Chicago Bullish on Local News Co-op

By: Mark Fitzgerald Few issues rankled Chicagoans more than the city's decision to lease its parking meters for 75 years to a private company that immediately jacked up rates and ended free parking on Sundays and holidays. So a newspaper report in early December that profits from the meters were going to a big German financial company ? and the investment arm of the Abu Dhabi government ? not surprisingly stoked civic anger.

What was surprising: The report wasn't published in the Chicago Tribune, the Chicago Sun-Times or any of the many suburban dailies. It appeared in The New York Times ? yet it wasn't written by a Times reporter.

The story was broken by Dan Mihalopoulos, who used to cover City Hall for the Trib but left to join the Chicago News Cooperative. The CNC was co-founded by James O'Shea, the former Tribune managing editor who was forced out as editor of the sibling Los Angeles Times in early 2008 when he refused to make another round of deep cuts in the newsroom.

These days, many downsized journalists have started or joined Web sites devoted to local coverage. Examples abound from MinnPost in the Twin Cities and the St. Louis Beacon to The Texas Tribune in Austin and Voice of San Diego. CNC isn't even the only example in Chicago, home to several such sites including Gapers Block, Beachwood Reporter and Chicago Current, the for-profit Web and print newspaper that Geoff Dougherty started as a successor to his non-profit Chi-Town Daily News.

But after barely two months of existence, the Chicago News Cooperative stands out for both journalistic and business reasons.

For one thing, it quickly found a steady, prestigious ? and paying ? client for its work: the New York Times. Every Friday and Sunday, the Gray Lady sets aside two pages in papers circulated in the Chicago area for CNC stories. But the Times is doing more than running CNC material. The paper is furiously promoting the arrangement in Chicago with sticky ads on front pages, Web ads in Chicago-oriented sites and a TV spot.

CNC is also that rare start-up that actually managed to attract working journalists from what they surely once imagined would be their dream job.

David Greising, for instance, was a star business columnist for the Tribune who was more likely to be offered ? again ? the position of business editor than shown the door in the next round of layoffs. "But as I saw what was happening about the time that [Sam] Zell came in, I decided I needed to look at what alternatives there might be," he says.

One of those alternatives turned out to be the news organization that came upon O'Shea like an epiphany very late one night at Cambridge, Mass., where he was a Shorenstein Fellow at Harvard and beginning work on a book on the Times Mirror acquisition that arguably sent Tribune on the path to filing for bankruptcy reorganization in December 2008.

"It was 3 a.m., and I suddenly woke up and thought, a co-op model, like an agricultural co-op," O'Shea says, though he might also have cited a famous cooperative blocks away: the Harvard Co-op bookstore. In a classic cooperative, the enterprise is owned and controlled equally by the people who work in it.

Once O'Shea hit upon the co-op model, events followed quickly ? even frenetically, in O'Shea's retelling. Urged on by former Federal Communications Commission Chairman Newton Minow (famous for his 1961 speech on the "vast wasteland" of television) and by book publisher Peter Osnos, O'Shea quickly drew up a budget, successfully sought a $500,000 expedited grant from the John D. and Catherine T. MacArthur Foundation, and fashioned CNC as an extension of the Chicago public television station WTTW, allowing it to get charitable funding as a 501(c)(3) tax-exempt organization.

In 2010, CNC is likely to become one of the first news organizations to do business as a so-called L3C, a low-profit limited liability company. Some in the industry, including the Newspaper Guild, believe L3C status, which positions a company as providing a social good through education. More important, an L3C allows a news organization to be a hybrid of for-profit and non-profit.

"The goal is for this thing to make it self-sustaining in five years," says O'Shea. Donor fatigue, he warns, is inevitable, as several flamed-out online local news sites that tried to survive on donations or "tip jars" for individual stories have shown in the past year.

If CNC can get 30,000 to 40,000 subscribers paying $2 a month, it figures it can increase its staff ? now six full-timers and seven regular freelancers ? to 25 to 30 and begin more elaborate projects with WTTW and other electronic media.

O'Shea rejected going for-profit right away, although some private equity money did approach CNC. "My view is, it's hard enough to do non-profit, without there being these guys banging on us," he says with a laugh.

Much of the workings of the business operations of CNC ? for now, soliciting funds, forging partnerships, writing grant proposals ? falls to Greising, who for the first time is using the acumen he developed as a business journalist in an actual start-up. Greising says he always wanted to be a writer in his newspaper career, but in contemplating leaving the Tribune, "I didn't want to just transfer the column to the Internet. In this role, I'm really helping to build the business."

Greising has been so busy with the funding side of CNC that three weeks into its contract with the Times, he had written only one short squib. But journalism is at the heart of what CNC does, he and O'Shea emphasize. CNC is not distracted by chasing breaking news and can do the stories the city's dailies are missing, they say.

"The Tribune and [Chicago] Sun-Times have cut back so much, they've made our job easier," says O'Shea. CNC operates from a Chicago Loop low-rise it shares with such neighbors as the Chicago Opera Theatre and the Council for a Parliament of the World's Religion. Like an old-fashioned print editor, O'Shea chases his staff out of there: "I tell them get out of downtown and the Loop, and get out in the neighborhoods, and tell those stories."