On the Lookout for Local News

Veteran journalist Ken Doctor had been analyzing “Newsonomics” for many years when he jumped back into the game to launch a new local digital news outlet, Lookout Santa Cruz, which debuted in 2020. With the Santa Cruz Sentinel having been taken over and downsized by the Alden Global Capital-controlled Media News Group, Doctor declared that Lookout was entering a news desert, which rankled some journalists in town.

But to Doctor the proof is in the pudding: with a newsroom of 10 covering a community of more than 250,000 people, Lookout Santa Cruz has become the area’s most robust news source. And Doctor is still analyzing the business of journalism, offering “9 Hard Truths About Reviving Local News” in a recent piece published by Nieman Reports. 

In the wake of the Press Forward coalition of donors committing $500 million toward local news, Doctor discussed the opportunities and pitfalls for the industry in Santa Cruz and beyond. This conversation, conducted over Zoom, has been edited for length and clarity.

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  Press Forward’s $500 million sounds like a lot of money, but as you point out in your Nieman piece, when you start spreading it out over time, maybe it’s not. Can philanthropy save local journalism? And should it?

  Mark Caro

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  It cannot by itself. It can be a significant aid to it. I mean, first off—and the people who are leading that movement understand this very well—there have got to be winning ideas. They want to get more money out there into what they call the ecosystem, and that [amount of money] is a big statement. But it's a beginning. If you look at what's needed, it's got to be, on an individual community level or a small group level, enough money to create a sufficient product to generate enough advertising and subscription or membership and a declining amount of philanthropy over time. It is tough.

  You cannot point to any digital news startup of scale that's trying to replace a daily newspaper that is profitable today. I can't find any. That doesn't mean they're not successful. They are meeting their missions. They are replacing the news function and information function, but they need more time.

  I started raising money for Lookout and Lookout Santa Cruz about four to five years ago now. It's not that there's not money out there. There's incredible wealth in America. Foundations have a lot of capacity, even compared to places like Europe. And there are plenty of people of means and of goodwill. What I saw, and I think it's still true, is that people who have money didn't buy the story that local news organizations or companies could be created and could be either completely sustainable or largely sustainable. That's what I was told when I was raising money. And I think it's still the case out there.

  I think that the best thing the $500 million [can do] is to prove out that yes, we can establish really good new news companies and organizations that will depend relatively little on philanthropic support over time. If we can prove that, I think that opens up more wallets, because people can see it, and they don't have to say, “Well, I can't see supporting this thing forever, like I support the opera or theater.”

  Ken Doctor

You cannot point to any digital news startup of scale that's trying to replace a daily newspaper that is profitable today. I can't find any.

Ken Doctor, CEO/Founder, Lookout Santa Cruz

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  A lot of people, including yourself, have pointed out that there's no single solution as to how to support heritage newspapers or how to make startups profitable.

  Mark Caro

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  I'm not saying there isn't a solution. I'm saying no one on the startup level has hit profitability level. It's not about finding the answer. It's about execution. It's not going to change. It is just hard work: selling advertising and converting readers into paying members.

  Ken Doctor

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  So it's a matter of giving the time and doing it well.

  Mark Caro

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  That's what I believe, yeah, from everything I know. This fall we've got a newsroom of 10, which is pretty large for a county of 267,000. But there are so many areas that we weren't covering. We hadn't used freelancers that much. We have freelancers and experienced people now covering wine, which is very big around here, high school sports, aging in Santa Cruz, with a disproportionate number of people aging here. We started a weekly business column. And we just this week found somebody we're excited about to be a surfing columnist. So these are all niches, but no matter how organized you are, you can't do all this on day one or even year one. It takes time, and these are all going to add up. The audience keeps growing.

  Advertising is our number one revenue source. And we're just a small community. We had one person selling it. We're actually expanding our sales staff now, and I'd like to see more.

  Ken Doctor

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  How important is it for people to know there’s a newsroom in their community?

