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How PPP loans saved the Minnesota newspaper business — for now

It’s not clear how many papers in Minnesota applied for or received PPP loans, though the Pew Research Center reported nearly 2,800 newspaper companies nationally received loans during the first round of stimulus payments. 

The Star Tribune was one of a number of media companies in Minnesota that received PPP loans to counter pandemic-related advertising revenue losses.
The Star Tribune was one of a number of media companies in Minnesota that received PPP loans to counter pandemic-related advertising revenue losses.
MinnPost photo by Corey Anderson

It certainly qualified as a Friday news dump. Just before 6 p.m. on March 12, the Star Tribune posted a story on its website acknowledging it received a $10 million loan from the Paycheck Protection Program to counter pandemic-related advertising revenue losses. As if we needed any more evidence of the ongoing troubles facing the news industry.  

The story was easy to miss given the other headlines of the day — the $27 million settlement from the city of Minneapolis to the family of George Floyd, and jury selection in the Derek Chauvin murder trial. It ran in print the next morning on page B5 in the combined Minnesota/Business section.

The $10 million loan is the maximum allowed under the second round of PPP, part of the nearly $900 billion relief package passed by Congress and signed by then-President Trump in December. That bill set aside $284 billion for the forgivable small business loans and expanded eligibility to thousands of newspapers, television and radio stations shut out in the first PPP rollout.

It’s not clear how many papers in Minnesota applied for or received PPP loans. The Pew Research Center reported nearly 2,800 newspaper companies nationally received loans last year under the CARES Act, the first federal coronavirus relief bill passed in March 2020. MinnPost received $250,700 in the first round of PPP loans. 

In that first round of loans, individual news outlets owned by large media companies and chains didn’t qualify. A provision introduced by Sen. Maria Cantwell (D-Wash) and supported by, among others, Minnesota Sen. Amy Klobuchar — the daughter of former Strib and MinnPost columnist Jim Klobuchar — addressed that. Eligibility in the December bill expanded to more than 2,000 newspapers and 3,300 TV and radio stations.

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In an email to MinnPost, Star Tribune Publisher and CEO Mike Klingensmith said the paper wasn’t eligible for a first-round loan because it was considered an affiliate of Taylor Corp., owner Glen Taylor’s business empire. The Cantwell provision allowed the Strib to apply. The loan will be forgiven as long as the Strib spends at least 60 percent on payroll-related costs.

Star Tribune Publisher Michael J. Klingensmith
Star Tribune Publisher Michael J. Klingensmith
Klingensmith wouldn’t specify how much ad revenue the Strib is down since the pandemic began, though last April he told MinnPost he anticipated a 40 percent dropoff through June 2020. “I can report that we have had a very sizable advertising loss that was only minimally offset by increased subscriber revenue,” Klingensmith wrote.

Last year Guild employees agreed to eight unpaid furlough days and delayed raises while upper management took 12.5 percent pay cuts. Today, signs of the squeeze are still evident if you know where to look. The Sunday paper regained some, but not all, of its preprint advertising. Certain weekly standalone sections, like Taste on Thursdays and Opinion Exchange on Sundays, remain merged with other sections. The paper continues to advertise vacant staff positions but has been slow to fill them. 

If the big-city Strib is feeling the pinch, imagine how bad things are among Minnesota’s community and weekly newspapers. 

Adams Publishing Group (APG), a national community newspaper company, owns ECM Publishers, which operates 27 papers in greater Minnesota. APG received a first-round PPP loan of between $5 million and $10 million, preventing mass layoffs across its 127 newspaper properties. Still, APG cut ECM employees’ hours from 40 to 30 per week and jettisoned almost all freelancers and part-timers. ECM Director of News Keith Anderson said full-timers recently had five hours per week restored, but most freelancers have not returned.

Closer to the Twin Cities, PPP loans of $98,000 (first round) and $84,000 (second) kept The Villager of Highland Park in business and prevented layoffs. “It’s helped cover some significant costs,” said publisher Michael Mischke. “I still don’t know what the future holds, but it was a lifeline for me.”

The 45,000-circulation Villager lost 20 percent of its advertising revenue when the pandemic hit, Mischke said, and it still hasn’t come back. Even as restaurants and entertainment venues slowly reopen, Mischke said most lack the cash reserves to advertise. That doesn’t help. To reduce costs, in May the Villager will move from its four-decade home on Snelling Avenue to a smaller space in the Mac-Groveland neighborhood. Mischke said he’s been considering this for a while, but the pandemic sped up the timetable.

Tesha M. Christensen, owner and editor of the Longfellow Nokomis Messenger and Midway Como Frogtown Monitor, said a small first-round PPP loan helped her through a rough patch in May. “So many of our advertisers hadn’t paid for their ads, and our cash flow was very low,” she wrote in an email. “The PPP loan came just in time.” She plans to apply for another. 

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Things are even tighter in outstate Minnesota. Reed Anfinson owns and publishes three community newspapers west of Willmar: The Swift County Monitor-News in Benson, The Grant County Herald in Elbow Lake and The Stevens County Times in Morris. All are about 2,000 to 2,500 circulation, and Anfinson said all turned modest profits until the pandemic hit.

That was a feat in itself. Swift County alone has lost more than one-third of its population since 1950, and internet revenue there is almost negligible. In rural America, print is everything.

“We weren’t flush,” said Anfinson, who also writes news, takes photos and lays out pages for the Monitor-News. “Our staff is down. I certainly could use another writer. I just don’t have the funds to hire another writer. It’s a struggle for all community newspapers trying to make those ends meet.”

Two rounds of PPP brought the three papers roughly $240,000 in loans, every cent badly needed. Advertising has fallen off 20 to 30 percent. The pandemic eliminated things that routinely prompted robust ad sales, like major community events, and high school sports teams going to state tournaments. That money is gone, and there’s no making it back.

“With the Elbow Lake and Morris newspapers, half the months were loss months,” Anfinson said. “If it weren’t for the Paycheck Protection Program, we’d been underwater in both those for the year.

“The Benson paper, because it has no debt, was able to weather it a little better. But we’re still down substantially here. If not for the Paycheck Protection Program, we’d be in trouble here as well. The margins would have been thin.”

They still are. Everywhere.

Correction: This story has been updated to reflect that the Star Tribune is an affiliate of Taylor Corp., and not under the latter’s corporate umbrella. The story has also been updated to say ECM operates a total of 27 newspapers in Minnesota.