From a startup outlet burning through tens of millions of dollars and shutting down to newsrooms making significant cuts, American journalism is facing a rough stretch.
The Messenger ceased operations, while The Los Angeles Times and The Wall Street Journal have executed notable layoffs—a reflection of the tough media environment, according to experts.
The Messenger
Less than a year after its launch, online news website The Messenger ended its roughly 300-personnel operation on Jan. 31 as founder and CEO Jimmy Finkelstein told the staff that the website would go dark “effective immediately.”In a memo that went out shortly after The New York Times and Semafor broke the news of the site’s end, Mr. Finkelstein said he tried until the very end to raise additional capital to keep the online publication running only to fall short.
A media veteran who sold The Hill to Nexstar for $130 million in 2021, Mr. Finkelstein founded The Messenger in the hopes of making it the next greatest thing in media with a newsroom of 500 journalists covering topics from politics to sports.
“The Messenger started with an incredibly important mission—to deliver balanced and accurate journalism at a time when Americans’ trust in media is at a record low—and I am proud of what we achieved,” he wrote in the memo.
“Our editorial team created and delivered an outstanding product that generated unprecedented traffic in seven months.”
Mr. Finkelstein blamed the current tough journalism environment.
“The industry has faced extraordinary challenges this past year. The economic headwinds have left many media companies fighting for survival,” he wrote.
“Unfortunately, as a new company, we encountered even more significant challenges than others and could not survive those headwinds,” he continued. “I am grateful to you and the partners who believed in our mission and came on board over the past seven months, but the reality is that we needed more capital to move forward successfully.”
The Messenger raised $50 million in capital ahead of its May 2023 launch thanks to investments including from billionaire Josh Harris and prominent pollster Mark Penn. By the end of 2023, The Messenger made just $3 million in revenue. The outlet spent millions on offices in Washington, New York, and Los Angeles, in what critics said was a waste of resources.
Additionally, it spent a few million on staff, offering salaries above market value, even offering someone over $500,000 to lead a section, and well over $100,000 on travel. The site began with 150 journalists on staff.
However, in addition to fiscal extravagance, The Messenger was beset by problems ranging from staff dissatisfaction and infighting to falling well short of the $100 million in annual revenue that Mr. Finkelstein said the website would garner through traffic and site ads.
Top-notch journalists had been recruited, including Marc Caputo, Darren Samuelsohn, Adam Klasfeld, Lindsey McPherson, Stephen Neukam, James LaPorta, Dan Merica, Marty Kady, Bridget O'Brian, Dan Kauffman, Mary Margaret, and Joe Concha.
Finkelstein sought to make the next journalism north star like “60 Minutes,” but The Messenger came under fire for what critics said was too much aggregation over original reporting. This led to at least one editor leaving the site shortly after its launch.
The outlet sought to stop the financial bleeding by laying off some staff, but that was not enough to save the day. It reportedly considered shutting down near the end of last year.
The Messenger did not give severance to its employees and immediately cut off health insurance benefits. Former staff members have filed a joint lawsuit against Mr. Finkelstein, accusing him of violating labor law.
Overall, this was a case of expanding too fast and burning through cash, said Todd Holmes, associate professor and head of the Entertainment Media Management program at California State University Northridge.
“I think that they hired on too many journalists and had high labor costs while not generating anywhere close to the ad revenue that was necessary to sustain the company,” he told The Epoch Times.
He noted that the company’s goal of $100 million in revenue while seeking to attract 100 million unique visitors to its site in 2024 was unrealistic.
The Messenger’s collapse is seen by some as an indictment of the current journalism landscape.
Los Angeles Times
The Los Angeles Times has all but shuttered its Washington bureau as it laid off 20 percent of its staff including bureau chief Kimbreill Kelly and deputy bureau chief Nick Baumann. This was on top of cutting 115 journalists that Jan. 23 day.In slashing its Washington bureau, the Times sent “a message that covering lawmakers is not a priority” even if “this is not the intended message that the LA Times is trying to send,” said Mr. Holmes. While they would like to have reporters holding members of Congress accountable, this is a business move, he said.
“At least the LA Times does still have a presence albeit a much reduced one at that,” he added. “Many newspapers covering a large swath of the country don’t have a single reporter on the ground in D.C. anymore.”
This was on top of a 13 percent staff reduction this past summer.
As with The Messenger, the L.A. Times layoffs were another instance of journalists versus a wealthy top boss.
Executive Editor Kevin Merida, who took the top position in May 2021 after serving as senior vice president and editor-in-chief at ESPN, had a strained relationship with billionaire owner Patrick Soon-Shiong.
Indeed, Mr. Merida appeared to confirm the tension with Mr. Soon-Shiong.
The Times was losing $30 million to $40 million annually, according to Mr. Soon-Shiong.
Additionally, said Mr. Holmes, the Times “was also heavily affected by the Hollywood strikes and the resulting estimated $7 billion in economic losses to the L.A. region.”
The reduction in the Washington bureau is also a testament to the power of wire services, according to Mr. Graham.
“There’s no need to have vending boxes for your paper edition in the nation’s capital,” he said.
“It’s easy to shrink a D.C. bureau now because you can just rely on AP or Reuters or the Washington Post for your D.C. reporting,” he continued. “That’s happened at large urban newspapers all over America that used to have a staffer or two in D.C.”
Moreover, remarked Mr. Graham, there is the Trump factor.
“We would obviously argue that traditional news outlets are suffering a loss of audience because the journalists seem to be writing to a narrow audience of fellow Democrats instead of a broad general public,” he said.
The Wall Street Journal
Like the L.A. Times, The Wall Street Journal laid off a significant portion of its Washington staff.Beyond the aforementioned outlets, there are bigger factors, according to Mr. Holmes.
One is circulation “partly due to the fact that people are turning to more specialized news services, including those that focus on only one industry.” Another is the lack of trust people have in news organizations, he said.
“The single biggest factor, however, has been declining advertising revenue as advertisers have been turning to digital platforms for ad placement due to their ability to better target specific consumer segments,” Mr. Holmes said.
“This includes advertisers placing their ads on such big tech platforms as Google, Meta, and X.”
X used to be Twitter.
At the end of the day, outlets must adapt, stated Mr. Holmes.
“Newspapers have to figure out a way to offer something valuable and unique—something that they can’t get from alternative sources,” he said.