  Mark Caro

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  It's huge. When I was in St. Paul for about 10 years, we knew, and the people the community knew: That's the Pioneer Press building. It was a huge building. But we also knew: That's the fourth Pioneer Press building, the third building is over here, the second building is over here, and the first building was over here. People had a sense that because they could see that it was a community institution.

  A key part of Alden’s strategy was to buy newspapers for real estate, and then the other owners kind of figured it out, and so one of the things in the great decline is a loss of basic offices but also basic signage. If you drive in many American cities today, you do not see a sign for a local news company or organization, and that is just part of the dumbing down of local democracies.

  Ken Doctor

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  The current owners of Tribune Tower kept the Chicago Tribune sign on the side of the building even though the paper is gone and they turned the building into luxury condos. It’s a perfect metaphor.

  Mark Caro

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  You can extend that metaphor to these ghost newspapers, so there's newsprint with the same flag on it that people recognize, but the content in it is regional, it's not really local. It can be pulled 50, 100 miles away. It's got ads, but it does not really tell you what's going on in your community. And that is a bigger problem.

  Ken Doctor

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  Patrick Soon-Shiong got the Los Angeles Times away from Tribune Publishing and then signed off on Tribune Publishing being sold to Alden Capital. This summer he sold the San Diego Union-Tribune to Alden. Is there a way that we as a society can expect people like him to not sell to Alden, or is that just the way capitalism works?

  Mark Caro

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  If you decide you want to or have to sell, for medium and larger-size dailies, Alden is pretty much the only buyer. So they're out there saying, “We'll buy at the right price. We're still buying.” They have capital from all of their various funds.

  Ken Doctor

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  “Capital” is in the name.

  Mark Caro

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  So if there isn't an alternative, that is one reason people turn to them. I don't know in San Diego's case, for instance, what else was tried. There were various civic efforts over the years. In L.A.  there is a strong focus on the L.A. Times and figuring out what the L.A. Times is going to be going forward. He decided that's where he was going to put his attention.

  Ken Doctor

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  In Chicago we were rooting for him not to sign off on that Alden-Tribune Publishing deal because we felt it was partly his responsibility not to sell one of the great newspaper chains to someone who was going to scavenge it.

  Mark Caro

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  About half of the daily newspaper circulation is owned by Gannett, Alden, Lee and McClatchy, all of which are financially driven firms. In the industry you hear a lot of conjecture of, well, is Gannett better than Alden? It used to be better than Alden. Is it still better than Alden? How do you compare them?

  Lee is actively selling in many properties or some properties, and it's the financial people behind it. Mainly, Warren Buffett is putting a lot of pressure on Lee. And McClatchy is Chatham [Asset Management], which is a fund by its nature. It's showing more signs of editorial life but has the same kind of constraints. So largely the half of the press that's in larger areas is controlled by financial people who all cite “headwinds.”

  The truth is in 2023, none of them has made sufficient progress on quote-unquote digital transformation. And so they're still too dependent on print for advertising and on especially subscriptions. That's why we see these high subscription rates. And they don't really see a way out at this point, which just gives much greater urgency to this Press Forward movement, which should be the beginning of something rather than an end.

  The American Society of Newspaper Editors, ASNE, stopped doing a census of how many people were in U.S. newsrooms about eight to 10 years ago, so we're all guessing how many people are there. You can see lists at Poynter and other places of all the people who were laid off, but it is getting worse. Even with all of the building that's going on mainly in fairly small news organizations, we're still losing more and more journalism than we're gaining. But I don't have any actual numbers. I don't think anybody does.

  Ken Doctor

It is really hard to hire people even at this time, where it seems counterintuitive. So many people have lost their jobs.

Ken Doctor, CEO/Founder, Lookout Santa Cruz

• 

  [Amazon founder] Jeff Bezos is one of the richest guys in the world, and he can afford to do what he does, but he really reinvested in the Washington Post, and they expanded their reach, reporting and digital subscriptions. Were there lessons from what he did that the larger journalism world should have followed but didn't?

