A writer at the Nieman Journalism Lab called it “the happiest media news of 2020 (so far).” True, it involves a satire site with only five full-time employees. But it nonetheless marks a new entry into the ranks of employee-owned firms and puts a spotlight on a problem facing larger and more serious-minded media enterprises that employee ownership might help solve.
The news involves ClickHole, a website that began as a spinoff of The Onion and has been under the ownership of G/O Media, the entity created in 2019 by the private equity firm Great Hill Partners when it purchased a suite of online media properties that included The Onion and the sports and culture site Deadspin. Cards Against Humanity, an independent company best known for producing a card game with that name, announced February 3 that it had purchased ClickHole and reincorporated it as an independent, majority employee-owned company. Cards Against Humanity will maintain a minority stake and offer financial support to ClickHole, but will not be involved in day-to-day operations, according to a statement from Cards Against Humanity’s co-founder Max Temkin.
ClickHole’s previous owner made national news when the staff of Deadspin resigned en masse after an edict from G/O Media’s chief executive to “stick to sports” rather than social commentary. That episode became one more count in a lengthening indictment of private equity as a destroyer of media integrity and quality. “Companies with names like Alden Capital, Digital First Media, Citadel, Fortress, GateHouse, and many others that you’ve never heard of have purchased more than 1,500 small-city dailies and weeklies,” wrote The American Prospect in 2018, well before one of those companies, GateHouse, swallowed the Gannett newspaper chain and its 100 newspapers, including USA Today, late last year.
“The malign genius of the private equity business model,” authors Robert Kuttner and Hildy Zenger went on to write, “is that it allows the absentee owner to drive a paper into the ground, but extract exorbitant profits along the way from management fees, dividends, and tax breaks. By the time the paper is a hollow shell, the private equity company can exit and move on, having more than made back its investment. Whether private equity is contained and driven from ownership of newspapers could well determine whether local newspapers as priceless civic resources survive to make it across the digital divide.”
Right now, the prognosis looks dire. A recent New York Times story highlighted reporters at The Chicago Tribune asking wealthy Chicago residents to buy the paper to keep a majority stake out of the hands of Alden Global Capital, which already owns a 32 percent stake in Tribune Publishing Company, which also owns the New York Daily News, The Baltimore Sun, the Orlando Sentinel, and several other newspapers. A few months ago, the editorial staff at The Denver Post got national attention when it published a commentary section denouncing Alden Capital after it purchased that paper.
On the other hand, this has sparked industry-wide debate over, and experimentation with, new media ownership models. Nonprofit media ownership is not new—the Tampa Bay Times in Florida has been under nonprofit ownership by the Poynter Institute since 1978—but it has remained novel until recently. The investigative news organization ProPublica was created as a nonprofit in 2007. The storied but financially troubled Philadelphia Inquirer was placed within a nonprofit in 2016 as a public benefit corporation. The latest entry into this space will be a news site for women launching in summer 2020 called The 19th, launched by Emily Ramshaw, a founding member of The Texas Tribune, itself a nonprofit news site that won awards for its political coverage of the state. News cooperatives are taking hold in places like Mendencino, Calif and Akron, Ohio.
Meanwhile, in January the Columbia Journalism Review launched an online debate over a topic once utterly verboten among US journalists—”government funding for journalism.” What that debate revealed is that beyond the specter of a government agency pulling the financial strings, and likely with that the content strings, of media enterprises, there are new possibilities for publicly based ownership and financing models—such as the Civic Information Consortium just launched in New Jersey—that protect journalistic independence and the public interest.
The only major US-based employee-owned news operations are Paddock Publications, an ESOP-owned Illinois company that publishes The Daily Herald in suburban Chicago and a host of other small publications, and Gazette Communications, a Cedar Rapids, Iowa-based newspaper publisher that created an ESOP umbrella company, Folience, that also owns non-media businesses.
The ClickHole/Cards Against Humanity deal—essentially a benevolent corporate takeover and spinoff—is no panacea for the larger problems of protecting media from being ravaged by the forces of extractive capitalism. While ClickHole’s employee-owners can plausibly build on a model of producing entertaining content that attracts an audience attractive to advertisers, it is a far more labor- and capital-intensive process to produce accountability journalism that has value regardless of the clicks it earns for advertisers—especially when those clicks yield diminishing returns as Google, Amazon, and Facebook monopolize the online ad market. But the people who produce this content, whether satirists at ClickHole or reporters struggling to cover their local institutions at hollowed-out news organizations, care passionately about their work and the impact it has on their readers and viewers. We owe it to them to lift up employee ownership models as one element of the systemic change the media industry needs.