Merger with CIR brings shift in focus for S.F.’s Bay Citizen

Two years after its launch as a new online news organization covering the San Francisco region, the Bay Citizen is reconsidering its mission and editorial focus under new management.

As of May 1, it merged operations with the Berkeley-based Center for Investigative Reporting, one of the granddaddies of the nonprofit news world, and ended its editorial partnership with the New York Times.

The combined newsroom now marshals a staff of 70 and an annual budget of $11 million for news reporting from the San Francisco Bay Area.

But differences between the news organizations’ editorial priorities and funding structures point to many challenges ahead, according to journalists from both the Bay Citizen and CIR.

The Bay Citizen, which was founded and launched in 2010 by the late San Francisco philanthropist Warren Hellman, focused on timely news about Bay Area communities and tried to compete with other local news outlets to break stories. CIR produces investigative reporting on national, international and statewide issues, and collaborates with major news outlets to publish its findings.

“It’s not going to be like we snap our fingers and there is a new entity,” said Robert Rosenthal, CIR executive director. “This is a very complicated process for the Bay Citizen. Some of their people will be leaving. We still have a lot to work out.”

Since its launch in May 2010, the Bay Citizen has struggled to establish itself as a source for local news and culture across nine counties in the Bay Area. Its two-year editorial partnership with the New York Times helped open doors with local newsmakers, and now its reporters are shifting to recently redefined enterprise beats. The founders who launched the online news service have moved on, as have the executives who tried to fill their shoes.

In the Bay Citizen’s two years in operation as an independent news organization, its journalists struggled through leadership turmoil and conflicts over editorial independence. Efforts to cultivate readers as members and contributors added little to the bottom line.

CIR, the country’s oldest nonprofit investigative news outfit, is in a much better place. It has diversified its funding, developed relationships with many editorial partners and made a mark with its journalism.

CIR’s national and international reporting is published and broadcast by major news outlets, including NPR, 60 Minutes, the Washington Post and PBS’s Frontline. And California Watch, its startup watchdog news operation that covers statewide issues, was a 2012 Pulitzer Prize finalist for local reporting. “On Shaky Ground,” a 19-month investigative project, exposed seismic safety hazards in thousands of public schools. KQED in San Francisco was among the news outlets that presented the exposé.

CIR recently landed major grants from two top foundations that invest in nonprofit media. In February, it received a $1 million MacArthur Award for Creative and Effective Institutions from the Chicago-based John D. and Catherine T. MacArthur Foundation; the grant backs production and distribution of “multimedia stories to engage the public and spark policy change,” according to the foundation.

More recently, the Knight Foundation provided $800,000 to back the launch of an investigative news channel on YouTube in July (Current, April 23). The grant also provides for training in best practices for online video and engaging new audiences.
“The key to what we are doing and want to be doing is wide distribution on every platform,” said Rosenthal, a former editor with the Philadelphia Inquirer and the San Francisco Chronicle.

Growth by leaps and bounds

When Rosenthal arrived at CIR in 2008, the news operation employed seven people and ran on a budget of $1 million; the addition of California Watch’s state-focused investigative work boosted the staff to 35 and the budget to $6 million. With the Bay Citizen merger, CIR more than doubled in size once again to become the nation’s largest nonprofit focusing on investigative and accountability reporting, according to Rosenthal.

“It’s nice to talk about building rather than dismantling,” said Rosenthal. “I never envisioned this.”

The celebratory mood may not extend all the way across the combined newsroom, however. Three top leaders of the Bay Citizen have departed — Peter Lewis, managing editor; Brian Kelley, interim chief executive; and Jeanne Carstensen, executive managing editor — and it’s unclear how many of the newsroom staff will be retained.

Nine reporters took on new beat assignments last week as the online publication aligned its reporting with that of CIR. “We won’t be chasing after breaking news, covering press conferences, competing with the local media or covering arts and culture the way we previously covered these topics,” wrote Mark Katches, CIR’s editorial director, on Baycitizen.org. “We’re going to focus our energy on finding and delivering more high-impact enterprise and investigative stories in the Bay Area. We’re looking for stories that hold to account government officials, public figures and the leaders of local institutions.”

Instead of competing against other local news outlets to break stories, the Bay Citizen’s journalists will begin sharing their reporting with former competitors.

“As one integrated, merged newsroom, we believe in reaching the broadest audience possible — the theory being that the more people who see noteworthy journalism, the greater the impact and likelihood for results,” Katches wrote.

Money wasn’t a problem

The Bay Citizen encountered several pitfalls during its short run as an independent online news organization.

Its attempt to introduce a public media–style membership-revenue model didn’t have time to take hold. Efforts to cultivate readers as members and contributors brought in contributions of up to $10,000 each from more than 8,000 donors, according to Keith Meyer, marketing director. (Those who wrote checks for higher amounts were considered major donors.)

The nonprofit relied heavily on philanthropic gifts during its startup. Financial disclosures in the Bay Citizen’s 2010 annual report acknowledged that 70 percent of its $11.27 million in revenues came from foundations. An analysis by Alan Mutter, a new-media analyst, reported that major philanthropic grants made up 92 percent of revenues in 2010.

