UPDATED: City of Winston-Salem to Loan The Winston-Salem Chronicle $100K?

 

The following is a letter that CCD editor Chad Nance sent to the Mayor’s office, and to every Winston-Salem City Council person individually.  At issue is the passage through the Finance Committee last week (without comment or testimony) of tentative approval for a loan of $100,000.00 to the Winston-Salem Chronicle.  No officials have responded to the letter at this time.  On Tuesday night January 21st at 7pm during the regular City Council meeting Carissa Joines, the Managing Editor of CCD, will read a statement into the record reiterating our points and questions as written below.  Considering that $100,000 is 1/3 of the entire Economic Development Loan Fund/Technology Fund, it might actually warrant a public discussion with openness and transparency.

camelcitydispatch.com

camelcitydispatch.com

Ladies and Gentlemen,

The purpose of this letter is to discuss the unanimous passage out of the Finance Committee and the subsequent proposal to the full Council of a loan request by Ernie Pitt of the Winston-Salem Chronicle for $100,000. As the editor-in-chief of the Camel City Dispatch, one of Winston-Salem’s news outlets, I see more questions in this deal than I do answers. As a community based news outlet we know what the people on the street are thinking and what kind of questions they will be asking if this loan is pushed through with no public input and no questions answered.

This is a serious amount of money. The initial question raised is why would an established outlet such as The Chronicle seek out a loan from the City over one from a bank or a capital infusion from an investor? Was such a loan sought, but deemed too risky by traditional lenders? Were private investors not an option? Perhaps we should not be discussing this transaction as a loan and call it what it is… a government bail-out of a local business.

Considering that The Chronicle is a media outlet, the problems in this particular scenario go beyond the economic into the ethical. Winston-Salem/Forsyth County has four print/online news outlets as well as one television station with a local news operation permanently located in town and another with a local desk. For a city the size of ours we are blessed with local news coverage in a time when local coverage is a novelty to most communities. If one of us goes under there will be no sudden drop off in information available to the public. We may have different styles, approaches, and attitudes, but does that mean that any one of us is more worthy than the others to exist?

That, in itself, begs the question of why our City government would consider jumping into the news business and tie themselves to a particular newspaper. There are the obvious ethical questions of having the very government that journalists are Constitutionally charged to watch having their hands on the chain. The fact that The Chronicle is beholden to the City of Winston-Salem will remove any credibility they ever had as an honest broker of news and information. It raises the questions about someone with a media platform like Mr. Pitt’s- a platform that would have the ability to do serious damage to political careers with a swipe of the pen- asking those very politicians for a hand out.

The fact that The Chronicle cannot be counted on for unbiased city reporting while the city holds their pink slip is not the only problem. What kind of political calculations would have to be made if it was up to the City of Winston-Salem to pull the plug on The Chronicle should it fail? Would the city own some more empty commercial real estate or would they own a newspaper? These questions need and deserve to be answered.

What use does The Chronicle say it will be doing with the $100,000 cash infusion? Are they going to hire more reporters, perhaps an investigative reporter who could dig deeply and contribute to real equity in Winston-Salem? No. They are going to hire sales people in an attempt to increase revenue. The three positions they propose to create at around thirty thousand dollars a year are jobs that are normally commission gigs in the publishing business. The funding appears to be a one-time loan request to hire these sales people for one year, and yet the loan does not have to be paid back for 10 years. This leaves the City without access to $100k for 10 years, and only creates jobs for 3 people for one year? In today’s media business reality where new outlets rise and fall weekly, ten years is a life-time. Will Mr. Pitt still be running The Chronicle in ten years? Will it even exist?

There is a claim that they wish to use some of the tax-funded loan money to take their “For Seniors Only” tabloid and turn it into a glossy. This sounds great, but does the City have a goal to create a publication for seniors? If so, shouldn’t a direct action such as that to be put out to an open bid? “For Seniors Only“ is currently a Chronicle publication in coordination with the Forsyth County Aging Services Planning Committee’s Senior Power Think Tank. The Committee entered into some type of agreement with The Chronicle for publication, a matter perhaps better discussed with the County since it is their Committee. However, the content for the publication is supported directly by the County’s Committee, and revenue from the publication appears to go solely to The Chronicle. With several locally owned publishing outfits (two of which are minority owned) shouldn’t there be opportunity for free and fair competition for this Seniors Publication? Seniors don’t just read print papers however- as an online news site we have 28% of our 12,000+ weekly readers in the 55+ age category.

