Observer remain the state’s most powerful and essential media outlets. But new challenges raise doubt about their future as the center of the state’s media world.
Good morning! Today is Friday, June 18, 2021. You’re reading The Charlotte Ledger, an e-newsletter with local business-y news and insights for Charlotte, N.C. Sign up for The Ledger or upgrade your account for full access here.
Editor’s Note: Today, we are bringing you an in-depth look at McClatchy, the owner of several of the state’s largest newspapers: The Charlotte Observer, Raleigh’s News & Observer and Durham’s Herald-Sun. It’s an important topic — for decades, the state’s largest papers have set the agenda in their cities and in North Carolina. Lately, though, they have fallen on hard times, with big staffing cutbacks and a sale last year to a hedge fund, Chatham Asset Management. What does that mean for Charlotte and for our state, and where does the state’s newspaper industry go from here?
We are sharing excerpts of an article published Thursday by The Assembly, a new digital magazine that produces thoroughly reported original articles about people and institutions in North Carolina. The article is written by Jeremy Borden, an independent journalist and former reporter for The Washington Post and the (Charleston, S.C.) Post & Courier. The Assembly handled the writing and editing. With The Assembly’s permission, The Ledger edited the version below for length, selecting the parts we thought were most interesting to Charlotte readers. Passages that we cut from the original are marked with an ellipsis (“…”).
The complete version is available at The Assembly’s website.
IN-DEPTH
They dominated N.C. media for decades. Now, declining subscriptions, new owners and other pressures pose challenges for McClatchy’s media outlets.
The Charlotte Observer building between Church and South Tryon streets in 2002. The site was redeveloped starting in 2016 and is now home to the Bank of America Tower at Legacy Union.
By Jeremy Borden
This year’s first-ever Local News Summit was dubbed “The Power of Many,” and for an industry rocked by constant layoffs and news of its own demise, the rows of modestly caffeinated Zoom faces were a welcome respite.
On a weekday in January, around 150 people joined by videoconference to discuss the future of news in North Carolina. James Taylor and Thelonius Monk set the mood as everyone from reporters to philanthropists to librarians confronted the industry’s big questions.
The day’s message was clear: The local journalism crisis requires an all-hands-on-deck approach. Gone are the days of rivalry and competition; partnerships and collaboration are the industry’s new lodestar to combat a news and information shortage that has been called a democratic crisis.
In both heft and resources, one organization in that virtual room occupied a different tier: McClatchy and its three North Carolina publications, Raleigh’s News & Observer, Durham’s Herald-Sun and The Charlotte Observer. The publications may be weakened from decades past, but their collective reporting staff still drives a significant amount of the state’s news coverage and public agenda. …
But McClatchy’s outlets increasingly are one of many, rather than a center of gravity in the state’s media landscape. As calls to rethink or revitalize journalism grow louder, and as startups emerge across the state, their path is uncertain. McClatchy’s top North Carolina editor, Robyn Tomlin, described the newspaper as wholly “unique.” As she put it, “We’re blazing our own trail.”
This spring, in interviews with more than two dozen former staffers and others in the media industry, The Assembly worked to understand the trail they intend to blaze, and the larger role that McClatchy’s outlets play in the state’s media world.
As a new digital magazine in North Carolina, The Assembly is not a disinterested party. And as a freelancer who has worked at national legacy outlets like The Washington Post, state-level outlets like the Post & Courier in South Carolina, and, early in my career, The Charlotte Observer, I’m not a wholly objective observer either.
But it’s impossible to fulfill this magazine’s mission to report on power in North Carolina without working to examine the state’s most powerful journalistic institution, one whose future is buffeted by big economic forces, a quickly changing news landscape, and questions over whether it can sustain its role as the state’s preeminent media outlet.
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The News & Observer, a Pulitzer Prize-winning metro newspaper, started out as a family-owned enterprise. Its early history was replete with shameful racism; its later history featured a marked progressive push paired with aggressive public accountability reporting.
