SNA (New York) — SoftBank Group, Japan’s second-largest public company, has quietly acquired a massive stake in US local media over the past few years. It is part of the financialization movement which critics argue is hollowing out local news media and eroding the nation’s democracy.

SoftBank took over Gannett, the largest newspaper publisher in the United States, in 2019. Its control is exercised through a labyrinthine chain of corporations headed by New York-based Fortress Investment Group, which, in turn, is owned by the Japanese telecommunications conglomerate.

This US news media empire, keeping the familiar Gannett name, currently controls more than 220 daily newspapers across the United States, and includes the giant USA Today as well.

SoftBank’s investment in US newspapers may seem odd in light of the ongoing decline of the industry. A quarter of US local newspapers have shut down since 2005, with an average of two closing each week. It also seems out of step with SoftBank’s own focus on telecoms, e-commerce, and finance companies.

However, making a success of US print news does not seem to be SoftBank’s true objective. Critics contend that what SoftBank’s executives really have in mind is to financialize the ailing publications as quickly as possible, squeeze out some profits, and then dump these assets to a new buyer.

The Hightower Lowdown, a monthly newsletter produced by former Texas state official and progressive activist James Allen Hightower, recently contended that SoftBank is “strictly interested in diverting the papers’ income and assets into jet streams of cash that fly from our local economies straight into their private wealth funds.”

Accusations about the plundering of the dwindling resources of local news media outlets are not limited to those directed at SoftBank, as several other major corporations–such as Alden Global Capital and Chatham Asset Management–have faced similar charges. Specifically, critics argue that these firms aim to extract profit for their shareholders without regard to the long-term health of the news media industry or its vital democratic responsibilities.

As a by-product of such financialization, there are many cases in which subscription costs have been substantially boosted at the same time as reporters and other staff are cut from the payroll. Fillings with the Securities and Exchange Commission (SEC) often describe these measures as “ongoing cost reduction programs.”

In the case of SoftBank-controlled Gannett, it recently sold off a printing plant in Phoenix, Arizona, which was largely responsible for its print news in the Southwest and in California. This is only one of several prominent examples in recent years of the corporation offloading its major assets in order to boost profitability.

Another by-product of this trend is that local media ownership has increasingly become concentrated in the hands of only a few major corporations with little or no connection to the communities which they claim to serve. In order words, there is now very little that is “local” in local news services. This is often reflected in the fact that the very same content–sometimes even the same character fonts–are being used for widely-separated communities with very different characteristics.

In Hightower’s words, this trend has destroyed local news as a “community’s main repository of shared information, its broadest public forum, and its principal means of exposing corporate and governmental corruption.”

He also contends that this process has rendered US local media more susceptible to “partisan hackery in the guise of legitimate reporting.”

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