Should this loan be approved, it will look like the City of Winston-Salem is playing favorites in our local media market. Are you going to bail out the Winston-Salem Journal or CCD if we are about to go under? How about Yes! Weekly? What if WXII or Fox 8 come to you for help in saving their local news divisions? Who are you going to choose? Any choice you make to support one of these outlets will look partisan. Everyone knows that the Winston-Salem Chronicle has a heavy bias toward the Democratic Party. Would that mean that if the Winston-Salem Journal, with their Conservative lean, came to you for help that you would have to pony up for fear of being accused of playing partisan favorites?

Camel City Dispatch will make it on our own merits and our own labors or we will not make it at all. We only ask to be allowed to play on an even playing field free from handicapping and subsidizing of the competition. My family has been scraping by in Forsyth County since the turn of the 20th Century and we will continue to do so, without a government bailout, into the 21st.

The optics on this deal are lousy. That is just the truth. We are not demanding or asking for an outright refusal to this request, but we feel that $100,000 is a large enough amount of money to warrant public discussion and hearing- especially considering the unique nature of the government and the media. It also warrants real answers to the questions above before someone cuts a check for a business bailout of any kind.

We are sending this letter to all of the members of City Council, the Mayor’s office, and to City Manager Lee Garrity. If there are answers for the questions above that are readily available or there is information that we have not been privy to which would assuage any of the concerns stated, we would be glad to consider any response. In the event that we do not feel that there will be a complete open process and public discussion of this loan before it would be awarded, then our intention is to read this letter into the record at the City Council meeting on Tuesday night, January 21st 2014 as well as publish the letter on CCD in order to foster more public discussion.

Thank you very much for your time and attention,

Chad Nance
editor-in-chief

 

The available public documents on this deal are as follows:

Chronicle Loan Request

City Council Action Request Form

Resolution Authorizing Loan

 

UPDATE: Winston-Salem City Council unanimously votes to loan the W-S Chronicle $100,000. Details tomorrow.

 

  • Truly local business owner

    Your response to the incentives offered to a competitor of your organization is contrary to your positive story regarding Mast General Store receiving subsidies to move downtown (CCD January 7, 2013). Great Outdoor Provision Company, Ski and Tennis, First Flakes and Village Outdoor did not receive subsidies for their business and will likely be adversely affected by the subsidies offered Mast. The government should not be in the business of loaning other people’s money.

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  • Debbie

    It’s a shame that these comments are about the Journal and silly right/left politics rather than what has happened here. $100,000?! Really?!? On a one page letter request? To a guy that has shown he has no problem screwing over the taxpayers? As head of the housing department he had his partner buy land (which he had owned previously) at foreclosure auction and then turn around and sell it to the Housing subsidiary and then take 86k of the “profit” for himself. If this land was truly needed for the housing department, why did he not have the city bid at the auction thus saving the taxpayers $130,000. Wonder who the “Sales Manager” is going to be that gets paid out of this $100,000.

  • Seriously Confused

    Are the links you provided the only documentation generated/required for the loan? If so then I have to say that if the city loses its $100k then it gets what it deserves. Where are the financials and projections to show how revenue will be generated to repay the loan? Who loans money based on a 1-page letter and a 1 1/2 page staff report? If this is really all it took then the city is worse than a mortgage lender circa 2006.

  • 4thbg

    I could really improve my revenue/sales if I had an assistant to handle all my paperwork. Funny, it never occurred to me that I could get the city to cover it. Wow, silly me.

  • Pat Van Briggle Kleinmaier

    I believe your news organization also supported all these people for re-election too.

    • admin

      CCD does not endorse candidates for public office. We do analysis on races based on “on the ground” factors such as organization, poll numbers, etc. in order to “call” a race just like analysis of ball games, but we do not endorse.

  • Karen

    Do you seriously think that the WS Journal leans Conservative?! They are not even close to being Conservative. The City shouldn’t be loaning this money and am very glad that you agree.

    • Aimee

      The W-S Journal has only endorsed one Democratic candidate for President since 1964. That was Barack Obama in 2012. They also endorsed Pat McCrory for governor that year. I would say it’s a conservative paper.

      • Bob.

        In 2013 they endorsed, as usual, they endorsed 6 of 7 Democrat Candidates. In the one head to head “R” vs. “D” race they endorsed the “R” but put a side note up that the “D” was terrific and they liked him but believed the other was slightly better. So, by your standard, they are a liberal paper.