In 1995, the Daniels family sold the paper to the family-owned national chain McClatchy. Eleven years later, McClatchy made a notorious debt-fueled acquisition of Knight Ridder, a newspaper chain which included The Charlotte Observer. That debt, combined with significant revenue drops after the Great Recession, ultimately led to bankruptcy and the 30-outlet-chain’s acquisition by its biggest creditor—the hedge fund Chatham Asset Management.
That trajectory is not dissimilar from its peers nationwide. Metro newspapers have seen their reach drop, advertising dollars plummet, and control change hands.
Nearly half of all newsroom jobs in the U.S. were lost between 2008 and 2019, according to Pew Research. McClatchy was worse. It cut a stunning 82 percent of its full-time workforce from 2006, the year it acquired Knight Ridder, to just before its bankruptcy in 2019.
Those extreme cuts hit North Carolina hard. In the early 2000s, The N&O alone peaked with around 260 in its newsroom, a number that excludes back-office staff and executive leadership. Today, the Raleigh-based newsroom has 64 positions, including unfilled roles. In Charlotte, the newsroom has just 50 positions. For The N&O, that’s a 75 percent decline in less than 20 years.
The immediate bleeding seems to have stopped. Tomlin, the executive editor, noted in an email that the company survived COVID-19 “with no layoffs, furloughs or pay cuts for our local journalists.” McClatchy did close its Garner, North Carolina, printing plant in February, cutting 81 full- and part-time positions and outsourcing the work to a third party.
But the business case remains difficult, balancing print and digital subscriptions with advertising and philanthropy.
McClatchy still has a lucrative print product in North Carolina—an annual subscription to The Charlotte Observer can cost nearly $1,300—even if it largely appeals to a shrinking, mostly older audience. To get the most out of that dwindling audience, the company has increasingly turned to advanced modeling, using an Atlanta firm called Mather Economics that adjusts prices based on demographic and geographic data. This differential-pricing approach means a subscriber could pay more for the same product than their next-door neighbor because an algorithm has predicted that they are willing to pay more.
One media consultant who works nationally and in North Carolina called the practice “a death spiral and a terrible thing for journalism, possibly even unethical.” He notes, however, that the practice has been “universally embraced by the big conglomerates as a way to drive incremental revenue growth, despite reductions in subscriber volume. McClatchy is the worst offender.”
In an email, Mather’s president, Matt Lindsay, declined to go into specifics but said that the “type of analytics and pricing tactics McClatchy is using are comparable to those of the major newspapers in North America.”
A purer form of revenue growth lies in digital subscriptions: During the pandemic, print subscriptions at The Charlotte Observer dropped by 18 percent, while its digital subscriptions rose 33 percent, according to an analysis by Iris Chyi at the University of Texas at Austin.
Audit numbers reviewed by The Assembly, and confirmed by Tomlin, show that, in 2021, The News & Observer had 50,047 print subscribers, and an additional 22,413 digital-only subscribers. Tomlin also provided numbers for the same period for The Charlotte Observer, which had 54,012 print subscribers, and an additional 19,602 digital-only subscribers.
By contrast, a 2014 audit reviewed by The Assembly showed The News & Observer had 144,982 print subscribers. That’s a 65 percent drop in seven years.
Replacing print subscribers with digital subscribers is a tall order. Chyi’s analysis estimated it takes six new digital subscribers to financially make up for the loss of one print subscriber.
That means the pressure is on for huge growth. But former McClatchy employees are quick to note that the sprawling company has dozens of outlets, all with shared support systems and vendor contracts that limit the ability of any single outlet to be agile and nimble. Negotiations over those types of shared service agreements helped derail a recent bid by a Maryland millionaire who hoped to wrest control of the Baltimore Sun from its new hedge-fund owners.
Tomlin, by email, argued that the paper has made significant strides. “We’ve dramatically sped up our metabolism and responsiveness to breaking news, and we are constantly adapting beats and focus areas to be nimble and responsive to new ideas and to our readers’ needs,” she wrote. “As a result, we reach more people than we ever have before—in spite of our paywall.”
One approach to bridge the gap is nonprofit funding. As of early this week, The N&O raised just over $12,000 from 70 donors for the newspaper’s partnership with Report for America, which places young journalists in newsrooms. The paper also funds certain reporters and projects with foundation and industry grants, like its technology reporter and some of its environmental coverage.
