Free Markets and the New Orleans Reporter

If the cities of the world were to compete for the title of “The Greatest Comeback,” which one would emerge triumphant?

Would it be New York, the metropolis that survived a devastating terrorist attack? Hiroshima, the city that rebuilt itself from the devastation of a nuclear holocaust? Or perhaps Leningrad (now St. Petersburg), whose citizens starved and froze to death during two years of siege by the Nazi army?

All of these cities have pulled themselves up by their bootstraps, and have re-emerged as global communities that are more economically powerful, socially vibrant, and culturally energetic than ever. Interestingly, last week’s announcement by National Public Radio and the University of New Orleans indicated that a similar process is now underway in the Crescent City.

The Decline of the Big Easy

The 21st century hasn’t been an easy one for New Orleans. Although the utter devastation of Hurricane Katrina is the catastrophe that first comes to mind when we ponder its recent history, the city has suffered other indignities as well.

Its surrounding wetlands and tidal basin, for instance, have been impacted by a variety of environmental threats. The Deepwater Horizon oil spill in the Gulf of Mexico damaged its seafood and tourism industries. And various industrial and residential activities in communities on the Mississippi River continually flood the surrounding wetlands.

NOLA has also absorbed several blows to its civic pride. Mayor Mitch Landrieu, for instance, felt compelled to ask the U.S. Justice Department for unprecedented levels of assistance to address pervasive corruption in his police department. And the football Saints flirted with other cities after the Katrina disaster before agreeing to remain in a refurbished Superdome.

Covering the News

Of course, during the past decade, there have been reasons for celebration in the Crescent City too. The championship won by the Saints after the 2009 season, for instance, energized the region and delighted the nation. And the intrepid on-site reporting of the Katrina disaster by the Times Picayune daily newspaper was recognized with a Pulitzer Prize for Public Service in 2006.

It therefore shocked the community to learn that the Times Picayune was planning to eliminate its daily edition and shrink into an online news service and a three-times-a-week news publication. Many community leaders worried that a major city could not prosper without a daily news presence.

So whom shall residents rely on to cover the news of the city in the future? Have no fear … there appears to be a new news organization in town! Last week, National Public Radio and the University of New Orleans jointly announced the launch of the New Orleans Reporter.

Free Markets at Work

Michael Hecht, chief executive of Greater New Orleans Inc. and lead fundraiser for the Reporter, proudly proclaimed that “we (i.e. the staff members of the Reporter) are filling a reporting gap that the free market will not necessarily fill.” He was referring to the fact that the Reporter has been designed to function as a non-profit service organization, as opposed to a for-profit, privately owned market entity.

In a sense, though, the emergence of the Reporter can be considered a prime example of the free market at work. Although there is continuing demand for daily news coverage in NOLA, the Times Picayune was unable to deliver a cost-effective supply to meet that demand, and thus engineered a partial withdrawal from the market. The Reporter then emerged, as a new supplier of news information, to meet the daily demand for news.

In other words, although Mr. Hecht described the Reporter as a venture that is designed to replace the free market, it can be considered instead as a core component of the free market itself. Its legal structure as a non-profit entity simply represents a business decision that was made to fit the parameters of the venture’s strategic plan.

Blurring Distinctions

The New Orleans situation, featuring a fledgling nonprofit entity competing in a free market against an established for-profit firm, is certainly not a unique one. The non-profit New Haven Independent, for instance, competes toe-to-toe with the established for-profit New Haven Register in the southern Connecticut news market.

Other industry sectors feature similar situations as well. In the hospital market in neighboring Massachusetts, for example, the fledgling organization is a for-profit entity and the established providers are non-profit organizations. Steward Health Care System, a one year old subsidiary of the private equity firm Cerberus Capital Management, is now competing with Massachusetts General Hospital and other major non-profit health systems.

Do you believe that competition is healthy because it inspires people and organizations to work harder to meet the needs of their constituents? If you do, then the partial withdrawal of the Times Picayune from the daily news market of New Orleans might prove to be welcome news indeed. After all, it attracted a new entity with formidable resources into the competitive free market.