In the sixth episode of the State of Local News Podcast, host Tim Franklin—Professor, John M. Mutz Chair in Local News, and founding director of the Medill Local News Initiative—speaks with Jim Friedlich, CEO of the Lenfest Institute for Journalism.
Friedlich joins Tim Franklin on the State of Local News Podcast to reflect on the Lenfest Institute’s decade-long journey to becoming one of the most influential journalism organizations in the country: investing more than $117 million in more than 600 news organizations and initiatives to support local news innovation, business sustainability and newsroom transformation. He also discusses The Philadelphia Inquirer’s digital transformation, the growing role of nonprofit ownership in local news, challenges facing commercial news organizations today and how AI is reshaping journalism. Friedlich discusses why local news organizations must embrace emerging technologies while continuing to invest in trusted reporting, sustainable business models and serving the community’s information needs.
This Q&A transcript captures their conversation about nonprofit journalism, newsroom sustainability, AI, digital transformation and the future of local news. It has been edited for brevity and clarity.
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Tim Franklin Hello everyone and welcome to episode six of the Medill State of Local News podcast, where every month we explore the business of local news and those who are shaping it and reinventing it. I'm your host, Tim Franklin, the John M. Mutz Chair in Local News at the Medill School at Northwestern University, home of the Local News Initiative. I'm especially excited about our guest today, someone I've known for a long time and whose organization is having a huge impact on the transformation of local news. Jim Friedlich, CEO of the Lenfest Institute for Journalism, welcome to the podcast.
Tim Franklin -
Jim Friedlich Oh, thank you, and thanks for your kind words.
Jim Friedlich -
Tim Franklin Well, there are more kind words to come. Jim, I want to talk to you for the next 30 minutes about your work at Lenfest as well as the trends that you're seeing across the country in local news. I consider you to be one of the savviest observers in the country on the business of local news. So I want to pick your brain a little bit about that. Before we do that, I want to tell the audience briefly about you and Lenfest. Jim is the founding executive director and CEO of the Lenfest Institute based in Philadelphia, which just turned 10 years old. Congrats on the anniversary, Jim.
Tim Franklin -
Jim Friedlich Thank you.
Jim Friedlich -
Tim Franklin Prior to Lenfest, Jim was the CEO of Empirical Media Advisors, a consulting firm helping major news organizations navigate growth, change management and digital media transformation. Jim also spent nearly 15 years at Dow Jones, where he held senior executive roles in business development, consumer marketing and advertising. The Lenfest Institute was created in 2016 when philanthropist and cable TV pioneer Gerry Lenfest donated ownership of the Philadelphia Inquirer and a $20 million endowment to establish a nonprofit institution focused on independent public service journalism and investigative reporting. Over that decade, Lenfest has become one of the most influential journalism support organizations in the country, investing more than $117 million in more than 600 news organizations and initiatives to support local news innovation, business sustainability and newsroom transformation. Lenfest is also the owner of The Philadelphia Inquirer, making it the largest major newspaper in the US operated by a nonprofit, and we're going to get into the Inquirer here in a few minutes. Before we do that, though, Jim, let's talk about Lenfest in the last decade. You've supported hundreds of news organizations, you've helped launch nonprofit models, you've invested in technology, fostered statewide collaborations and civic information initiatives. Talk a little bit about Lenfest, how your mission has evolved over the course of the last decade and maybe what's surprised you during that time.