  Mark Caro

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  Sure. And the magic word there is what you said: It's investment. It is investment over a longer term and expecting a longer-term result. I cited Bezos in my [Nieman Reports] piece because of how long it took to build Amazon and to really give away potential profits in terms of building the business. When I stand back from all this, I think the two problems are capital and talent. And he had all the capital that he wanted. The Post is far bigger than it was, far more stable than it was and has more impact on policy, which is huge going into 2024. But it is investment.  

  You have to have a good business model and a good plan, and then you need the money to be able to hire the right people with the right skills to do it. It is kind of Business 101, but we have not seen this in the newspaper industry other than what Bezos did there, what John Henry did in Boston [with the Globe] to stabilize the place, and the Star Tribune [in Minneapolis] is a good example. What Frank Blethen has done in Seattle [with the Times] is a good example. It can be done.

  Ken Doctor

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  No matter the headwinds.

  Mark Caro

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  Yeah [laughs]. When I was doing analyst work, I would be on these earnings calls, I remember hearing about headwinds then.  

  I'm curious, as you've talked to people, have they brought up this question of talent and the difficulty of recruitment?

  Ken Doctor

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  I was asking [retired Washington Post Editor] Marty Baron about that: How do you keep a pipeline of talented people when they’ve basically been told this profession is going down the toilet? He took an optimistic view that many talented people are coming into the profession. I'm afraid a lot of those younger people are going elsewhere.

  Mark Caro

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  They are. Statistically we can see that. I mean, journalism schools are still full. There are bright, motivated young people there. We've already had 20 interns here in three years, from Stanford, Berkeley, UC Santa Cruz and a community college. But the problem is more in the middle. To create a high-quality local news product, you need people who have experience.  

  We were very lucky. I found a year ago Tamsin McMahon, who's our managing editor and came from the Globe and Mail. High standards. It's really hard to find editors that are experienced and really are very good at their jobs. And then it is also hard on the business end. We're starting to look now for our second market, both for top-end people, editors and a publisher and an audience person there, and we'll see how that goes. But everything I've heard from my peers is it is really hard to hire people even at this time, where it seems counterintuitive. So many people have lost their jobs.

  Ken Doctor

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  The copy editors have gone first and a lot of section editors as well, so you’d think talented editors would be available.

  Mark Caro

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  It's hard, and COVID made it harder because everything froze. And people didn't want to move. In general professionals are less likely to move these days than they were five or 10 years ago. The one thing that has made it really hard in Santa Cruz is the cost of living. We are the least affordable market in the country, so it's very expensive to find housing here. You need experience, but you also need people with fire in their bellies.

  Ken Doctor

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  And the institutions have to care.

  Mark Caro

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  You're right. If you don't care, you're not going to make any progress there. I mean, that's why I stopped doing “Newsonomics” and focused on caring about one little market and trying to do it right. You have to care. But once you care, you’ve got to find the right people, and you have to set standards.  

  I've been a journalist for 48 years. That's a long time. I'm doing this because I'm a journalist. I spend more of my time on the business, of course, but as a journalist, you have to care about what you're creating. We are not recreating the daily newspaper. We are creating a new digital-only news product for people of every generation. And that's actually working for us when I look at Google Analytics.  

  It's really exciting to ask the question: What can you do with digital that you couldn't do with print? And there are so many things. But so much of the stress and focus is on the business model and “How are you going to do that?” that not enough people are dreaming of, wow, what we can now create goes so far beyond what we could do even with huge staffs in print.

  Ken Doctor

I was surprised at how many people in our trade, in journalism, are essentially innumerate.

Ken Doctor, CEO/Founder, Lookout Santa Cruz

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  The Texas Tribune was seen as a guiding light for new media, and they announced layoffs and cutbacks, and a lot of people were shocked by that. How meaningful are those struggles for the industry?

  Mark Caro

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  I think they're very meaningful and very timely. Texas Tribune has established an incredible level of journalism. You've got to start there, what it did and has done in the state of Texas, a pretty important place in the country. Their struggles then are really timely, because they point to these questions as Press Forward goes forward.  

