This Chicago Journalism Merger Is a Breakthrough for Local News—and Funders Are Taking Note

The former headquarters of the Chicago Sun-Times, pictured in 2015. Photo: Felix Lipov/shutterstock

In his 1954 autobiography, the great Chicago newspaperman-turned-screenwriter Ben Hecht wrote, “I have lived in other cities but been inside only one. I once wore all the windows of Chicago and all its doorways on a key ring. Saloons, mansions, alleys, courtrooms, depots, factories, hotels, police cells, the lakefront, the rooftops and the sidewalks were my haberdashery.”

With his trademark literary flair, Hecht gets to the core of why place-based, community reporting is a cornerstone of a thriving democracy. Local journalism provides oversight within local communities — with reporting straight from the courtrooms, sidewalks, police cells and saloons. 

That craft has been in crisis for well over a decade now. According to a 2020 report, 2,100 communities lost their local newspapers since 2004, representing about one-fourth of all U.S. papers. The effect of this decimation on the health of civil society is increasingly evident, and in recent years, philanthropy has stepped in with a variety of initiatives and strategies for supporting local journalism. As Mike Scutari documented in his State of American Philanthropy report on the issue, “Giving for Journalism and Public Media,” local news funding (and journalism/media funding in general) accelerated after the 2016 election, and has accelerated again since 2020, when the pandemic further highlighted the need for local news as a counterweight to social media-driven misinformation. 

It is fitting that Chicago, once a city of thriving hometown papers and hardknock beat reporters, has become a hub of innovative local journalism projects, from digital-first neighborhood news outlets like Block Club Chicago to new models for strengthening existing weeklies. Local funders have helped to underwrite these initiatives for several years, and a new, larger effort was announced in January, with some major philanthropic involvement and implications: The long-beleaguered and previously bankrupt Chicago Sun-Times, one of Chicago’s two major dailies, was acquired by Chicago Public Media (CPM), becoming a nonprofit subsidiary. CPM is the owner of WBEZ, the city’s public radio station and NPR affiliate. 

This merger is the result of behind-the-scenes conversations and fundraising among leadership at WBEZ, the Sun-Times, and Chicago-based donors and foundations that began in the spring of 2021. By early 2022, $61 million had been pledged. The deal is unusual both for its form — a newspaper becoming a nonprofit via a public media merger — and for the role that philanthropy played in making it happen. According to a Sun-Times interview with Sharene Azimi at the Institute for Nonprofit News, “The $61 million is the largest philanthropic amount committed to local reporting in the U.S. known to the Institute for Nonprofit News.”

We reached out to a few of the key players involved in the acquisition to discuss how it came about and the larger ramifications for philanthropy. In these conversations, excitement about the novelty of the merger, as well as its potentials, was palpable.

“This is a first of its kind,” said Matt Moog, CEO of Chicago Public Media, pointing to the unique way in which a public media organization came to acquire a for-profit newspaper. “Part of our responsibility here is to get other foundations and individuals to think about funding journalism as one of their priority areas, recognizing the critical role it plays in all the issues they care about.”

“There isn’t anything like it,” said Alberto Ibargüen, president of the John S. and James L. Knight Foundation. “This is a really unusual experiment… It’s one that could matter. It’s one that could be an example for others.”

According to Jim Brady, vice president of journalism at the Knight Foundation, Knight’s decision to become the merger’s first national funder was based on its potential as a replicable model. “Our thinking is we’re not in the position to solve individual problems for individual publications. There are too many publishers and too many problems,” he said. “We’re looking at things that can extend out across the industry. What makes this exciting is every major city has public media, and most of them have a struggling newspaper, and if this model can work in Chicago, it’s one that others can employ across the country.”

A tale of two newspapers

The unique story behind the Sun-Times merger can only be fully understood by taking into account the recent fate of Chicago’s other major (and larger) daily, the Chicago Tribune. The drawn-out ownership saga at the Tribune arguably began in 2007, when real estate mogul Sam Zell bought and privatized it. By 2008, the paper was bankrupt, and in 2014, it emerged as one of the multiple properties of Tribune Publishing, a publicly traded company.

