Nota bene: Gothamist's resurrection
|Felix Salmon||Feb 24, 2018|
The fantastic media news of the day is that Gothamist has been bought by a consortium of radio stations led by New York’s WNYC.
While the media angle has been well told elsewhere, I’m particularly interested in the philanthropic angle, which is being downplayed in large part because the two philanthropists behind the deal have both asked for anonymity.
As far as I can tell, the deal has been structured with lovely simplicity. Gothamist was an independent business for 14 years, from 2003 to 2017, and I’m pretty sure that in that time it never lost money. Its owners, Jake Dobkin and Jen Chung, ran the site very lean, didn’t take large dividends, and never accepted a penny of outside investment.
When they finally sold, it was to fickle billionaire Joe Ricketts, who was losing a substantial amount of money on his smaller competitor site, DNAInfo. Rolling the two into a single site made economic sense — but then Ricketts shut the whole thing down in a fit of pique when the sites unionized. On that day, his investment, in terms of aggregate DNAInfo losses as well as the purchase price of Gothamist, looked like a complete write-off.
But still: If Gothamist could be run as a sustainable non-money-losing proposition before it was acquired by Ricketts, it could be run that way afterwards, too. And so Ricketts, along with Dobkin, started talking to potential buyers.
For WNYC, along with WAMU in Washington DC and KPCC in Southern California, this was a fantastic opportunity to acquire a much-loved brand and to integrate it with the kind of local reporting they’ve long done a lot of without much internet visibility. Given Dobkin’s proven ability to run the sites at a profit, the month-to-month costs of owning the Gothamist sites would be small and possibly even zero. A great site would be resuscitated, digital local journalism would live again, and the radio stations would see their online footprint expand dramatically.
There was only one stumbling block: Ricketts wanted to be paid for the intellectual property he had sunk so much money into.
Enter the anonymous philanthropists, who wrote the checks necessary to get the deal done.
One of the problems with journalistic philanthropy is that it tends to be an ongoing commitment: An outfit like ProPublica, say, needs to raise a large amount of money year in and year out. And while there’s no shortage of mission-driven outfits which are looking for up-front funding in the hope of being profitable in year three, none of them have much of a track record, which makes them pretty risky bets.
In this case, however, the radio stations could assure the philanthropists that they weren’t going to ask for any money for operations. The donation would go straight to paying Ricketts for his valuable intellectual property, and then the sites could basically support themselves. And because the radio stations would pay Ricketts, the donors could give the money via the radio stations, making their gifts tax-deductible and fully in line with any kind of charitable-foundation guidelines.
It’s a perfect example of catalytic philanthropy. A one-off donation basically kicked the Gothamist electrons from a dormant energy level to one where they were active again and achieving a significant public good. Better yet, the mom-and-pop donors to WNYC and WAMU and KPCC don’t need to worry that their hard-earned donations have ended up going in any way to an evil right-wing billionaire, because they didn’t. All the money going to Ricketts came from just two philanthropists who knew exactly what they were doing.
Well done to both of them, and congratulations to Jake Dobkin, especially, for helping to architect what must have been a very fraught and complex deal. I can’t wait to go back to reading his site.