Comstock's magazine 0618 - June 2018 - Page 47

purchase. Weaver argues that higher- performing, former Knight Ridder papers protected McClatchy from the worst of the down years. Others say that debt from the deal bound McClatchy like a straightjacket, leaving the com- pany no choice but to cut its way out. U.S. home prices peaked four months after the sale, portending a subprime mortgage crisis that would hit Sacramento harder than any re- gion in the state. And while online advertising increasingly unsettled the newspaper business model, few pre- dicted the devastation to come from the world’s largest internet companies. The End of an Era “No newspaper publisher woke up to the power and challenge of the in- ternet from 1995 to 2005,” says Alan Mutter, a media economics professor at UC Berkeley. “While revenues were climbing, they pocketed the profits and distributed it back to shareholders.” Warning signs were clear, how- ever, from the journalists themselves. Across the globe, reporters were pub- lishing prophetic stories about the slow demise of their own industry. Online news was gaining popularity, but digi- tal ads only brought pennies on the dollar compared to the printed prod- uct. Craigslist had already been around for over a decade. Its mass production of free classified ads had spread to 35 countries, inhaling an estimated $50 million in advertising revenue out of the Bay Area alone. Facebook, not yet a threat to the core newspaper rev- enue model, introduced its News Feed in September 2006, an innovation that would slowly replace the nation’s news- paper distribution system pioneered more than 200 years ago. McClatchy executives initially envisioned McClatchy newspapers ful- filling a role on the web that may have worked if not for the rise of Facebook. Under the vision, urban residents would become citizen journalists who wrote local community news, such as little league scores, out of hobby on personal web pages and online forums. Reporters at a paper like the Bee would cherry-pick from those posts, and the most engaging and important infor- mation would rise to top its homepage. That plan, outlined in Wiegand’s book, arrived a few years before a Silicon Val- ley tech firm became the online public square to every U.S. city. “Ultimately, Facebook gave that stuff away free,” Wiegand says. “You couldn’t build a business model to do what Facebook does and still have the [original] journalism.” Two years after the Knight Ridder sale, the collapse of brokerage firm Bear Stearns sent global stock markets rolling, and the Great Recession was underway. Newspaper