One of the theoretical perks of having billionaire donors bankrolling news outlets is that the people writing the checks are not venture capitalists looking to make a buck. They’re civic-minded patrons whose wealth can buttress an outlet from market fluctuations and unforeseen calamities like a global pandemic.
“Our involvement in media is not to turn a profit,” said Laurene Powell Jobs during The Information’s virtual WTF Summit in September. “It’s important that everyone know that great journalism should not be for free. It’s a civic good.”
Powell Jobs’ giving vehicle, the Emerson Collective, is an LLC that focuses on areas like education, the environment, and media and journalism. The collective is an investor in Axios, controls The Atlantic, and supports nonprofit organizations like ProPublica, Mother Jones, and the Marshall Project.
In 2018, the collective purchased Pop-Up Magazine Productions, the company behind Pop-Up Magazine, a San Francisco-based “live magazine” showcasing writers, photographers and journalists, and the California Sunday Magazine, a weekly print publication for most of its run.
In early October, the award-winning California Sunday announced it was suspending publication after the collective severed ties with Pop-Up Magazine Productions. Eleven staff members and two properties were let go, according to Pop-Up’s union, which disputes the legality of the layoffs.
The news, which comes five months after the Emerson-owned Atlantic laid off 17% of its staff, suggests that the enlightened billionaire unencumbered by the commercial aspects of running an outlet is a misleading archetype, or at least has its limits, depending on the publication. Billionaires like Craig Newmark, who donated $20 million in seed money to The Markup, a nonprofit entity, can advance the “civic good” to their heart’s content knowing their support reduces their tax liability and that the outlet’s revenue model includes philanthropic contributions.
The for-profit model, which primarily relies on advertising and paid subscribers, can be a tougher nut to crack, which explains why some outlets are finding the nonprofit route increasingly palatable. California Sunday—aka California Sunday, Inc.—was a for-profit endeavor, and as Poynter’s running list of closures, furloughs and layoffs painfully illustrates, Powell Jobs wasn’t the only media owner who’s made some difficult financial decisions in these last few months.
“An all-of-the-above revenue model”
Douglas McGray and Chas Edwards founded California Sunday in 2014. The magazine featured long-form stories about the Western United States, Latin America and Asia. The first print issue was included as an insert to the Sunday editions of the Los Angeles Times, the San Francisco Chronicle, the New York Times and other outlets. Its initial runs reached 400,000 households.
Journalism commentators were intrigued. California Sunday’s “out-of-the-box approach to distribution is married to an all-of-the-above revenue model,” wrote Tony Biasotti for Columbia Journalism Review in 2014. The model included a metered paywall, memberships, advertising and $2 million in backing from investors.
The Emerson Collective also took notice. It invested at least $10 million in Pop-Up Magazine Productions in 2017. The same year, Powell Jobs spoke at a New York Times DealBook conference and explained why she was pouring money into the struggling media industry. “We know the business model is weakened, and we also feel that that kind of shoring up and that kind of belief, and the kind of patient capital that we can bring to media companies, is essential for the health and well-being of our democracy,” she said.
In 2018, the collective purchased Pop-Up Magazine Productions and with it, California Sunday, for an undisclosed amount. Vox’s Kara Swisher noted that the collective had made “an increasing number of media investments via its for-profit arm over the last two years,” including buying a majority stake in The Atlantic, large stakes in Hollywood production companies like Concordia Studio, Anonymous Content and Macro, plus investments in Axios and podcast maker Gimlet Media.
In a statement, Powell Jobs said, “We think the creators and team at Pop-Up Magazine and California Sunday are exciting and innovative. Both magazines have managed to create unique journalistic platforms that help foster empathy and a better understanding of the world.”
Fast-forward to 2020. The collective said it agreed to a “mutual separation” with Pop-Up in August, which included “an additional substantial contribution” to allow the company to “operate independently and do so without oversight or control by Emerson Collective.” While California Sunday has gone up to that great printing press in the sky, Pop-Up Magazine will publish its fall issue in late October, while its live series will continue online and return to the stage when public health rules permit.