Tim Franklin -
Jim Friedlich Oh, thanks for all that. We were founded by a very young 85-year-old cable visionary (H.G. "Gerry" Lenfest). He got into the cable business in the early 1970s, so he was someone who could see over the horizon in the media business for a very long time. When Gerry Lenfest was 84 years old, his beloved Philadelphia Inquirer fell into bad hands and bad economics; it had been bankrupt a couple of times, and there were political influences kind of vying for control of the paper to use it for their purposes. Gerry stepped in with another investor, Lewis Katz, and bought the local paper for $88 million. Lewis sadly died in a plane crash shortly thereafter. He was another visionary and sports team owner and amazing media character who should not be forgotten. The task that we were given was really a dual mission. The first was to transform the Philadelphia Inquirer into a sustainable, viable digital business. And the second was to kind of, as Gerry said, go forth and multiply, take those lessons and use them around the country, help others do the same thing, either turn nonprofit if it was an existing newspaper or start new nonprofits where none existed. So we've really done both and the evolution has been from that dual mission to begin with. The Inquirer has had a meaningful turnaround – at some expense – but a very good and encouraging path. Others have followed, and we can get into the details of what's happened in Pittsburgh or Salt Lake City or Santa Barbara or Lancaster, Pennsylvania, and maybe in Minneapolis soon. We've started a business in Pennsylvania as a whole called Spotlight PA, which began with six people and a $750,000 annual budget six years ago; and now has about 38 people and a close to $5 million budget and partners with news and information companies all across the state. We, from early on at Gerry's encouragement, viewed the mission as bringing news and information to all of Philadelphia, not only the readers of the Philadelphia Inquirer, which are perhaps 20% of the city or the region. So we embraced early – sometimes with some criticism – the idea of an ecosystem approach to local news that has had its best expression in projects that everyone has worked together on. Like Every Voice, Every Vote, which was a collaborative among a coalition of about 25 news organizations and 50 community organizations – all covering the mayor's election and then accountability journalism after that. The area that I'm most excited about and most proud of is the national work. All of our focus is on local news, but local news, as your own news desert work illustrates, is a challenge and an opportunity all across the country, if not the world.
So we've done a couple of things. We started something called the News Philanthropy Network, which is focused on how news organizations can raise money. Our head of advancement, Annie Madonia, when she started, could only find five or six other fundraisers outside of NPR and PBS raising money for local news. And now we have about 3,000 members in that community of practice. We just had an event with 520 people sold out in Philadelphia. The focus there is kind of teach them how to fish. So the capacity building is happening all around the country, not only grant making for worthy journalism. We started something called the Lenfest Expert Network, which is a little bit of a lofty title, but the experts in this case are not Lenfest people but a network of consultants that we use. We offer pro bono advice and counsel to news organizations. We've touched about 200 so far through the network all around the country.
So when Stewart Bainum called, saying he was trying to buy the Baltimore Sun—your alma mater—but that deal didn’t go through. He then shifted to launching the Baltimore Banner, where we served as advisors. We also advised Chicago Public Media when it pursued the acquisition of the Chicago Sun-Times. So we formalized that business and turned it into a nationwide pro bono consulting business. And lastly, we were founded by a media visionary. The original name of the Institute was The Institute for Journalism and New Media, and we decided that was too much of a mouthful. I also tried to explain to the 85-year-old that new media was no longer new in 2016. It turns out I was wrong. Media is always new and the mission for the last 10 years and now the next 10 years is to ensure that there is always important, high-quality, sustainable, independent, local news and information no matter what the change in technology, no matter what the change in audience preference, no matter what the change in consumer habits. And that thesis has been tested, and we think it has never been more important than it is now in the age of AI.
Jim Friedlich -
Tim Franklin It's a good point about “new.” Everything seems new almost week to week. It seems things are changing so fast in the industry these days. So you mentioned the Philadelphia Inquirer. Let's talk a little bit about that transformation, which has been kind of remarkable. So earlier this year, the Inquirer reported its first year-over-year revenue growth in more than 20 years and its return to profitability. About 70% of the Inquirer's revenue now comes from digital and print subscriptions. The Inquirer has about 170,000 paying subscribers, the vast majority of which are digital subscribers. In March, it was reported that digital subscriptions had grown 44% in the last 15 months. To what do you attribute this turnaround? And then I guess secondarily, is any of this replicable in other major cities around the country?
