Even amid the affluence of tech capital in Silicon Valley, local news struggles – CNBC

The cities and suburbs on the eastern side of San Francisco Bay are home to 2.7 million people, a world-class University of California campus and bedroom communities for Silicon Valley that produce median incomes 50 percent higher than the national average.

What they no longer have is a thriving landscape of local daily newspapers.

Gone are the Oakland Tribune, the Contra Costa Times, The Daily Review of Hayward, The Argus of Fremont and the Tri-Valley Herald, among others. All had tens of thousands of readers during their heyday and served communities populous enough to be among the largest cities in many other states.

Ownership changes and consolidations have left the region known as the East Bay with just a single daily newspaper. The East Bay Times, based in Walnut Creek, attempts to cover a region nearly the size of Delaware with a fraction of the staff of the former dailies.

The growing number of places across the country with dwindling or no local news options has been associated with mostly rural and lower-income areas, places that have little resilience to counter the trend among readers and advertisers to go online. But the East Bay among the wealthiest and highest educated regions in the country shows that no place is immune to the struggles of the traditional news industry.

"It is really shocking that the place with the demographics and the business and the universities and the progressiveness, that this is a news desert ... " said U.S. Rep. Mark DeSaulnier, a Democrat who represents a significant part of the East Bay.

The former small business owner started his political career on the Concord City Council nearly three decades ago, where he recalls seeing at least one reporter in the front row of every meeting. DeSaulnier is so concerned about the state of local news that he has backed legislative action in Congress to support it.

One of those bills targets what he and others believe is a main culprit of the industry's woes the big tech and social media companies that profit from the content news outlets produce without adequately sharing the profits.

Facebook and Google, among the most prominent of those targets, say they are not to blame for the news industry's downfall and have pledged hundreds of millions of dollars to boost local news and help develop new business strategies. That includes backing for news sites in the East Bay, where many of the tech giants' employees live.

But some wonder if that philanthropy is too little, too late. In Fremont, Dan Smith used to have two copies of The Argus delivered daily, one to his family's funeral home for the obituaries placed on behalf of clients and the other to his home, where he turned to sports and comics.

But Smith, 60, no longer subscribes to a daily newspaper, after The Argus turned into a weekly insert to cover a community of nearly 240,000 people, where one of the local employers is electric car maker Tesla.

"Where does one go for local coverage, high school sports? What's going on with the city and the politics, and what's happening around the community?" he said. "How can I be part of my community if I don't know what's going on?"

Former journalists, civic leaders and others in the East Bay lament the loss of the community coverage that was once the staple of local dailies, many of which competed for scoops in towns where coverage areas overlapped.

In Richmond, a working-class city of 110,000 dominated by Chevron and its oil refinery, Mayor Tom Butt recalls a time when two reporters were posted full-time in the press room in the basement of City Hall.

"And everything that happened in the city of Richmond showed up in the newspaper the next day or two, a detailed, blow-by-blow account of every city council meeting, every planning commission meeting," Butt said.

Today, coverage of Richmond falls largely to two online publications. The graduate journalism school at the University of California, Berkeley, staffs Richmond Confidential, which goes on hiatus during summer and winter breaks.

The city's largest employer, Chevron, runs the other through a public relations firm. The Richmond Standard posts stories about crime, high school football and community events. It also provides "a voice for Chevron Products Company on civic issues."

The website has posted stories about a Chevron workforce program, its employees and philanthropy, including an article about Chevron taking kids to an Oakland A's game.

Heat rises from stacks at the Chevron refinery in Richmond, California.

Getty Images

A few miles down Interstate 80, Martin Reynolds gazes up at the 22-story Tribune Tower that defines the Oakland skyline and was home to the Oakland Tribune for decades before the paper was sold and its headquarters moved. The Tribune's nameplate with fancy gold script remains over the building's main entrance.

The 142-year-old Tribune was the first African American-owned major metropolitan daily, and its staff took pride in its deep connection to the racially mixed city of over 400,000. The newspaper won a Pulitzer Prize for its coverage of the 1989 Loma Prieta earthquake.

Its reporters scoured the city's neighborhoods and institutions, and they filled the front page with Oakland-based stories, said Reynolds, who started as an intern and became editor in 2008. They also tried out new ideas in the digital age, such as blogging about life inside one of the city's most dangerous zip codes.

"We were just out there covering stuff all the time," said Reynolds, 51. "We even had a Berkeley bureau."

But ownership consolidated and newsrooms shrank. The Digital First-owned Bay Area News Group eventually announced it would collapse the East Bay's daily papers into one.

"There was a time when newspapers were so powerful and so meaningful and so influential to the community," Reynolds said. "To have lost that is a shame."

Digital First has a record of consolidating newspapers and trimming staff, but it also has said that its business model keeps local journalism alive. The company staffs reporters throughout the region and has separate regional sections on the East Bay Times' website.

The East Bay Times won its own Pulitzer in 2017 for its coverage of a fatal warehouse fire in Oakland. Even then, it wasn't long before cutbacks resumed.

Bay Area News Group Executive Editor Frank Pine said he understands the loyalty people have for the newspapers they grew up with, but said there is no way to turn back time.

