Where is the enemy of the people when you need him?
Sept 16, 2019 11:43:11 GMT -5
Dub and coachdoc like this
Post by Chesapeake on Sept 16, 2019 11:43:11 GMT -5
The Hidden Costs of Losing Your City's Newspaper
KRISTON CAPPS MAY 30, 2018
www.citylab.com/equity/2018/05/study-when-local-newspaper-close-city-bond-finances-suffer/561422/
Without watchdogs, government costs go up,
according to new research.
When local newspapers shut their doors, communities lose out. People and their stories can’t find coverage. Politicos take liberties when it’s nobody’s job to hold them accountable. What the public doesn’t know winds up hurting them. The city feels poorer, politically and culturally.
According to a new working paper, local news deserts lose out financially, too. Cities where newspapers closed up shop saw increases in government costs as a result of the lack of scrutiny over local deals, say researchers who tracked the decline of local news outlets between 1996 and 2015.
Disruptions in local news coverage are soon followed by higher long-term borrowing costs for cities. Costs for bonds can rise as much as 11 basis points after the closure of a local newspaper—a finding that can’t be attributed to other underlying economic conditions, the authors say. Those civic watchdogs make a difference to the bottom line.
Paul Gao, an associate professor of finance at the University of Notre Dame and one of the paper’s authors, was inspired to look into the issue after an episode of “Last Week Tonight with John Oliver” about the news industry. “He was focused on two things: consolidation of national news media and closure of local news media. John Oliver’s show really gave us the prompt for the phenomenon, and we started thinking about it from an economist’s point of view.”
The survey covers some 1,596 English-language newspapers serving 1,266 counties in the U.S. over the study period. This paper excludes counties without any daily local newspaper (1,863 in all). Across the relevant counties, the study finds 296 newspaper “exits”—which refers to a local paper closing down or being absorbed by another outlet, or publishing fewer than four days a week, or merging to form a new newspaper. Depressingly, the paper finds that news shrinkage is a nationwide phenomenon.
Discounting the media-rich counties, which could absorb the hit of a lost daily—as well as the places that added a newspaper (they exist!)—a total of 204 counties saw a decrease in local coverage to two or fewer daily newspapers. By examining local municipal bond data for these counties, the researchers were able to suss out a relationship between local newspaper closures and public finance outcomes. In the three years following a newspaper closure, the costs for municipal bonds and revenue bonds increased for these cities. That’s likely the result of losing the investigative services those ink-stained wretches once provided.
“You can actually see the financial consequences that have to be borne by local citizens as a result of newspaper closures.”“There are already papers that show that there are political consequences, or political outcomes, when local newspapers close,” says co-author Chang Lee, assistant professor of finance at the University of Illinois at Chicago. “But that’s not really a direct impact on local residents. We wanted to show that, if you look at the municipal bond market, you can actually see the financial consequences that have to be borne by local citizens as a result of newspaper closures.”
Think of a municipal bond’s offering yield as the interest rate that municipalities pay for borrowing money in the bond market, Gao says. High offering yields mean that a city or county has to promise to pay more in coupons (semiannual payments to bondholders) or more principal for whatever the city is borrowing. Secondary yields, on the other hand, are the interest rates for bonds as they trade in the market: more of a proxy or indicated rate of a city’s financial wellbeing.
Without investigative daily reporters around to call bullshit on city hall, three years after a newspaper closes, that city or county’s municipal bond offering yields increased on average by 5.5 basis points, while bond yields in the secondary market increased by 6.4 basis points—statistically significant effects.
KRISTON CAPPS MAY 30, 2018
www.citylab.com/equity/2018/05/study-when-local-newspaper-close-city-bond-finances-suffer/561422/
Without watchdogs, government costs go up,
according to new research.
When local newspapers shut their doors, communities lose out. People and their stories can’t find coverage. Politicos take liberties when it’s nobody’s job to hold them accountable. What the public doesn’t know winds up hurting them. The city feels poorer, politically and culturally.
According to a new working paper, local news deserts lose out financially, too. Cities where newspapers closed up shop saw increases in government costs as a result of the lack of scrutiny over local deals, say researchers who tracked the decline of local news outlets between 1996 and 2015.
Disruptions in local news coverage are soon followed by higher long-term borrowing costs for cities. Costs for bonds can rise as much as 11 basis points after the closure of a local newspaper—a finding that can’t be attributed to other underlying economic conditions, the authors say. Those civic watchdogs make a difference to the bottom line.
Paul Gao, an associate professor of finance at the University of Notre Dame and one of the paper’s authors, was inspired to look into the issue after an episode of “Last Week Tonight with John Oliver” about the news industry. “He was focused on two things: consolidation of national news media and closure of local news media. John Oliver’s show really gave us the prompt for the phenomenon, and we started thinking about it from an economist’s point of view.”
The survey covers some 1,596 English-language newspapers serving 1,266 counties in the U.S. over the study period. This paper excludes counties without any daily local newspaper (1,863 in all). Across the relevant counties, the study finds 296 newspaper “exits”—which refers to a local paper closing down or being absorbed by another outlet, or publishing fewer than four days a week, or merging to form a new newspaper. Depressingly, the paper finds that news shrinkage is a nationwide phenomenon.
Discounting the media-rich counties, which could absorb the hit of a lost daily—as well as the places that added a newspaper (they exist!)—a total of 204 counties saw a decrease in local coverage to two or fewer daily newspapers. By examining local municipal bond data for these counties, the researchers were able to suss out a relationship between local newspaper closures and public finance outcomes. In the three years following a newspaper closure, the costs for municipal bonds and revenue bonds increased for these cities. That’s likely the result of losing the investigative services those ink-stained wretches once provided.
“You can actually see the financial consequences that have to be borne by local citizens as a result of newspaper closures.”“There are already papers that show that there are political consequences, or political outcomes, when local newspapers close,” says co-author Chang Lee, assistant professor of finance at the University of Illinois at Chicago. “But that’s not really a direct impact on local residents. We wanted to show that, if you look at the municipal bond market, you can actually see the financial consequences that have to be borne by local citizens as a result of newspaper closures.”
Think of a municipal bond’s offering yield as the interest rate that municipalities pay for borrowing money in the bond market, Gao says. High offering yields mean that a city or county has to promise to pay more in coupons (semiannual payments to bondholders) or more principal for whatever the city is borrowing. Secondary yields, on the other hand, are the interest rates for bonds as they trade in the market: more of a proxy or indicated rate of a city’s financial wellbeing.
Without investigative daily reporters around to call bullshit on city hall, three years after a newspaper closes, that city or county’s municipal bond offering yields increased on average by 5.5 basis points, while bond yields in the secondary market increased by 6.4 basis points—statistically significant effects.