The irony, as The N&O works to grow its revenue and protect its newsroom, is that, overall, McClatchy appears to be doing surprisingly well financially, though its debt remains a burden. Before its financials went dark due to private ownership, Joshua Benton of Nieman Lab took a deep dive into McClatchy financials made public because of the bankruptcy proceeding. They showed the business had been battered by the advertising drop due to COVID-19 but that it remained “operationally profitable.” …
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The business environment is what enables content—and that is what matters most for dedicated readers.
It’s hard to argue that The News & Observer and The Charlotte Observer don’t still produce impactful work. A call from investigative reporter Dan Kane is still a nerve-wracking experience for executives or officials. “The Insider,” The N&O’s subscription newsletter covering state politics, remains the go-to source for what happened yesterday in the General Assembly. During consequential events like the killing of Andrew Brown in Elizabeth City, McClatchy was publishing daily updates and beautiful, comprehensive pieces like Andrew Carter’s expansive scene-setter.
The frustration from many is about the inconsistency of quality. In a 2019 post, The Charlotte Ledger’s Tony Mecia noted outstanding Charlotte Observer stories like a triple-bylined investigation on prosecutorial dismissals of gun charges statewide, and a double-bylined exposé on the Charlotte-Mecklenburg Schools Superintendent.
But he argued that combining that with “an addiction to staff-written click-producing articles delving into the exploits of meth-fed attack squirrels in Alabama and horny snakes on the Outer Banks doesn’t sound like a winning business strategy—more like brand suicide.”
Those stories, like the many McClatchy write-ups of rumored Sasquatch sightings, are part of a strategy to drive clicks. But on your social media timeline, they get equal space to the thoughtful, hard-won reporting that the paper’s staff labor to publish. …
Dawn Blagrove, the executive director of the racial justice advocacy group NC Emancipate, told The Assembly that the [N&O’s] coverage too often lacks important context. “No one is creating the arc of a story anymore and maintaining the arc of a story,” she said. “That’s not something you expect to see on broadcast journalism but it should be essential to print journalism. The N&O does not do a great job of that.” …
Tomlin sent The Assembly reports from the analytics site Comscore, that showed both of McClatchy’s major papers beating their competitors in unique viewers in April, 7.7 million for The N&O and 5.4 million for The Charlotte Observer. …
Reach remains the paper’s biggest asset. But The N&O and The Charlotte Observer are not the only ones holding the statewide megaphone.
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There’s no North Carolina city where the relatively dethroned status of McClatchy’s papers is on better display than Charlotte.
From 1975 to 1997, publisher Rolfe Neill led The Charlotte Observer as a sort of civic giant—in backrooms with the city’s most powerful business elite while enabling the paper to win Pulitzers and publish strong journalism. While far from perfect, the paper was undoubtedly central to the city’s growth and identity.
Today, the spotlight is instead on a host of city-level startups and boundary-pushing outlets. QCity Metro provides “news, information, and commentary from a Black perspective.” Queen City Nerve serves as a strong alt-weekly. WFAE is often cited as an innovator in public radio coverage. Charlotte Magazine serves as a consistent publisher of well-reported long-form.
But, two new startups stand out as real challengers to The Charlotte Observer’s presence, in part because of the buzz they’ve produced since their relatively recent launches.
The Charlotte Ledger, started by former Observer reporter Tony Mecia, is held up as a go-to example of how Substack—a hot new newsletter platform—can enable local newsrooms.
Over two years, with just two full-time staff, The Ledger has reached just under 2,000 paid subscribers. A low churn rate, sky-high reader conversion rates, and a lean operation has enabled the outlet to punch above its weight and grow by 50-80 net subscribers a month, according to metrics Mecia released to The Assembly.
While the Ledger focuses on business-related news, often hitting a middle-aged demographic, another startup aims slightly younger. Ted Williams, formerly the Director of Digital Strategy & New Initiatives at The Charlotte Observer, launched Charlotte Agenda—now Axios Charlotte—in 2015.
“I think a reader needs useful information that allows them to make better decisions day to day,” Williams told The Assembly. “Where to eat, what to do over the weekend. They want a sense of place.” He also had a philosophy that drives the site: go long and in depth or short and useful. “You want to stay out of the middle,” he said.
