Case Study 6.2: Local News Deserts — How Media Consolidation Creates Information Vacuums

Overview

Between 2005 and 2023, approximately 2,900 local newspapers closed in the United States — more than a third of all local papers that existed in 2005. In the same period, surviving newspapers cut their reporting staffs by more than half, with total newsroom employment in the U.S. newspaper industry falling from approximately 71,000 in 2008 to fewer than 32,000 by 2020 (Pew Research Center, 2021). The closures and cuts were not distributed randomly: they clustered in lower-income communities, rural areas, and communities of color — precisely those communities where alternative information sources are least available and where local journalism's democratic functions are most critical.

The result is what researchers have labeled "local news deserts" — geographic areas with limited or no local news coverage. As of 2023, more than 200 U.S. counties lacked any local daily newspaper, and a much larger number had only nominal newspaper coverage with severely depleted reporting capacity. The affected communities are not fringe areas: they include suburban counties, small cities, and formerly well-served communities whose newspapers were acquired by chains that subsequently cut their operations to profitability thresholds that hollowed out their journalistic function.

This case study examines the causes and consequences of local news deserts, drawing on a growing body of empirical research that documents their effects on democratic governance, and considers the structural and policy responses available.

Section 1: The Economics of Local News Collapse

The Collapse of the Classified Advertising Model

For most of the 20th century, classified advertising was the financial engine of local newspapers. Classified ads — for housing, employment, automobiles, and personal services — were a natural local newspaper monopoly: buyers and sellers in a local market needed a common venue, and the newspaper was the only such venue. In major metropolitan markets, classified advertising revenue could represent 40-60% of total newspaper revenue.

The emergence of Craigslist (1995 onward) and subsequent platforms (Zillow, Cars.com, Indeed, Match.com) destroyed this revenue source with extraordinary speed. Craigslist was free for most categories of advertising, making it impossible for newspapers to compete on the price dimension that was their traditional advertising advantage. By the mid-2000s, classified advertising revenue at most newspapers had declined by 70-90% from its peak.

The loss of classified revenue was not offset by growth in display advertising or subscription revenue. Display advertising — from retailers, service businesses, and branded goods companies — migrated toward digital platforms (initially banner ads, then Facebook and Google's more precisely targeted advertising products) that offered better audience targeting at lower cost per impression than print advertising. Newspaper display advertising revenue fell from $17.3 billion in 2005 to $2.5 billion in 2020 (Pew Research Center).

The Digital Advertising Paradox

Newspapers that established digital presences (websites, apps) found that digital advertising revenue did not replace the revenue they had lost from print. The reason is structural: the economics of digital advertising are dominated by platforms with the scale to sell finely targeted advertising at the highest prices, and local newspapers lacked the audience scale to compete in this market. A local newspaper's digital audience of 50,000 monthly visitors could not command the premium advertisers paid for access to Facebook's and Google's billion-plus user bases and sophisticated behavioral targeting.

By 2020, Google and Facebook together captured approximately 57% of U.S. digital advertising revenue (eMarketer, 2020). Local newspapers competing in this market were at a structural disadvantage that no amount of digital innovation could overcome without access to comparable scale.

The paradox was acute: local newspapers created the news content that was shared on Facebook and found through Google, generating traffic and advertising revenue for those platforms, while capturing little of that value themselves. The value chain of local journalism had been restructured by digital intermediaries who captured the advertising relationship without performing the journalism.

Private Equity Acquisition and Extraction

As local newspapers' financial condition deteriorated, they became attractive acquisition targets for private equity firms and hedge funds pursuing a specific investment thesis: extract maximum short-term value from declining assets before they fail or are sold. This thesis was applied with mechanistic consistency by chains including Alden Global Capital (through its MediaNews Group and Tribune Publishing holdings), Gatehouse Media (which merged with Gannett to create the nation's largest newspaper chain), and numerous smaller acquirers.

The extraction strategy was consistent across acquirers:

1. Acquire newspapers at distressed prices reflecting their declining revenue
2. Implement immediate deep cuts in staff (typically 30-50% in the first year) to restore profitability
3. Sell real estate assets (newspaper buildings in prime downtown locations represent significant value independent of the newspaper operations)
4. Reduce print frequency and consolidate editorial operations across multiple papers
5. Extract profits for investors while running the asset into the ground or preparing it for sale

The Alden Global Capital case is the most intensively documented. Alden, a hedge fund, acquired controlling stakes in dozens of major metropolitan and mid-sized newspapers and implemented cuts that took newsrooms to skeleton staffing levels. The Denver Post, one of the Rocky Mountain region's most important newspapers, saw its newsroom staff fall from over 200 in 2012 to under 60 by 2020 under Alden ownership. Post journalists published an editorial explicitly criticizing their owner's management in 2018 — an unprecedented public act of institutional rebellion.