In 2016, disgraced tech entrepreneur Michael Ferro became Tribune Publishing’s largest shareholder. Ferro had previously been majority owner (via now-defunct media company Wrapports) at the Sun-Times before his Tribune coup, at which point, in alignment with antitrust laws, he relinquished that position. Nevertheless, in 2017, Ferro spearheaded an attempt to buy the Sun-Times, along with the Chicago Reader, and bring them under the Tribune Publishing umbrella. The U.S. Department of Justice intervened, placing the process on hold to prevent the impending media monopoly. Public entreaties were made on behalf of the Sun-Times, and the result was perhaps more idiosyncratic than expected: an investor group composed of former Chicago alderman Edwin Eisendrath, the Chicago Federation of Labor, and an assortment of civic-minded Chicago investors bought the paper for $1 (its books were about $4.5 million a year in the red at the time) and pooled substantial funds to take on its debts.

It was a bold bid to “save this independent news voice in Chicago,” Eisendrath said at the time. This change in ownership set the Sun-Times on a course with a variety of investors who were not only amicable to new models for local journalism, but part of a vanguard. 

According to Moog at Chicago Public Media, it was the Sun-Times principal investor Michael Sacks who contacted him in the spring of 2021. “He called me and talked about this idea,” Moog said. “And at exactly the same time, we were in the middle of our strategic planning and looking very closely at the state of journalism in Chicago, and recognizing that we needed to take a broader view of serving the community, in light of the declining news capacity in Chicago.” 

The outlines of the idea included Chicago’s philanthropic community, as well as “significant future financial support” — the pledged amount is undisclosed — from Sacks himself. Sacks is the CEO of Chicago-based asset management firm GCM Grosvenor and was an advisor to former Chicago Mayor Rahm Emanuel. 

“We knew that we could not do this on our own, that we would need substantial support from the philanthropic community,” Moog said. One of the first philanthropies to become involved was the MacArthur Foundation. With a $7 billion endowment, MacArthur is one of the largest foundations in the U.S., but also has an extensive program supporting Chicago, where it is headquartered. Others spearheading these early conversations included Chicago philanthropist Bryan Traubert, who was board chair at CPM, and Sun-Times CEO Nykia Wright. 

According to MacArthur Foundation President John Palfrey, the philanthropic community in Chicago had been searching for “a number of years” to find a way to ensure the longevity of a “significant, sustainable paper of record” — presumably in light of the Tribune’s decline. So in May of 2021, when Moog told him about the nascent plans, “I jumped at the possibility,” Palfrey said. He wasn’t the only one. In June, MacArthur’s board voted to support the project “if it came together,” Palfrey said—the merger was still on the drawing board at the time.

This is where the Tribune again becomes relevant. The backdrop to these Sun-Times planning sessions was the Tribune’s acquisition by Alden Global Capital, a hedge fund. Two years prior, in 2019, Alden Global became dominant shareholder at Tribune Publishing and promptly enacted a Machiavellian board takeover, eventually putting itself in a position to buy Tribune Publishing via MediaNewsGroup, an Alden company that owns over 100 newspapers, including the New York Daily News. Margaret Sullivan at the Washington Post has deemed Alden “one of the most ruthless of the corporate strip-miners intent on destroying local journalism.”

There were vocal rallying cries for a wealthy philanthropist — or a group of them — to save the paper, including by beloved Tribune columnist Mary Schmich, who asked for a “hero” to step forward. In March 2021, as Alden’s takeover loomed, reports emerged that hotel magnate Stewart Bainum — who was attempting to pry the Baltimore Sun from Alden — was putting together a deal to purchase Tribune Publishing. Reportedly, Chicago-based philanthropies, including the MacArthur Foundation, were involved in an eleventh-hour rally that ultimately failed. Days after Alden bought Tribune Publishing, massive buyouts were announced at multiple newspapers, including a significant proportion of the Tribune’s newsroom.

But around the same time, talks surrounding the Sun-Times were heating up. According to Moog, disappointment regarding the Tribune “helped to raise awareness among the philanthropic community of the need for local journalism to be supported. It laid that groundwork.”

“We and others in the philanthropic community put on our fundraising hats, and called around, along with the capable fundraising team at Chicago Public Media,” Palfrey said. Additional Chicago-based philanthropies came on board, including the Pritzker Traubert Foundation, the Builders Initiative, the Joyce Foundation, the Walter and Karla Goldschmidt Foundation, the Chicago Community Trust and the Mansueto Foundation, along with Knight and several individual donors including Michael Sacks, Robin Steans and Leonard Gail, and an anonymous donor. Fundraising is ongoing. 