  I was surprised in a couple of stories about the layoffs that they said they just had two people in revenue generation for a big organization. This is a common problem in the new news, that mainly they are editorial people. I'm an editorial person, but I had other kinds of business experience, and people focus disproportionately the resources on newsroom and content, which has got to be the lead. But you've got to have the revenue generation staff and smarts to be able to monetize it. They seem to be in a real imbalance as to how they were doing it. So that's a big lesson right now. It is still a model, but it is both a really positive model and a cautionary model at the same time.

  Ken Doctor

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  The cautionary part being you need to make sure you got the business side as in as good of shape as the journalistic side.

  Mark Caro

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  Yeah, and that should be so basic to anybody in this trade at this point. When I was in St. Paul, we had a business news staff, and I was surprised—I was surprised then, I'm no longer surprised—at how many people in our trade, in journalism, are essentially innumerate. They're not illiterate. They're pretty literate, most of them [laughs]. But they have been innumerate. They do not understand how money works. I did that analyst’s work for 10 years, and I can't tell you how many reporters would call me from the paper and say like, “Oh, hey, I came across your name,” or “I saw your piece in NiemanLab, and they're gonna announce this morning my paper's getting sold to Alden or Gannett or somebody. Can you explain to me why that is?” It was just over and over and over again.

  Ken Doctor

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  What do you think the role of government support is in all of this? How much are you comfortable with in having the government involved with local news?

  Mark Caro

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  I'm not comfortable with anything where there's kind of a direct line of support for journalism, for journalistic ethics reasons. [I support] kinds of government-related aid that don't make government an arbiter. There are three things that are going forward. One is advertiser tax credits. This is not the government deciding this organization gets this or not, but an advertiser gets a tax credit of $2,500 or $5,000 to spend on local media of their choice. To me, there's enough distance in there that it isn't the government making that choice.  

  There's a parallel one of tax credits for journalism companies, organizations that employ journalists. Again, if the law is written well enough—and the language I've seen I'm comfortable enough with, so that again it doesn't pick winners and losers—that is exactly the core of what we need. We need more original local journalism. So those two are going forward in a number of jurisdictions. We are talking about them in California.    

  And the third one is where does the state of California spend its own public advertising dollars? And should that be partially directed to the local press, independent press, ethnic press? Our Latino press in California is very strong and gets none of those dollars at this point. So we're seeing action on that, and I'm comfortable with that, depending on how the allocations of those advertising dollars are going to be decided.

  Ken Doctor

• 

  What has been your biggest surprise since you launched Lookout, the biggest revelation of your tenure there?

  Mark Caro

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  I've thought about that, and I'm still not sure I have the right answer. I had the hope that if we built this that people would come to it. But I didn't really know that they would. And that the level of supportiveness here — which we see in audience numbers, but you also see it a lot anecdotally — is so affirming that it is an amazement. I believed it can be done. I told people it could be done. But to be able to create a new, trustworthy news brand in three years, against news brands that have been out there for more than 100, is something that actually works. And so I guess I’m half surprised, because I hoped it would happen, but it can happen.    

  And we very intentionally didn't give it a traditional newspaper name. It's not Santa Cruz Lookout. It's Lookout Santa Cruz. There'll be other Lookouts, and that whole thing of looking out for the community, looking out for our readers, that's the whole community-betterment mission of it. But it's surprising to me how quickly this community took to it.

  Ken Doctor

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  I read the L.A. Times story about you guys a while ago, and there was some contentiousness among some of the other organizations there about your coming into the market.

  Mark Caro

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  It was the most wonderful publicity that the guy that runs the alternative weekly in town took exception to my using the term “news desert.” He decided to put Lookout on the cover of the alternative weekly, and he owned a bunch of other weekly newspapers, and he wrote a piece about how this was unfair, and he put it everywhere. So that was great free publicity for us.    

  Three years later what we point to is, look at the several thousand stories we've done that would not have appeared anywhere else. Look at the diversity of the faces in Lookout throughout the county that you don't see anywhere else. People can argue about a term “news desert,” “ghost newspaper,” but we've got 10 people out there every day producing a news product, and we're the biggest newsroom by far in the county. So the only way to answer it is to do the work. And I'm very proud that we've done it.

  Ken Doctor