“We look forward to possible future collaborations as Pop-Up returns to its status as an independent company,” the collective’s statement read.
Bad omens
Revisiting Biasotti’s 2014 piece on California Sunday’s launch, with the benefit of hindsight, he unwittingly raised two red flags for the publication.
First, he referenced Pop-Up Magazine Production’s “live magazine” model. McGray elaborated on this idea in a 2016 interview with the Huffington Post’s Claire Fallon, saying, “We started a media company. We approached it like a story production company. Some of the things we’d make would be live experiences, live stories, and some of the things we’d make would be stories for you to read at home.”
McGray, of course, couldn’t anticipate that a pandemic would shutter revenue-generating live events, but that’s precisely what happened earlier this year, creating a trickle-down effect that reached California Sunday’s doorstep. In June, the outlet shifted to a digital-only format. “We’re facing the most difficult economic conditions of our lifetimes, especially for a small company that depends on live events and sponsorship,” McGray said.
Biasotti also noted that McGray and his team were attempting to cultivate a distinctively California brand. It would be a challenge, but McGray could find inspiration in the Santa Barbara-based Pacific Standard, which launched in 2012 and dealt “mainly in politics and science, from a Western and California perspective,” Biasotti wrote.
Pacific Standard was bankrolled by the Santa Barbara-based Social Justice Foundation, which received funding from SAGE Publications, an academic journal publisher. In July of 2019, SAGE Publications told the foundation it would no longer receive funding. In response, the foundation stopped funding Pacific Standard, which ceased publication in August.
“No money, no mission'“
After The Atlantic laid off 68 staffers in May, The Intercept’s Lee Fang tweeted, “Atlantics’ philanthropist owner Laurene Powell Jobs has essentially unlimited money. For some perspective, Apple’s stock price went up 1.2% this week, netting her an additional $144 million in just the last four days.”
Five months later, Powell Jobs is still doing pretty well. According to Americans for Tax Fairness, her net worth as of October 13 stood at $20.5 billion, up 25.1% from $16.4 billion on March 18. She’s also a Giving Pledge signatory, meaning, in theory at least, most of that money is supposed to go somewhere.
Powell Jobs could have easily kept Atlantic staffers on its payroll and California Sunday afloat by cutting a small check from time to time. The fact that she didn’t suggests that an outlet hemorrhaging cash can frighten billionaire patrons as much as anyone else. A few million dollars in annual losses could have been re-invested in the market or allocated elsewhere. Even the most “patient capital” has a breaking point.
Other billionaires who own major media outlets include the Benioffs (Time magazine), John Henry (the Boston Globe), Jeff Bezos (the Washington Post), and Patrick Soon-Shiong (the Los Angeles Times).
Soon-Shiong made his fortune by inventing the successful cancer drug Abraxane. In 2018, he purchased the Times for twice what Bezos paid for the Post. He told The Guardian's Rory Carroll the outlet had to be profitable, evoking an old adage from his Catholic missionary teachers: “No money, no mission.” He meant it. In May, the Los Angeles Times’ guild accepted a 20% reduction in pay and hours due to pandemic-related losses.
I’d be remiss if I didn’t mention Chris Hughes. The billionaire Facebook co-founder purchased a majority stake in the New Republic in 2012, only to sell it four years later, admitting he had “underestimated the difficulty of transitioning an old and traditional institution into a digital media company in today’s quickly evolving climate.”
Again, these billionaires oversee a different and more high-stakes revenue model than someone bankrolling a nonprofit operation where a combined 89% of revenues come from foundations (48%), individuals (35%), and other charitable sources (5%), according to the Institute for Nonprofit News Index 2020. Craig Newmark knows his nonprofit The Markup can tap donors and institutional funders like the Ford, MacArthur and Knight foundations if the walls start to close in. Soon-Shiong doesn’t have that luxury.
Vox’s Theodore Schleifer alluded to billionaire owners’ not-so-subtle concern for the bottom line after The Atlantic’s layoffs. “A billionaire who does not address a publication’s fundamental business problems might be doing a genuinely good deed for the world,” he wrote. “But these are businesspeople, and even that generosity will be strained and can prove temporary.”