Tim Franklin -
Jim Friedlich All great questions. When Gerry bought the Inquirer, there was no paid digital strategy. There was a site not branded the Philadelphia Inquirer called Philly.com, which was not unusual. There was boston.com and other sites. The user experience was not very strong and it was viewed as an advertising medium, although digital advertising has kind of failed to arrive as a significant source for most newspapers. We were hired initially as an Empirical Media advisory firm to advise on all of this and we were highly focused on digital subscriptions. We were deeply involved in the movement to metered paywalls that converted users to payment. We believed for a long time that it was the user who needs to foot the bill and be delighted enough in the product to pay for it. And I actually think that's increasingly true of nonprofit news as well. The Baltimore Banner is a nonprofit but a paid subscription site and we can come back to that.
One thing you said earlier, I wanted to put a pin in. We own but don't day-to-day control the Philadelphia Inquirer. The Inquirer is led by a very capable CEO and editor, Lisa Hughes and Gabriel Escobar. They've hired terrific product people, the head of product and technology. And what we have done is agree on a strategy and then invest pretty heavily in that. We attribute the success to date – and there are challenges in the future – to two things. One, the management strategy and execution of that strategy with a laser focus on the user experience, the content and the functionality that people are willing to pay for digitally. Second, a meaningful infusion of capital. Over a 10-year period, the Inquirer has received about $50 million of Lenfest grants, about half of which we have raised from elsewhere. As you mentioned, we received an initial endowment of $20 million, but we've given grants of $120 million. The difference between those two numbers is additional fundraising. So we've invested meaningfully in the Philadelphia Inquirer, in investigative news, in digital marketing, in user experience; in expansion to new verticals that really appeal to users like food and sports, breaking news and politics. So it's been, I think, management talent on their side, capital raising and strategic alignment from us.
Jim Friedlich -
Tim Franklin Well, and Jim, thank you. You're not involved in the day-to-day management of the Inquirer, but obviously are involved. What do you see as the lessons learned from the Inquirer's experience that might be replicable in other markets across the country? What specific strategies do you think are working?
Tim Franklin -
Jim Friedlich So you asked, is this replicable? I would say it is, and it is being replicated. The Boston Globe is a leader in digital subscriptions and they have, I think, upwards of 300,000 and digital user revenues of about $60 million. The Minnesota Star Tribune has moved sharply in this direction under (Publisher) Steve Grove, as has the Seattle Times. There's a strong user revenue stream at the Long Island Newsday. What all of these titles have in common is beneficial ownership. Some of them are nonprofit and the nonprofit model is now in Tampa Bay, in Philadelphia, Salt Lake, Chicago (Sun-Times), Lancaster, Santa Barbara and Pittsburgh. Others have a beneficial owner like John and Linda Henry in Boston who have apparently no desire to go nonprofit, but they are investing consistently in the paper. So having an owner who is willing to invest and a playbook, which is, I think, increasingly understood about how to generate digital subscribers, what the product needs to be like and what the costs are, is highly replicable.
The bifurcation in the market is that in other cases where the paper is owned by either a large chain with a lot of debt like Gannett or a hedge fund or distressed debt group like Alden Global, their model is to take money out of it. They do not invest in the newsroom beyond kind of minimal staying power and much of the proceeds are used to pay down debt. So I'm not saying that's evil, I'm just saying it's bad. It's bad for the consumer and it's bad for the long-term health of the news organization and the product.
Jim Friedlich -
Tim Franklin Jim, you mentioned the Tampa Bay Times as owned by the Poynter Institute (where I used to work), as well as other news organizations like the Salt Lake Tribune, the Chicago Sun-Times and the Baltimore Banner, that are nonprofits. Do you see more and more local news outlets, especially in major metros, becoming nonprofits in the next few years or is this just kind of a one-off situation that we're seeing around the country?