Section 2: The Geography of News Deserts

Where Local News Is Disappearing

Research by the Hussman School of Journalism's "State of Local News" project (formerly the Local News Initiative) at the University of North Carolina has produced the most comprehensive mapping of local news deserts in the United States. Key geographic findings:

Rural concentration: More than 70% of the counties lacking any local newspaper are rural. Rural communities face particular challenges because: (1) their smaller populations make local journalism less commercially viable; (2) geographic distance from metropolitan centers means fewer alternatives when local papers close; and (3) civic institutions (local government, courts, schools, hospitals) are simultaneously less resourced than urban counterparts and less subject to any other form of accountability oversight.

Income correlation: Counties with lower median household incomes are substantially more likely to be local news deserts. The communities that most need information about local government services, housing, healthcare, and civic affairs are the least likely to have journalism covering those topics.

Community of color underrepresentation: Research on news coverage of communities of color documents both historic underrepresentation (mainstream local papers have historically underserved communities of color) and disproportionate recent losses (the digital disruption has hit community and ethnic newspapers particularly hard).

The suburban paradox: Some of the largest local news deserts are not in remote rural areas but in suburban counties adjacent to major metropolitan areas — places where national and metropolitan media cover national stories but provide little to no coverage of local government, suburban school boards, county commissions, and other institutions that directly affect residents' daily lives.

The "Ghost Paper" Problem

A particularly deceptive feature of the local news landscape is the existence of what researchers call "ghost papers" — publications that continue to exist nominally (websites active, occasional print editions) but have so little reporting capacity that they perform none of the accountability functions of a genuine local newspaper. A ghost paper with one or two staff members cannot cover city council meetings, county commission hearings, school board decisions, or court proceedings with any regularity.

Ghost papers create a measurement problem: counting the number of newspapers that exist systematically overestimates the actual local journalism capacity available. Research that tracks newspaper closures (which are easier to count) underestimates the deterioration because it misses the many papers that continue to exist while providing little actual journalism.

Section 3: Documented Consequences for Democratic Governance

Voter Participation

The most comprehensive study of local newspaper closure and voter turnout (Rubado and Jennings, 2020, published in Political Research Quarterly) examined 1,200 U.S. counties and found that county-level newspaper closure was associated with lower voter turnout in local elections, but not in presidential elections. The effect was specific to local elections — where the newspaper's role as an information provider about local candidates and issues was most important — and null for national elections, where national media provided comparable information regardless of local newspaper presence.

This finding suggests a precise mechanism: the newspaper's contribution to voter turnout was through its provision of information about local races and candidates, not through any general civic mobilization effect. In the absence of local newspaper coverage, residents were less aware of local races and therefore less likely to participate.

A complementary study (Shaker, 2014) of communities that lost newspapers found post-closure declines in voter registration and candidate filing — suggesting that the declining participation extended to the supply of candidates, not only to turnout.

Municipal Finance and Corruption Risk

Financing local government requires borrowing — through bond issuances — at interest rates that reflect the market's assessment of the government's creditworthiness and governance quality. Research by Gao, Lee, and Murphy (2020, published in the Journal of Finance) examined the relationship between local newspaper coverage and municipal bond interest rates.

Their findings were striking: counties that experienced newspaper closures saw an increase in municipal borrowing costs, relative to comparable counties that retained their newspapers, of approximately 11 basis points (0.11 percentage points). This may seem small, but for governments that borrow tens or hundreds of millions of dollars, the additional interest cost is substantial and measurable.

The researchers interpreted this as reflecting market perception of increased governance risk without newspaper oversight. Municipal bond markets appeared to price in the accountability function of local journalism — treating the absence of local reporting as a signal of increased opacity and governance risk. This is one of the most powerful quantitative demonstrations that local journalism has concrete economic value beyond its direct informational function.

Knowledge Deficits

Research by Shaker (2014) directly tested whether residents' knowledge of their representatives declined after newspaper closures. Comparing communities that had lost their newspapers to matched communities that had not, she found statistically significant declines in ability to name local representatives after newspaper closure — a basic civic knowledge measure.

Research by Snyder and Strömberg (2010) found that congressional representatives who were covered by local newspapers were less likely to vote against constituent interests, more likely to serve on committees relevant to local districts, and more likely to obtain federal funding for their districts. The accountability mechanism that local coverage created was demonstrable in measurable behavioral outcomes for elected officials.

Section 4: The Community Impact

What Communities Say They Have Lost

Qualitative research in communities that have lost their newspapers consistently documents loss of:

Institutional memory: Local newspapers serve as the community's institutional memory — archives of meetings, decisions, elections, controversies, and local history. When papers close or go digital without digitizing their archives, this record is often lost.

Civic infrastructure: The newspaper's role as a convener of community attention and a forum for public affairs discussion — letters to the editor, investigative series that produce public debate, coverage that frames what issues are on the community agenda — disappears without obvious replacement.

Corruption deterrence: Officials report that reduced press scrutiny changes their behavior — not always in the direction of increased corruption, but often in the direction of reduced transparency and reduced investment in community communication. The "cop on the beat" function of local journalism operates partly through deterrence even when specific corruption is not uncovered.

