“The time was ripe. COVID had blown everything up,” Tribune’s executive vice president tells TheWrap
The Salt Lake Tribune underwent a radical transformation just as the pandemic took hold last year, leaving its legacy print publication roots behind to become, as one newsroom executive described it, a “150-year-old startup.”
“The time was ripe. COVID had blown everything up,” Tim Fitzpatrick, the executive vice president of the Tribune, told TheWrap. “And I’ll tell you, it was the absolute right decision.”
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The newspaper’s move to a nonprofit model had been in the works since 2019, when the Tribune successfully applied for 501(c)(3) status with the IRS, making it the first legacy newspaper in the U.S. to fully become a nonprofit. Still, the official transition to nonprofit status on April 1, 2020, happened two weeks after the pandemic began rearing its ugly head in the U.S. and made abundantly clear how necessary it was for the Tribune to move away from a for-profit business model that relied so heavily on advertising.
“Most of the slaughter, if you will, of the early pandemic was on the ad side,” Fitzpatrick said. But with a model that relies more heavily on a combination of philanthropy, an endowment from the Utah Journalism Foundation and donations from readers, the precipitous drop in advertising revenue didn’t have the same kind of impact on the Tribune as it did on other papers.
According to Pew Research Center, advertising revenue dipped 42% in the second quarter of 2020 for print newspapers, while circulation revenue dropped by 8%. More than 70 local newsrooms have also shuttered since the start of the pandemic, according to the Poynter Institute, while others that have managed to stay afloat have often done so through mass layoffs and other deep cuts.
“Thirty years ago, a nonprofit model wouldn’t have worked because so much money was coming in from advertising,” Fitzpatrick said. “For a news industry to arrive at this point, the ad business had to shrink, frankly.”
The Tribune’s revenue model is roughly 60% dependent on reader revenue, while 20% comes from philanthropy and another 20% comes from advertising, Fitzpatrick said. Reader subscriptions cost $79 for a year, with the option of a $150 membership that considers the difference in costs as a reader donation to the paper. Since moving to a nonprofit model, Fitzpatrick said the Tribune has been able to double its subscribers to about 40,000.
“It’s not a business model. It’s a charity model,” FItzpatrick said. “But it really is a more honest approach, if you will, in the sense that we answer less to advertisers and more to our own readers.”
With this model, the Tribune was able to avoid layoffs last year, though Fitzpatrick noted that the paper had already “tightened considerably” in 2018 when it lost about 30% of its staff. (Today, there are about 80 people on staff at the Tribune on both the business and editorial sides.)
“We know we’re hanging in there,” Fitzpatrick said. “We have a budget this year that won’t require any layoffs. We think we can do it. And really, frankly, we think we can grow.”
But the Tribune’s relative success last year, despite the pandemic, wasn’t simply a matter of getting IRS approval to become a nonprofit. The paper also had to exit its joint-operating agreement with the Deseret News, a Utah-based newspaper owned by the Mormon Church, to become independent in its operations. The Tribune also made the decision, beginning this past January, to cut down its print circulation from seven days a week to just once a week. Though the paper lost around 20-25% of its print subscribers when it moved to a one-day-a-week print schedule, according to Fitzpatrick, all print subscribers also have digital subscriptions. But all things considered, keeping a seven-day print schedule just “doesn’t make any sense,” Fitzpatrick said.
“There’s nobody under 40 that wants a printed newspaper,” he said. “It isn’t sustainable. And all the costs that are associated with that — you have to hire carriers; you have to buy ink; you have to buy paper — all of that is kind of unnecessary. We can deliver the same information via electrons. Every day there’s more people who realize that.”
The bold move to a nonprofit model also would not have been possible, Fitzpatrick said, had it not been for the willingness of the Tribune’s former owner, Paul Huntsman, to essentially donate the paper back to the Salt Lake City community.
Huntsman, the son of billionaire Jon Huntsman Sr., purchased the Tribune in 2016 for an undisclosed amount from Digital First Media, a Colorado-based publisher owned by the hedge fund Alden Global Capital. In announcing his decision to transform the paper to a nonprofit in 2019, Huntsman said he did not want to be “held hostage to a broken system” as print publications were struggling to replace print advertising dollars with comparable digital advertising revenue.
By moving to a nonprofit model, Huntsman gave up his ownership of the paper to a volunteer board of directors, on which he serves as chair. “He had to walk away from his investment,” Fitzpatrick said. “You need an angel who is willing to do that.”
The Salt Lake Tribune just celebrated its 150th anniversary last week after its first full year as a nonprofit. While not every news outlet will be able to thrive under a nonprofit model, Fitzpatrick said it was the right thing to do for the Tribune — and that he hopes other papers in similar situations can do so as well.
“There’s so many challenges ahead. We’re not out of the woods. But, basically, moving to a nonprofit was a good thing. I can recommend it to other people,” he said.