The nonprofit’s operating expenses for that year totaled $3.6 million, according to its annual report, but the report projected nearly $5.8 million in expenses for 2011.

Money was not a problem for the Bay Citizen. Instead it suffered more from a leadership vacuum, both internally and on its board, according to former interim-editor-in chief Steve Fainaru and four additional sources who requested anonymity to discuss its operations. Its heavy reliance on the financial support of one donor, founder Warren Hellman, created problems as its journalists sought to report without fear or favor.

Hellman, the late venture capitalist, civic leader and philanthropist who paid for business planning of the Bay Citizen and provided $5 million in startup money in 2009, did so out of alarm over the decline of local news reporting at San Francisco’s daily newspapers. But he had no prior experience with journalism, and neither did his friends recruited to serve on the governing board.

When a Bay Citizen reporter called Hellman as a source for a May 2011 story on pension reform, the philanthropist threatened to withdraw his funding, according to Fainaru, who wrote about the episode last year in a New York Times piece memorializing Hellman after his death from leukemia. The story involved one of Hellman’s longtime advisors.

The story ran anyways. Hellman didn’t pull his money out of the Citizen, and months later he joked about it and promised not to intervene again.

“The episode … underscored the Bay Citizen’s complicated relationship with its founder … and the vulnerability of a news organization so reliant on one man,” Fainaru wrote in December 2011.

There were also drawbacks to the Bay Citizen’s relationship with the Times, although observers expressed divided opinions about whether it hurt the news startup. The partnership, a key element of its editorial plan from the beginning, required the newsroom to produce 16 stories a week, said Jeanne Carstensen, who recently departed as executive managing editor.

“That relationship was far more beneficial than detrimental,” said Carstensen. “It opened doors for us in the cities. As a new organization, being affiliated with the New York Times made people sit up and pay attention.”

Others said the partnership sucked away human resources that might have gone to the website.

Months prior to Hellman’s death, the Bay Citizen’s top leaders began exiting. Chief Editor Jonathan Weber, hired in January 2010 to lead the launch, took a job as Reuters West Coast bureau chief last fall. Lisa Frazier, the media consultant who led business planning and later became chief exec (at a controversial salary of nearly $457,000) cited health reasons in resigning a month later, in October 2011. Fainaru took an interim appointment as editor-in-chief but left in January, a month after Hellman’s death, to work for ESPN.

The rapid exodus of top managers created “a terrible leadership crisis” for the Citizen, Carstensen said. “We were making a decent start for a two-year-old organization. We were slowly but surely building interest, respect and support.”

She described the Citizen’s reliance on one donor as a potential weakness but pointed to what she saw as a bigger problem.  “If you are lucky enough to have a donor like Warren Hellman,” she said, “you also need to make sure the board is diversified enough and clear about the mission, and have a fundraising plan in place to look beyond the checkbook of your donor.”

The board’s waning commitment to the Bay Citizen’s survival became apparent after Hellman’s death, according to several sources.

“Warren provided not only substantial funding for the Bay Citizen, but also he was such a cheerleader for it — he really believed in it,” Fainaru said. “Frankly, the board he assembled was mostly composed of people who had some kind of relationship with him. Without Warren there, the real anchor was gone.”

The board members tried to recruit a successor to Frazier and considered veteran San Francisco journalist Phil Bronstein for the job, according to Tom Goldstein, interim dean of the University of California at Berkeley’s journalism school. His school partnered with the Citizen in the early stages of startup, he said.

Bronstein, former editor for both the San Francisco Chronicle and the Examiner, became president of the CIR board in January, when the Bay Citizen’s board was still trying to recruit a new executive.

Bronstein brought the Bay Citizen and CIR together, Fainaru said. “Phil was absolutely the driving force behind the merger.”

Bronstein had “decided that it was a wiser thing for these two things to combine,” Goldstein said. “Phil thought this was the solution, so they began merger talks rather than continue searching for a c.e.o. to replace Lisa Frazier.” Bronstein did not respond to interview requests.

Goldstein objected to Bronstein’s proposal and resigned from the Bay Citizen board over it. He believes, as does Fainaru, that the merger is really a takeover. “I was of the belief that the Bay Citizen should have remained independent,” Goldstein said. “They deserved more time and they had a lot of money in the bank, and I thought they could do it.”

CIR’s Robert Rosenthal endorsed the merger and approved of ending the relationship with the New York Times. The Times wanted exclusivity, he said, and he believes CIR should be partnering with lots of news organizations.

“The Bay Citizen tried to do way too much too fast,” said Rosenthal. “The relationship with the Times brought them credibility at the beginning, but also got them on a production cycle that was very demanding and gave them a very limited audience.”

And now it remains to be seen how this new, still unwieldy organization will fare in today’s cutthroat climate.

“The big question for CIR is, can they handle that much?” said Jan Schaffer, executive director of J-Lab, who studies the evolution of interactive journalism. “Journalism nonprofits are having a hard time. Funders have changed focus and are not necessarily funding journalism, but are more interested in the tools and toys. It’s a very challenging time for everyone.”