Tim Franklin -
Jim Friedlich I think it's somewhere in the middle. I don't sense a wholesale conversion to nonprofit. There has to be a willing seller at a reasonable price and nonprofits can't acquire these news organizations for free and then not invest in them or you're right back to where you started. So I think you'll continue to see a steady trickle as we have over the last 10 years. One of the surprises I have had is that there haven't been more. There has been a really encouraging growth in nonprofit and news organizations of scale, and I'm less excited about the tiny news phenomenon in one-person newsrooms because I think those efforts are laudable, but the scale of the problem is huge. So when you have a Baltimore Banner, which has required $35 to $50 million of investment, they now have a $20 million business and 65,000 paid digital subscribers and they were able to take on the Pittsburgh Post-Gazette and save a hundred journalism jobs in an important American city. So it's the nexus between commercial savvy, operating at scale, deploying meaningful new capital and the mission and goals of nonprofit news that excites us. That’s why Gerry hired business operators in addition to journalists.
Jim Friedlich -
Tim Franklin Were you surprised about the Pittsburgh Post-Gazette acquisition by the Venetoulis Media Group, which owns the Baltimore Banner? The Pittsburgh Post-Gazette had lost something like $350 million reportedly over the last 20 years, and there’s a lot of labor strife in Pittsburgh, which has been well documented. Were you surprised by that move? And I guess my other question is, did Lenfest look at the Pittsburgh Post-Gazette at all during that time?
Tim Franklin -
Jim Friedlich So we spoke very early with Stewart Bainum and Bob Cohn about Pittsburgh and we agreed that the way to do it if they were to do it at all would be to acquire assets, not the company as a whole. So they bought the name, the subscriber lists, the archive and the ability to operate as the Pittsburgh Post-Gazette. They did not buy the liabilities. The Block Company severed all employees and paid them severance and then came into the market and hired back roughly a hundred people, including a newsroom of about 60. So I wasn't surprised because I know Stewart to be bold and savvy and expansive in his thinking. He reminds me of Gerry in that way, very similar personalities. The Philadelphia Inquirer looked briefly at the Post-Gazette and decided to stick to its knitting, which is expanding in and around Philadelphia. So there's an expansion strategy at work at the Inquirer, but it involves South Jersey and the surrounding counties in Pennsylvania rather than across the state.
Jim Friedlich -
Tim Franklin Got it. Jim, I want to get your take on what's happening in local news nationally today. We've seen so far this year an estimated 1,000 job cuts at local and national news organizations. The Washington Post laid off a third of its newsroom. We've also seen cuts at the AP, NPR and recently the Minnesota Star Tribune, among others. There have also been deep cuts in local TV news over the course of this year. But at the same time, and we reported this on our website, we've also seen a number of acquisitions of local news outlets this year, which would indicate that there's still a belief that investing in local newspapers is worthwhile. So can you talk a little bit about what the heck is going on? What do you see happening in local news today?
Tim Franklin -
Jim Friedlich I think there are still meaningful headwinds and crosscurrents. The Washington Post is an interesting example on the heels of that announcement. Robert Albritton announced the notion of revitalizing the brand NOTUS or starting a new brand, The Star, and hiring Washington Post reporters to do so. Stewart Bainum and Venatoulis invested first in Montgomery County coverage meaningfully and then in Washington area sports coverage. So I think you're seeing a secular transition from print to digital and from a certain chain style of ownership to more beneficial nonprofit ownership in real time. It still is a very, very challenged business.
The most interesting challenge in a way, and I think when we have this conversation 10 years from now, we'll be talking about what happened when AI came to town, whether we did enough to secure our interests, whether we did enough to embrace the change, whether we did enough to follow the user and pick up the signals that they're sending us with regard to artificial intelligence. And that's the next hill to climb, and it's as disruptive, if not more so, than the advent of the consumer internet in the late '90s.
Jim Friedlich -
Tim Franklin Let's talk about that, because I agree with you 100%. We're at a critical moment right now and when we look back 10 years from now, a lot of people will wonder about the actions that were or weren't taken today. So you've argued that one of journalism's biggest mistakes was underestimating the impact of technological change. To help with that, Lenfest partnered with OpenAI and Microsoft to launch a $10 million AI collaborative and fellowship program placing engineers inside major news organizations like the Baltimore Banner, the Boston Globe and Chicago Public Media. Do you see AI as primarily a threat to local journalism or an opportunity or both?
