NPR Documents How Hedge Fund Newspaper Ownership Creates News Deserts and Undermines Democracy - Over 2,500 Newspapers Closed Since 2005

On October 18, 2021, NPR published comprehensive reporting documenting how hedge fund ownership of local newspapers creates “news deserts” that cause measurable harm to democratic governance and civic life. The investigation revealed that since 2005, 2,500 newspapers have closed in the United States—more than 120 newspapers on average closing each year—with hedge fund ownership accelerating the collapse through systematic newsroom gutting designed to extract short-term profits while destroying journalism’s civic function. The reporting provided empirical evidence that communities losing local news experience increased corruption, reduced government accountability, higher municipal borrowing costs, decreased voter turnout, and less informed civic participation.

The NPR investigation focused particularly on hedge fund Alden Global Capital’s devastating business model but documented industry-wide patterns. Research showed that when hedge funds acquire newspapers, they systematically slash newsroom staff, sell real estate assets, increase subscription prices, outsource operations, and cut coverage of local government, education, and community issues—all to maximize profit margins regardless of civic consequences. A 2018 University of North Carolina study found that “Alden-owned newspapers stand out for cutting their staff at twice the rate of their competitors,” demonstrating that even in an industry facing economic challenges, hedge fund ownership produces uniquely destructive outcomes.

The democratic consequences of newspaper closures and newsroom gutting are extensively documented and severe. “There’s a huge body of research that shows when a local newspaper either disappears or is significantly diminished, there are downstream effects on the communities they serve,” the NPR report explained. Newspapers dramatically shrink their coverage of local government, education, and schools—the exact institutions that most directly affect residents’ daily lives. Without journalists attending city council meetings, school board sessions, zoning hearings, and county commission deliberations, officials operate without scrutiny and constituents lack information needed to hold them accountable.

The measurable impacts include: increased government corruption as officials realize no one is watching; higher borrowing costs for municipal bonds because investors lack reliable information about local government finances; reduced voter turnout in local elections as citizens lack information about candidates and issues; and decreased civic engagement as communities lose the “binding agent” that local newspapers provide by creating shared knowledge and common civic identity. Communities without local news become fragmented, less informed, and more vulnerable to misinformation, manipulation, and official misconduct.

The scale of newspaper collapse represents a fundamental transformation of America’s information infrastructure. More than half of daily newspapers are now owned or controlled by hedge funds, according to documentary filmmaker Rick Goldsmith. This ownership structure creates a fatal conflict: hedge funds are “interested solely in making money off of the newspapers and not in serving the community and doing good journalism.” When newspapers are treated as purely financial assets to be strip-mined for profit rather than civic institutions serving democratic functions, journalism inevitably loses.

The NPR investigation documented how hedge fund ownership creates “ghost papers”—publications that technically still exist but no longer perform meaningful journalism. These ghost papers maintain recognizable mastheads and skeletal staffs but lack the resources to cover local government, conduct investigations, or serve as community watchdogs. The Baltimore Sun, for example, declined from 400 journalists two decades ago to just 80 by the time Alden Global Capital acquired Tribune Publishing in 2021—an 80% reduction in newsroom capacity that made comprehensive local coverage impossible.

News deserts—communities without access to reliable local news—now cover large swaths of America, particularly in rural areas and economically struggling communities. The closure of 2,500 newspapers since 2005 means that millions of Americans lack any professional journalism covering their local government, schools, police, courts, or civic institutions. These communities become “news deserts” where residents cannot access basic information about local decision-making, official conduct, or community issues—leaving them vulnerable to corruption, misinformation, and political manipulation.

The hedge fund business model actively accelerates news desert creation. Rather than attempting to adapt newspapers to changing economic conditions while maintaining civic functions, hedge funds like Alden Global Capital deliberately gut newsrooms to extract maximum profit before newspapers collapse entirely. This “strip for parts” approach, documented in the 2024 film “Stripped for Parts: American Journalism on the Brink,” treats journalism infrastructure as a temporary resource to be exploited and discarded rather than a civic necessity requiring protection and adaptation.

The failure of market forces, regulation, or civic intervention to prevent news desert proliferation represents a crisis of democratic infrastructure. Local journalism functions as essential civic infrastructure—like roads, water systems, or electrical grids—that enables democratic governance by providing citizens with information needed to participate effectively. The collapse of this infrastructure, accelerated by predatory hedge fund ownership, leaves communities unable to perform basic democratic functions: monitoring government, holding officials accountable, making informed decisions, or maintaining civic cohesion.

The news desert crisis demonstrates that treating journalism as a purely commercial enterprise—rather than recognizing its essential civic function—inevitably leads to market failure. Hedge funds rationally maximize short-term profits by destroying newsrooms, because the civic benefits of journalism accrue to communities rather than shareholders. Without regulatory intervention, public investment, or alternative ownership models that prioritize civic mission over profit maximization, the collapse of local journalism will continue until vast swaths of America become news deserts where democracy cannot function effectively.

The NPR investigation provided empirical documentation that media consolidation, hedge fund ownership, and news desert creation are not isolated business stories but fundamental threats to democratic governance. Communities without local journalism cannot hold power accountable, cannot make informed decisions, and cannot maintain the civic knowledge and engagement that democracy requires. The closure of 2,500 newspapers since 2005 represents the systematic dismantling of civic infrastructure essential to democratic function—a crisis that demands treating local journalism as public infrastructure requiring protection rather than commercial products subject to predatory financial engineering.