The East Bay Times has collaborated with other publications in efforts to beef up local reporting, including a recent in-depth project about law enforcement officers with criminal convictions. The news group also received a grant from Google to test a premium, ad-free service for subscribers.

"Our business the business of news continues to be distressed, and we're doing our level best to stabilize that business and make it sustainable into the future," Pine said.

The loss of so many daily news outlets in this relatively well-to-do region has a ring of irony: Much of the East Bay's wealth and growth is due to tech giants Apple, Facebook and Google whose headquarters are a mere bridge crossing away on the other side of San Francisco Bay.

The dominance of Facebook and Google, which rake in the majority of digital ad dollars, is a key reason the traditional news business has been struggling through a period of layoffs and readership decline.

Apple's iPhone conditioned people to abandon print and seek information with a swipe of a screen. Since the iPhone debuted in 2007, employment in U.S. newspaper newsrooms has dropped by nearly half, according to the Pew Research Center.

David Chavern, president and chief executive of the News Media Alliance, said Google and Facebook can solve the crisis affecting the news industry by paying more for content and sharing more data about the people who click on it.

"The fact of the matter is that both Google and Facebook control everything about the news experience, and yet they don't want to compensate the people who create that content," he said.

Newspaper ad revenue was $50 billion in 2005, according to the Pew Research Center. Today, it's $14 billion.

Representatives of Google and Facebook reject the suggestion that their companies are responsible for the decline of newspapers, saying business models, readership and the way society operates changed dramatically.

They say they are making it easier for people to subscribe and are offering grants, partnerships and training programs to boost local news, but draw the line at sharing digital revenue at the levels news executives want.

"It's not about providing artificial props to models that frankly are no longer valid," said Richard Gingras, vice president of news for Google. "It's not a healthy thing if you're dependent on other sources for revenue to allow you to do your journalistic work."

Google drives an invaluable amount of traffic to news sites, he said, and shares revenue with publications that use its advertising technology.

Campbell Brown, a former television journalist and current head of global news partnerships at Facebook, said publishers she talks to want to be less dependent on platforms such as Facebook.

"We have to find new business models," she said. "But it has to be something that's sustainable over the long term."

Campbell Brown speaks onstage at the Peabody-Facebook Futures Of Media Awards at Hotel Eventi on May 19, 2017 in New York City.

Getty Images

Both companies are putting money behind attempts to build different business models and resuscitate local news. In announcing an array of initiatives and partnerships, the companies have also said they understand that strong local journalism is critical for a healthy democracy.

Each has pledged $300 million to boost journalism across the country, much of that at the local level where newsrooms have suffered the most; a University of North Carolina study found that more than 2,000 weekly and daily papers have closed in the U.S. during the last 15 years.

Facebook sees promise in its accelerator program, which brings leaders from various news outlets together to brainstorm over flash sales, e-newsletters and other tools to boost revenue and attract subscribers.

Josh Mabry, Facebook's lead for local news partnerships, said publications need to remind people why local journalism matters and why they should pay for it.

"Asking goes a long way," he said. "And I think, frankly, a lot of the publishers that we work with are learning how to market themselves in a way that maybe they haven't done in a while."

The program has helped several news outlets in the San Francisco Bay area, including a hyper-local website in Berkeley that used what it learned last year along with grant money from Facebook to sign up 343 members during its year-end membership drive. The previous year had seen just 23 new members during the same period.

"The program really injected a lot of discipline into what we were doing," said Tracey Taylor, co-founder and managing editor of the site, Berkeleyside.

Founded in 2009 by three journalists, Berkeleyside is a beacon in a bleak local news landscape. The site has a staff of seven and an annual operating budget of $800,000, with just under half of its revenue from advertising, Taylor said.

Most of its readers live or work in the relatively wealthy and famously liberal college town, and they send tips and shape coverage, Taylor said.

Habits have changed, said Gingras, the Google vice president. Consumers no longer need the local newspaper for national news or movie show times. Berkeleyside is smart in doing exactly what publications need to do to thrive in the digital age, he said: connect with readers.

Berkeleyside isn't the only local outlet attempting to fill the news void created by the loss of the East Bay's dailies. Political bloggers, community volunteers and others have started their own sites, determined to inform their communities about schools, town councils and crime.

In a major boost for local journalism, Berkeleyside announced recently that it was branching out to cover Oakland with $3 million in backing from Google and the American Journalism Project.

The two newsrooms will team up to cover the Alameda County Board of Supervisors and regional transportation, said Lance Knobel, Berkeleyside co-founder and CEO of the new non-profit that will oversee both sites. He is hoping that a combination of philanthropy and dedication to covering communities creatively will usher in a new era for local news. Knobel said he sees the hunger for that all around him.

"If we bring that sort of passion and caring and ability to tell stories and do deep reporting, there are a lot of people in the city who will say, 'Wow, I didn't know that about the place that I live in,' and will take an interest," he said.

The Associated Press has received grant funding from the Google News Initiative for its AP Verify and AP Story Share projects.

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Even amid the affluence of tech capital in Silicon Valley, local news struggles - CNBC