According to a WBEZ press release, initial funding “will be directed toward investments in the Chicago Sun-Times to deepen and broaden its journalism, maintain the print newspaper, invest in a digital transformation, and support collaborations.” The merger will reportedly include 50 to 60 newsroom hires, an early indication that this is the opposite pathway of the extractive, divestment-centric Alden model. 

Palfrey believes that the culture of philanthropy in Chicago — where open, ongoing collaboration between funders is the norm, he said — was part of why the merger succeeded.

“There are more generous individual and family foundations and community foundations and big philanthropies and corporations working together here than I think any other city in the country,” he said. “And that system worked. It’s an important statement and model for the country in this moment of crisis, and it holds up a version of Chicago that is a positive one.”

The nonprofit newspaper model gains steam

The WBEZ/Sun-Times merger is part of a fascinating, larger trend. Private ownership and reliance on advertisement income is still the dominant business model in U.S. newsrooms, but that appears to be changing. According to recent INN research, 33 local nonprofit news outlets launched in the period from 2018 through 2020, with an acceleration in 2020. This followed the 2016 decision of Philadelphia Inquirer owner Gerry Lenfest to donate the newspaper as a for-profit public benefit corporation to The Lenfest Institute, a nonprofit for which he provided seed funding. The Institute is now a major proponent of new models for local journalism. The Lenfest Institute’s CEO Jim Friedlich advised on the Sun-Times acquisition.

In 2019, the Salt Lake City Tribune was the first major metropolitan paper to become a 501 (c)(3) nonprofit thanks to a civic-minded former owner (Paul Huntsman) and a long list of donors. In 2022, Stewart Bainum donated $50 million to launch the Baltimore Banner, a full-service, nonprofit digital newspaper. (This was after his unsuccessful attempt to buy Tribune Publishing.) All told, these conversions and launches reflect an ongoing search for a model, or a series of models, that can sustainably support local news.

Ibargüen said that Knight’s support for the Sun-Times merger is part of the foundation’s extensive local news program, which reinvented itself in 2007 with the Knight News Challenge and a focus on digital media. Knight is a big supporter of the NewsMatch campaign, a highly collaborative national program administered by INN, The Miami Foundation and The News Revenue Hub that has raised over $150 million since 2016 to “jumpstart emerging newsrooms and support independent media outlets.” Knight was also an early funder of ProPublica, the Texas Tribune and The Voice of San Diego, amid other innovative collaborations in nonprofit news.

“There has been a market failure, and that’s the kind of thing that should be an open invitation for philanthropy,” Ibargüen said. Local journalism in general is still searching for a reliable business model for the future, and one of the keys is adapting to digital-first formats, including by maintaining an evolving presence on popular social media platforms. “You can get scared by that,” he said. “Or you can say, OK, how do I make civic news important in that format? Neighborhood news interesting in that format? How do I tell people what they’re doing at the school board, how they’re taxing us? Somebody needs to figure out how to tell that story in a TikTok-y way.”

According to Brady, in the coming years, there will be more mergers, more tinkering with different ideas, more partnerships. “We’re kind of in the huddling for warmth phase of journalism right now,” he said.

The philanthropic community has stepped into the huddle, and community foundations have been increasingly pivotal. Report for America found that in 2020, 56 community foundations contributed to newsrooms, compared to just 25 in 2019. American Journalism Project (AJP) and Media Impact Funders have become major backers of local news, as well. In a recent conversation with IP’s Mike Scutari, AJP CEO Sarabeth Berman said the organization is partnering with community foundations to help them “craft business plans to incubate new nonprofit newsrooms.”

As nonprofit newsrooms proliferate, their for-profit siblings are adopting new fundraising models. Report for America (RFA) and the Local Media Association are leaders here. RFA places reporters in newsrooms across the country — splitting those placements evenly between nonprofit and for-profit newsrooms. Community involvement is baked into RFA’s process: It pays half of each reporter’s salary while deploying “sustainability coaches” to help newsrooms raise a quarter of the salary from the community. 

