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Bellingham Herald future

By On

This week, McClatchy sold its Herald building to Bob Hall. McClatchy, owner of the Herald newspaper, is in deep financial trouble. The Herald decided this simple building sale was worth front page headlines, multiple stories and several photos. While humorously self indulgent about their building, the reporters and editors failed to report two newsworthy facts.

First, McClatchy is totally in hock to its bankers. Every penny of the $2.35 million sale will go to pay down some of its $1 billion in secured debt. This month, McClatchy is acting like it is in bankruptcy, offering 20 cents on the dollar to the unsecured creditors of its second $1 billion in debt. No word in the Herald about any of this.

The second left out fact is that Bob Hall is one of the two owners of the Cascadia Weekly. How ironic that the owner of the only competition for advertising with the Herald just became their landlord. Not a word about this in the Herald. Will he move the Weekly offices to the Herald Building? What fun is in store as Bob considers his options.

The truth is McClatchy is a hair away from bankruptcy and this would spell the sale of the Herald newspaper to local investors. I am following rumors of sale discussions and they do not want the building. We can only reasonably expect any reporting on this news by the Herald to be self serving. And now the Weekly owner has an interest in the Herald, which means there is a conflict there. That leaves KGMI as the only local news media that might report on this.

Meanwhile, newspapers across the US are frantic and scrambling as they look for any way to survive. A week ago, the largest 20 publishers all met at what was supposed to be a secret meeting in Chicago. Reuters news services reported on it. They all met to agree on how to charge us for online news pages. The thinking seems to be that if they all charge us then we will have to pay someone for news - our only choice being which ones we will pay.

Here is my take on all this. This will hurt the newspaper owners and increase the failures and challenges facing all of them. They are now lemmings intent on committing mass suicide by following each other over a cliff. Why?

Two related things to keep in mind. One - newspapers thrived and were very profitable because the very nature of their business allowed an existing daily paper to prevent a new paper from successfully starting up and competing. Advertising - including the classifieds and legal notices - were the key to keeping competition at bay. In fact, this tendency for advertisers to find the best place to spend their money helped the trend towards one newspaper cities over the past 40 years or so.

Big corporations split up the cities and then closed down any competing dailies one by one. Gannett, the owners of the Bellingham Herald for many years, did that in virtually every city they had a daily. A best selling book, “The Chain Gang” exposed their tactics. One competing paper was owned by my cousin - the Brown County Chronicle in Green Bay, Wisconsin - and he beat back Gannett for about a dozen years before succumbing to them. The book related much about what he did to survive - and the very nasty tactics of Gannett.

So - newspapers have survived and made big profits mainly by eliminating competition. Now to the second point. If they start to charge for online content then they will open the door to almost anyone to start up a ‘charge for news content’ website. Why? Because there is no advertising barrier to charging for content. It is easy and inexpensive to start a news website while it is very expensive and risky to start a newspaper. I speak from experience.

The best thing that could happen for me would be for the Herald to start charging for content. I would be able to make a modest investment, hire a reporter, add advertising and offer free news. No barrier to my entry into competing with them.

The last cash cow that the daily newspapers are freaked about losing is the legal notices. They have lobbied for cozy state laws that give them these very rich revenues. Yet legal notices could much better reach everyone if they were on the city and county websites. This would save us huge amounts of tax dollars. This is the big secret that will give the Herald honchos a chill as they read these words. They do not want that issue public.

We could save a lot of taxpayer dollars if the Legislature would allow local governments to post legal notices online and not have to print them in the local daily newspaper. When I was publisher of the Whatcom Independent, we looked into what was necessary for us to compete for the legal notices. Man, let me tell you - the laws were so well crafted that we absolutely had no chance at all. The big dailies had decades to bomb proof their protection at the state level.

This spring, the Seattle Times lobbied to get all daily newspapers in the state a 40% tax cut. Our legislature politely bent over for them. Our legislature reduces newspaper taxes while they require us taxpayers to unnecessarily pay huge fees to newspapers for legal notices. You might put some pressure on any state rep you know.

The Bellingham Herald was against this tax break favoritism and printed an editorial against it in February and ran a news article on it in April when it had passed. (I missed the Herald articles and mistakenly criticized them for passively supporting the tax break. I’ve apologized and posted a correction. And am repeating it here.) The Seattle Times did not report the bill passing.

So - in closing. The biggest 20 daily newspaper publishers in the USA - controlling probably 99% of all daily newspapers - are banding together for what is probably an illegal price fixing scheme on all their newspapers. Don’t expect any anti-trust action. They are the ‘mainstream media’ who go easy on governments.

About John Servais

Citizen Journalist and Editor • Fairhaven, Washington USA • Member since Feb 26, 2008

John started Northwest Citizen in 1995 to inform fellow citizens of serious local political issues that the Bellingham Herald was ignoring. With the help of donors from the beginning, he has [...]

Comments by Readers

Damon Gray

Jun 03, 2009

It will be very interesting to see what Bob does with the building. Will the weekly move in?  If so, will the Herald stay?  I’m actually pleased to hear him say he wants to restore it to its original condition.  That will be interesting to watch.

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Hue Beattie

Jun 03, 2009

Interesting news. Does the building come with the web press? The “management” made a deal to print in Mt. Vernon.

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Frank E. Ward

Jun 04, 2009

Well, my advice to the Herald staffers is the same I gave to Horizon Bank folks—polish up your resumes!

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Kamalla R. Kaur

Jun 06, 2009

Extremely fond of the building. Even the sign; which I associate with Christmas and angels. Because, as a child, I imagined that Hark himself lived on the Herald building’s roof.

I also remember my parents (and many others I respect down through the decades) cronically unimpressed with the Bellingham Herald’s journalism. I too rarely read it. I’m more interested in the stories the Herald under-reports or fails to publish Which is why I get my regional news right here at NW Citizen.

That said, the Bellingham Herald was the first newspaper in the USA to give turbaned Sikhs - mistaken for Muslims and experiencing many hate crimes - positive press in the first days after 9-11.

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