Tim Franklin -
Jim Friedlich I think it's quite clearly both. The threat to me is less the question of securing our IP and more about listening to what users are really saying to us. To me, the user is trying to tell us something: they're highly interested in getting their news and information in a different way. They're tired of searching or they see less utility in an old-fashioned search that leads to a dozen links and two dozen advertisements and more interested in actually getting answers that they can act upon. Brands like The Wall Street Journal, The New York Times and the Philadelphia Inquirer still matter in that context. In fact, they might matter even more, but what we've tried to do is sound a call and round up some capital to take action on local news being much more engaged in AI. The original thesis was and remains that putting AI engineers – in every single case, the first on that the company had in newsrooms of scale like the Boston Globe, The Philadelphia Inquirer or Dallas Morning News or ProPublica or the Baltimore Banner – would help turn on the entire organization to the benefits of AI. And that's exactly what's happened. You have advertising sales applications at the Seattle Times; you have archive search applications at The Philadelphia Inquirer. Several of them, including Newsday, the Inquirer, The Boston Globe and The Dallas Morning News, are using AI to search public information and to act as a kind of watchdog at public meetings, council meetings, school board meetings. It's really, really powerful stuff. Very few of us are asking how AI should change the actual product experience, what we call mode-two-thinking. If mode one is a look at efficiencies and process improvements, mode two is a fundamental rethink of what the user does and how the news organization satisfies that demand.
Jim Friedlich -
Tim Franklin Jim, I wanted to ask you about A.G. Sulzberger, the publisher of the New York Times and his speech just a few days ago to the World News Media Congress, and I want to read you a quote of his and get your reaction to it. It's a bit of a long quote, so bear with me here. He said, “The companies driving AI, already among the richest and most powerful in human history, are consolidating their outsized control over our data and our attention. At the same time, they are failing to embrace a core responsibility that comes with this power to ensure the public has access to trustworthy news and information. Their hijacking of the public square is made possible by the original sin that animates their products, a brazen theft of intellectual property that has occurred at an unprecedented scale. Tech giants strip mine news websites without permission or compensation. They repackage these stolen goods as their own, siphoning off the audiences and revenue that would otherwise go to news organizations that created this work. As a result, I fear we are heading towards a future with fewer and fewer journalists to do the expensive, difficult work of original reporting.” Is he right?
Tim Franklin -
Jim Friedlich I think much of what he says is right, but with that quote, it's incomplete and there are other quotes from his talk that urge news organizations to embrace AI forcefully, thoughtfully, ethically. And I would argue that we haven't yet done that, particularly at the local level. We should all be asking, what can we do in our organizations to embrace the not-coming-but-already-here technology, how does it affect how we acquire subscribers, how we acquire advertisers, how we distribute our content and what the user experience is all about. We've seen ample illustration that a new technology that answers questions, that packages different kinds of content together, that cites multiple sources, that has broad access to information in a community or a country or a topic is highly attractive to users. Yet very few news organizations are leading with that question, as opposed to where can I use it for greater efficiency or process improvement. The process improvement and efficiency activity is extremely important, but it seems to me the last time around the spoils went to those who thought differently, as Steve Jobs liked to say. Facebook among them, Google, among them. Now we have a new crop that's telling us we should be looking differently at how we do business.
Jim Friedlich -
Tim Franklin Well, Jim, the time has flown by and we're already at time. But I want to thank you so much for taking the time to talk to us today. I could talk to you all day about these issues. So thank you for joining us.
As always, I'm grateful to our supporters of the Medill Local News Initiative and this podcast: the MacArthur Foundation, Knight Foundation and the Joyce Foundation. And if you're enjoying this podcast, please hit the subscribe button. You can find us on Spotify, Apple Podcasts, YouTube, and the Local News Initiative website. Please join us next time when our guest will be P.J. Browning, the entrepreneurial president and publisher of The Post and Courier in Charleston, South Carolina. Until then, we'll see you next time.
Tim Franklin
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