Local identity: For many communities, especially smaller ones, the newspaper was a central institution of local identity — the place that covered high school sports, recorded births and deaths, documented community achievements, and stitched the community together as an information-sharing entity. Its absence is felt as a cultural and communal loss, not merely an informational one.

The Digital Native Alternative Question

A frequent response to concerns about local news deserts is: "Digital native alternatives will fill the gap." This is partly true and partly false.

Digital native local news outlets have emerged in many communities — often founded by journalists from closed print outlets, often funded by a combination of subscriptions, local philanthropy, and advertising. These outlets have demonstrated that local journalism can be done more efficiently in digital-native form than in the traditional newspaper model.

However, the digital native sector has not scaled to fill the gap created by newspaper closures. Research by the American Press Institute and others finds that:

• Digital native local news outlets are concentrated in wealthier, better-educated communities where subscription models are more viable
• The total number of journalists employed by digital native local outlets is a fraction of those lost from closing newspapers
• Digital native outlets have struggled to develop sustainable revenue in lower-income communities where subscription pricing is prohibitive
• Many digital native outlets are funded by philanthropy that may not prove sustainable over the long term

The honest assessment is that the digital native sector is an important and encouraging development but has not and will not, under current market conditions, replace the journalism capacity lost through print closure.

Section 5: Policy Responses and Their Adequacy

Existing Interventions

Several policy and philanthropic responses have been developed:

Philanthropic funding: Foundations including the Knight Foundation, MacArthur Foundation, and hundreds of local community foundations have invested in local journalism. The Local Media Project (now Local Media Foundation) and similar bodies coordinate philanthropic support. This funding has enabled significant journalism but is not sufficient in scale and is not democratically accountable.

State and local initiatives: A small number of states and localities have created or proposed public subsidies for local journalism, including New Jersey's matching fund for local news organizations and New York City's "Civic Media Corps" pilot. These initiatives are small-scale but represent an important precedent.

Federal legislative proposals: The Local Journalism Sustainability Act (introduced in Congress multiple times since 2020) would provide tax credits for subscribers to local news outlets and for businesses that advertise in local news outlets. As of 2023 it had not been enacted.

Platform commitments: Google's Google News Initiative and Facebook's Journalism Project have provided grants to local news organizations, representing recognition that platforms that benefited from local news content have some responsibility for its sustainability.

The Adequacy Gap

None of these responses comes close to addressing the scale of the local news desert crisis. The philanthropic support available is orders of magnitude smaller than the revenue that newspapers have lost. Public policy responses are nascent and politically contested. Platform commitments are voluntary and small relative to the value that platforms extract from news content.

The structural problem — that local journalism in the current digital advertising market cannot be commercially self-sustaining at the scale the community requires — has not been solved. The range of structural solutions that have been proposed (public broadcasting for local news, endowments for public service journalism, platform fees for news content, antitrust action against advertising duopolies, postal subsidies for local media) remain politically contested and unimplemented at the scale needed.

Discussion Questions

1. The private equity acquisition model treats local newspapers as assets to be extracted from rather than public services to be sustained. Does journalism's democratic function create an obligation on the part of government to prevent extractive ownership? What regulatory tools would be needed?

2. The research finding that municipal bond interest rates increase after local newspaper closure suggests that markets recognize the value of journalism accountability. Should this create market incentives for sustaining local journalism? What mechanisms would translate that recognition into revenue for news organizations?

3. Digital native local news has emerged in some communities but has not scaled to fill the gap. Identify the specific economic barrier in each of the following communities: (a) a wealthy suburban county adjacent to a major city; (b) a rural farming county; (c) a lower-income urban neighborhood. Are these barriers the same, and do they require the same solutions?

4. The Local Journalism Sustainability Act would provide tax credits for local news subscriptions and advertising. Evaluate this mechanism: who would benefit, who would be excluded, and would it address the structural revenue problem or merely slow the decline?

5. How does the local news desert problem relate to the political polarization documented in Chapter 5's discussion of echo chambers? When communities lack local journalism, what fills the information vacuum, and what are the epistemic and political consequences?

References

• Gao, P., Lee, C., & Murphy, D. (2020). Financing dies in darkness? The impact of newspaper closures on public finance. Journal of Financial Economics, 135(2), 445–467.
• Hussman School of Journalism and Media, University of North Carolina. (2023). The state of local news 2023. UNC.
• Pew Research Center. (2021). Newspaper fact sheet. Journalism.org.
• Rubado, M. E., & Jennings, J. T. (2020). Political consequences of the endangered local watchdog: Newspaper decline and mayoral elections in the United States. Urban Affairs Review, 56(5), 1327–1356.
• Shaker, L. (2014). Dead newspapers and citizens' civic engagement. Political Communication, 31(1), 131–148.
• Snyder, J. M., & Strömberg, D. (2010). Press coverage and political accountability. Journal of Political Economy, 118(2), 355–408.