The Gutenberg Press (The Columbus Dispatch) Parent Company Makes Big Money From State Government
Teachers Union, Gas, Consumer Loans, and Taxpayer Money Fuel The Hedge Fund That Controls Central Ohio Opinion.. Who’s Their Daddy?
By John Corrigan
For one hundred and forty- four years, the editorial pages of the self- proclaimed Ohio’s Greatest Home Newspaper, The Columbus Dispatch, were the rock solid domain of Republicanism in Ohio journalism. The Journal and later Citizens Journal were considered the Democratic newspapers in the State Capital, but one thing was for sure, the ownership of The Dispatch was never in doubt, they disclosed their business interests for all to see.
The Wolfe Family owned the paper from 1905 through 2015. The Wolfe's were substantial backers of Central Ohio, and all things Columbus. They were unabashed advocates for Columbus civic virtue, commerce, and of course, editorially, The Republican Party.
With the Wolfe's, you knew what you got. They owned television and radio stations. They owned financial institutions, including the investment vehicle, The Ohio Company. The original Wolfe's owned shoe stores, a trade they learned while serving time in the Ohio Penitentiary. Some Central Ohio observers even think that The Dispatch’s zeal to have the State Penn torn down and turned into The Arena District was driven by latent shame of the Wolfe family towards the 1834-1984 prison that housed some of their relatives.
When the Wolfe Family sold The Dispatch in 2015, it was sold to a company known as Gatehouse Media. Gatehouse Media is a media conglomerate. Gatehouse has also purchased the Akron Beacon Journal. With corporations of this nature, its views are difficult to discern, but like most media conglomerates these days, revenues are down, and way down from advertising and subscriptions. The Internet age has made being a “media company” into a very difficult business model.
Advance Ohio, owner of Cleveland.Com, which used to be known exclusively as The Plain Dealer, is able to absorb the losses of the media business by having a robust family trust that funds the operating losses and strategically has shed its businesses of loss leaders. Advance believes in “journalism” and is determined to be in the “journalism” business.
On the other hand, The Dispatch is actually owned by a hedge fund, Fortress Investment Group. And not just any hedge fund, but a hedge fund that makes money from conducting business with Ohio state government. A lot of money.
Meet the State Teachers Retirement System, the nearly $80 billion retirement fund of school teachers and administrative staff in Ohio. For the last quarter, STRS reported that the fund grew at just over 6% over the prior fiscal quarter. At the same time, the Dow Jones Industrial Average increased 28.5% over 2016. Who is one of the portfolios that STRS invests in? None other than The Dispatch’s parent company, Fortress Investments.
Being heavily invested in STRS also naturally means that Fortress relies on public tax dollars and employee contributions as part of their investment portfolio. While most investment managers have to seek out wealthy individuals and help them to invest their funds, Fortress, The Dispatch’s real parent company, gets a lot of their’s from one source. You.
Does this represent any sort of conflict of interest in terms of public policy and a taxpayer funded parent company? The American Prospect opined on this topic recently. You betcha is the answer. From tax advantages of using the once vibrant and now hulking shells of American journalism, corporate entities like Fortress can write off newspaper losses and lower their tax bill.
The formula is by now obvious, they dismantle the journalistic side of the paper, outsource advertising and customer service, and decimate the staff. Ohio’s “Greatest Home Newspaper” becomes a multi-state affair, with employees all across the nation helping to keep it afloat. After they get rid of a good percentage of the staff and eliminate much of what readers wanted to know locally, they can achieve margins of 15% to 25%.
Is it possible that the newspaper can be advantageous to the corporate parent through its ability to advocate for policy changes at the local, state, and federal level? Of course it is possible.
How about STRS though? Since part of Fortress’ business model is reliant on managing part of the pension fund of Ohio school teachers, does this create a moral dilemma for The Dispatch? Let us examine.
Knowing what we know about the parent, would The Dispatch oppose any school levy that potentially puts more money in the coffers of the corporate parent through increased pension benefits for school employees? On that note, how about the process of the “employee pick- up” where taxpayers pay the teacher’s share of pension benefits, effectively a secret raise in teacher salary every year since they do not have to pay for their own pensions? In the private sector, nobody even knows the term, but it is a key part of the collective bargaining strategy of every public sector union. You won’t read much about it in The Gutenberg Press.
Would they publicly oppose initiatives or policy and or write articles critical of the Ohio Education Association or Ohio Federation of Teachers, both key labor unions, as well as AFL-CIO affiliates, that help appoint STRS Board Members. Board Members who appoint staff who hires investment managers? Like The Dispatch’s parent company, Fortress Investments?
For that matter, would it be good for business for The Dispatch to editorialize strongly against the Governor of Ohio, House Speaker or Senate Presidents? They have much to do with the investment funds at STRS through appointments. Same with the Ohio Public Employee Retirement System (OPERS), The Service Employees Retirement System (SERS), and the Police and Fire Pension systems. All controlled by state government and labor union appointees. The taxpayers go pretty much unrepresented on these panels.