As Steve Waldman, RFA’s president, wrote in an Inside Philanthropy op-ed last year, “Here’s the thing: Adding philanthropy is the new business model for local news that we’ve been waiting for. And frankly, if executed properly, it could be a better model than the one we had before — for many types of local journalism should really be thought of as a public good.”

Synergies with public radio

Report for America embraces the idea that local communities are ready and able to help fund local reporting. This taps into why the WBEZ/Sun-Times merger is a breakthrough: The public radio partnership automatically brings a community-first fundraising model into the picture. And according to those involved, there’s no better radio station than the storied, respected WBEZ to spearhead what is pretty much a national first.

“The advertising business was great [for newspapers] when you had scale, when you were on 400,000 doorsteps every morning,” Brady said. “But we became so beholden to advertising that we pulled away from the audience a bit. Public media never made that mistake. They couldn’t, on a nonprofit model. They stayed connected to their listeners.” 

WBEZ and the Sun-Times have something important to offer one another, and if successful, the combined entity will be the “king of the Chicago market,” Brady said. WBEZ’s fundraising will benefit the Sun-Times via all the hallmarks of a community-driven model: pledge drives, giving campaigns, sponsorships and memberships. Meanwhile, public broadcasting needs to regain the “journalistic heft” it once had. “Fifteen years ago, WBEZ could rely on the Tribune, on Crains, on the Sun-Times, but now, they realize they need to pick up some of that responsibility themselves,” Brady said. Public media brings the business model, while newspapers bring added depth in local reporting. CPM can become a hub of sorts, Brady said, a digital entryway for accessing local news.

Moog pointed to the fact that public radio relies on multiple revenue streams. For WBEZ, this includes memberships (individuals supporting WBEZ for $160 a year), corporate sponsorships, and traditional philanthropic support. That model is primed for growth, partly because of public backlash against increased partisanship “and the belief that commercial media models are feeding that divide,” Moog said. “There is a high interest in nonpartisan, independent, fact-based journalism … a mission-driven approach not driven by clicks or subscription fees.”

An interesting benefit and potential challenge of the merger is that both entities will now have access to, and responsibility toward, the other’s audience. The Sun-Times has historically been considered a blue-collar newspaper that values local investigative reporting, more likely to run a sensationalist story than the staid Tribune. WBEZ, as a public broadcaster, touts a responsibility to report on underserved communities and connect diverse audiences. In joining together, the two will reportedly “share content from both newsrooms across more platforms,” while their newsrooms will “operate separately with their own editors and maintain their editorial independence.” 

Moog says he has been actively promoting the public media merger model across the country, including by attending “several meetings, gatherings of public radio leaders, as well as local journalism executives.” He says there is “strong interest” in many cities, and people are looking for a version of the model that fits. “Each situation is unique,” Moog said. “Do they launch their own digital-first news organization, like the Baltimore Banner? Or do you partner with a brand that has been around longer?” 

Local news and the democracy crisis 

There is emerging consensus that, since buying out vulture capitalists like Alden is extremely challenging, philanthropy must boldly invest in a range of other models. The stakes have never seemed higher to revitalize and reimagine local journalism.

“We have divorced the ways we inform ourselves from the physical, geographical structure of democracy,” Ibargüen said. “We vote based on geography, but we are informing ourselves divorced from geography. We are electing people we don’t know to do things we don’t understand.” Ibargüen said that funders increasingly appreciate journalism/media funding as another form of democracy funding — not to mention its role in supporting civic education on just about any issue. Along with the philanthropies already mentioned, a number of larger LLCs and foundations also fund local news (including Arnold Ventures, Emerson Collective and Ford Foundation), as well as corporations like Microsoft, Google and Meta. 

Palfrey said that philanthropy is often criticized for its “highly defined, siloed strategies,” and that the Sun-Times merger is an example of the innovation that can occur when funders collaborate and go outside their lane. “We are going to see more funders coming together like we have seen in Chicago,” he said.

But Palfrey also maintained that increased philanthropic involvement must be linked to a general civic rallying around local news. “I think individuals need to be thinking differently,” he said. “We are coming out of a time period where young people feel that information is free. And that is a dangerous approach. We need to see quality in journalism as something you pay for… everybody needs to step up here, because the old commercial model has broken down.”

Note: This article has been updated to correct a spelling error in the name of RFA President Steve Waldman.