In December, Williams sold to Axios for a reported $5 million, becoming the flagship outlet for Axios Local, which has since expanded to 14 cities across the country. Williams serves as Axios Local’s general manager.
Unlike Charlotte Ledger, Axios Charlotte has no paywall. A membership program touts some 2,100 subscribers and its email list another 100,000. Its reach on Instagram also speaks to both its younger audience and broad reach — Axios Charlotte has 246,000 followers on the platform compared to the Observer’s 48,000. Around two-thirds of its revenue comes from advertising and events. The New York Times reported the site made $2.2 million in 2019 with a profit margin of over 30 percent.
With a newsroom of just seven, Axios Charlotte isn’t a replacement in reporting scale to The Observer. But with reporting like its dive into Charlotte’s tent city and its scoops on the city’s 2040 comprehensive plan, it routinely drives the city’s agenda.
Tomlin rejected The Assembly’s framing of the changing landscape in the city. “In Charlotte, most of the startups you refer to as being in the ‘spotlight’ have audiences so small that they don’t even register on Comscore,” she wrote, citing the website analytic platform. …
Whether these small startups can grow to challenge McClatchy’s market dominance remains to be seen. …
Nonprofit outlets may be part of the answer. … EducationNC is part of a growing array of nonprofits, often specific to a place or issue. NC Health News has a newsroom equivalent of five full-time staff, focused on health writing, and the 10-year-old Carolina Public Press specializes in accountability and investigative journalism. Both are regularly cited for awards and revelatory coverage.
Elsewhere, the new Border Belt Independent, funded by the Reynolds Charitable Trust and led by longtime publisher Les High, is focused on four rural counties near the South Carolina border. And the Asheville Watchdog has been breaking big local stories by leveraging the volunteer reporting firepower of Asheville retirees, including Pulitzer Prize winners, former senior writers at the NYT, and a surprising concentration of former Miami Herald writers and editors.
None of them, though, can currently replace what McClatchy’s newspapers do in North Carolina day to day. Will the day come when they need to?
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Navigating this new multipolar world is Robyn Tomlin. Her titles vary, but she is responsible for 11 news sites across North Carolina, South Carolina, Georgia, and Mississippi as McClatchy’s Southeast Regional Editor, including her role as president and executive editor of The N&O.
Time and bandwidth are not on her side, but among those I spoke to, she was held in high regard. …
A former N&O journalist put it, “She’s one of those editors who never forgot what it’s like to be a reporter. She wants you to grow as a professional and as a person and devotes a lot of energy to that.”
That’s especially helpful at a time when reporters are stressed and at times demoralized by a tough reporting environment. But it’s less clear whether Tomlin and the outlets she leads have a larger vision of the future of media and civic infrastructure.
Tomlin refused to make any editors or reporters available for interviews. In a May email, as reporting for this piece neared conclusion, Tomlin expressed regret over how the process had played out.
“I wish we’d gotten off on a better foot and/or that I felt that I could trust you to be fair and approach your story without an agenda,” she wrote. “People who know me would tell you that I’m a pretty open and transparent person, so it has actually been difficult to not participate more fully in your reporting because I do think there’s an important story to tell. And it is complicated.”
In the end, Tomlin only agreed to answer emailed questions herself.
When asked about strategic priorities, Tomlin reverted to language about serving as “a dynamic and sustainable multi-platform regional news organization.”
When pressed on which aspects of its work The N&O sees as priority, Tomlin said their primary focus is on “breaking news, investigative/accountability/enterprise stories and on journalism that answers critical reader questions.” For those less familiar with the journalism world, that covers most every type of story.
One challenge for Tomlin and her leadership team is the significant uncertainty they still face as its new hedge fund owner settles in. Chatham, which won its bid for McClatchy in part by promising to keep staffing levels steady, has a mixed track record overall when it comes to journalism.
Under its new owners, McClatchy set a minimum salary of $45,000 for both North Carolina outlets, Tomlin said, a new floor that “resulted in pay increases for some.” The company has also voluntarily recognized unions among workers and journalists at newspapers in South Carolina, Texas, and Washington—a trend with no apparent sign of life in North Carolina.