This is the extensive portfolio of STRS from the last fiscal year, and also includes the various labor union and political appointees. Under “alternative investments” on page 57 of this STRS publication, shows the investment relationship.
No wonder they won't rock the teachers union boat. Would they ever support charter schools, knowing that those teachers are paid less, and ultimately provide less money for Fortress to invest in STRS? The Dispatch has published a constant rant of one sided anti ECOT articles for years. Case in point, from Michael Arace | Amid crooks, LeBron James is an inspiration in education:
LeBron James (1984- ) might not be Horace Mann, but, I would submit, he is no Bill Lager, either. Lager was the founder of ECOT — the Electronic Classroom of Tomorrow — and he took $200 million from our state coffers to fund his charter-school enterprise.
In theory, Lager’s idea was to catch the children who fell through the cracks of the public-education system. In practice, Lager’s scheme was to grease politicians to back him as he monetized public education. Lager’s ECOT shell game ultimately was raided and shut down, leaving thousands of children bereft and hundreds of teachers jobless. ECOT still owes the state tens of millions of dollars.
The Ohio Supreme Court has ruled at least six times that the state’s system of funding public schools, reliant on property-tax levies, is unconstitutional. Many of our public-school systems are starving, and it makes us ripe for pillage by people like Lager.
Arace concludes that LeBron James school is good because it is a "traditional public school."
Have you wondered about The Dispatch’s aggressive and over the top support to put Ohio’s short term loan companies out of business? Dozens of editorials and articles that worked hard to essentially get rid of pay day lenders and title loans. If you knew that Fortress owned financial service products that also lent to customers such as One Main, NationStar (now Mr. Cooper), and CW Financial, would it put The Dispatch’s view of its financial services sector competitor in a different light?
One Main provides loans to consumers in 84 Ohio cities. CW Financial provides financial services to the commercial real estate market, and is not a direct competitor, and Mr. Cooper does provide refinancing loans, that would directly compete against short term lenders in some instances.
The Dispatch has provided much ink, attempted to shame legislators, and has opined in derogatory fashion against the short term loan industry. When it is known that their parent company competes in the financial services industry, at least that disclosure would allow the reader to think twice about the vitriol that The Dispatch has put out about its parent company competitors. For a newspaper that preaches full disclosure for elected officials and chides politicians about real or perceived conflicts of interest, it is incumbent upon them to disclose these associations. They may have a sincere interest in consumerism, but that must be balanced with the interests of their corporate masters, who certainly benefit from regulating short term loans out of business in Ohio. You would not know that if you did not read it in 3rd Rail Politics.
Wall Street is worried about The Dispatch’s parent company. The concern stems from under preforming in the market for Fortress, and a business model that allowed the founders and leaders to cash out twice as a publicly traded firm before it went public, and its strategies afterwards.
How about open records and the public’s right to know who is controlling policy in Ohio? This New York Times article lays out how Fortress lobbies state governments and manipulates policy to its own advantage. Truth in disclosure, they do not have an Ohio lobbyist of record. Bet you didn’t read that in The Dispatch?
How much money is Fortress - owners of The Dispatch, managing for the state? Try $50 million big ones. . Given that STRS has had such meager earnings compared to the DJIA, this may be one reason you are not reading about it in the newspaper.
But wait, there’s more. Millions upon millions more. The Police and Fire Pensions are also using Fortress for investments, splitting $80 million in taxpayer and public employee money between two hedge funds. These same unions in 2017, are no longer covering health insurance for retirees, perhaps with better investment returns, that would not have been the case?
Remember when Ormet's, the steel company that went out of business on the Ohio Rivers and assets were sold to a New York hedge fund? You may not remember because it was not in Central Ohio’s newspaper of record, but its parent company bought the distressed assets to make a gas fired power plant. A legitimate question about The Dispatch’s frequent anti-coal and anti-nuclear power plant editorials is, are they tainted by their parent company owning a gas burning power plant? They have derided the PUCO and Legislature over policy related to the coal and nuclear energy. Their own parent is in the gas business, ladies and gentlemen.
Lastly, The Dispatch’s real parent company applied for a natural gas license in Eastern Ohio. This just illustrates that what you don’t know may have an impact on what they tell you in the daily fish wrap.
3rd Rail contacted Ashley Higgins with Industrial Relations for The Columbus Dispatch parent company seeking clarification on editorial content policy for articles written by the Columbus Dispatch and investments made by Fortress. We have not received a response at the time of this publication.
Keep in mind when The Dispatch reports on pension fund issues, power issues, short term lending, it has not disclosed these relationships. The Dispatch of old, did disclose its business interests when the Wolfe Family reigned supreme. Now with the hedge fund in charge, silence is golden.
Today’s Dispatch, which may or may not, make money as a business entity, is controlled by an entity that the Ohio taxpayers have invested nearly $100 million in, and we all had no idea. They are in the natural gas business, and the unsuspecting reader had no idea. If you are not reading investigative stories about the Pension Funds, Consumer Lending, or Energy Industry, we know one thing, The Dispatch certainly is able to do so, and knows who to interview for the story.