But the best way to understand what Chatham might do is to look at its previous track record in the media business, where it owns the Canadian newspaper chain Postmedia. (The fund also controls American Media, the publisher of the National Enquirer and other supermarket tabloids.)
Chatham’s strategy and approach was similar for both McClatchy and Postmedia: It spent years buying up the company’s debt before taking a larger ownership control of both companies, The Sacramento Bee reported.
Around two years after Chatham had taken a larger controlling interest in Postmedia, changes rolled in. As The New York Times laid out, “The company has cut its workforce, shuttered papers across Canada, reduced salaries and benefits, and centralized editorial operations in a way that has made parts of its 106 newspapers into clones of one another.”
Chatham had Postmedia make large payments on its debt—which benefits Chatham as the holder of that debt—while making smaller investments in its newsrooms, according to both newspapers. In January, Postmedia reported more than $50 million in profits even as advertising dollars continued to fall because of COVID-19, BNN Bloomberg reported.
Chatham assumed control of McClatchy nine months ago. …
Jeremy Borden is an independent researcher and journalist who lives in Durham. He writes at Untold Story. Additional reporting contributed by The Assembly’s editor, Kyle Villemain.
➡️ The complete article is available on The Assembly’s website.
In brief
Bokhari calls for firing planning director: City Council member Tariq Bokhari is publicly calling for the city to fire Planning Director Taiwo Jaiyeoba, following publication of a news article that suggested that a presentation by Jaiyeoba did not fully represent the results of a poll on the city’s transit plan. An article by WFAE on Thursday, republished in the Transit Time newsletter, said the presentation excluded results that were unfavorable to increased transit funding. On Twitter on Thursday, Bokhari, one of two Republicans on the council, said: “We must demand with a united voice the City Manager fire the City Planner on the grounds of ethical failures.” Bokhari has previously tangled with Jaiyeoba on the 2040 Comprehensive Plan, which is scheduled for a vote on Monday.
Price’s closing was recent decision, owner says: Price’s Chicken Coop owner Stephen Price says he decided to close the restaurant just in the last couple weeks and that he wants to take time to rest before deciding the fate of the property in booming South End. Property records examined by The Ledger show Price owns four parcels totaling 0.584 acres that are valued at nearly $1.8M but could sell for more. (Axios Charlotte)
Casino prepares to open: The Catawba Two Kings Casino resort planned for Kings Mountain, 45 minutes west of Charlotte, has already installed more than half of its 500 slot machines and is looking toward an opening as soon as July 1. Future phases will include table games and a hotel. (Biz Journal, subscriber-only)
Big South End land assembly: A company affiliated with The Providence Group bought a 0.8-acre parcel on Distribution Street in South End this week for $4.1M, property records show. The same owner, FHN 2301 South Tryon, now owns six contiguous parcels — all purchased since the start of 2020 — that total 4.1 acres at a cost of $15.7M. The other five parcels were rezoned in January to TOD-UC, which allows the tallest building heights of all transit-oriented zoning classifications. It’s mostly old industrial buildings on the site. Any guesses on what happens next?
Marketing panel Monday: The Ledger and Jumbo are holding our next online “Midday Marketing” panel discussion on marketing in Charlotte on Monday at 11 a.m. Topic: brand-building. Details and registration here.
Flashback: From The Ledger’s April Fools’ Day edition
From the totally made-up article “New 2040 plan idea aims to end guilty feelings about nostalgia-inducing business closures,” published April 1:
The city’s planning department is rolling out a new proposal intended to help residents not feel bad about the closings of longtime local businesses they have failed to support.
A new zoning designation, to be called the “Hypocrisy Avoidance Overlay District,” would be established to outlaw the closings of certain longstanding businesses. That would spare Charlotte residents feelings of guilt for not having been to those businesses in more than a decade, as well as avoid overly sentimental social media posts from those people.
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Executive editor: Tony Mecia; Managing editor: Cristina Bolling; Contributing editor: Tim Whitmire, CXN Advisory; Reporting intern: Lindsey Banks