Insider Louisville cuts three top execs as it struggles to align costs with revenue

The Insider Louisville editorial team discusses upcoming stories last year during a Coffee with the Newsroom event.

Insider Louisville has eliminated three of its top executive positions as it struggles to align costs with revenue following its recent transition to a nonprofit newsroom.

CEO Tom Cottingham, a serial entrepreneur who has been with Insider since 2012, will leave at the end of February, along with Chief Operating Officer Jon Pyles and Director of Audience Engagement Jim McKiernan.

The nonprofit said that despite deep cuts, its newsroom staff was not affected and will continue as before. Chief Community Officer Brian Eichenberger will co-lead the nonprofit with Chief Content Officer Mickey Meece.

Brian Eichenberger

Eichenberger said that since its transition to a nonprofit in 2017, Insider’s leaders, which includes a “more active” board, identified an unsustainable revenue shortfall that they had to address to try to assure Insider’s survival.

The priorities of a nonprofit differ from those of a for-profit enterprise, he said, and those changing interests required Insider to look at, among other things, its organizational structure.

“So in that transitional year of 2018, we (had) additional infrastructure that now as we look into 2019 we say, ‘Maybe there are ways we can tweak this model, and we can get us running tighter and more efficiently and then continue to grow community support.’”

The elimination of three leadership positions helped decrease the nonprofit’s annual expenditures by 40 percent, from about $1.6 million to about $950,000. Nonetheless, that leaves the organization with a shortfall of about $525,000 for this year, according to Insider board member David Jones Jr., who discussed the nonprofit’s finances in a staff meeting this week.

Eichenberger said that the new goal is “very achievable.”

“We’ve aligned our financial goals for the year and created a moderate growth plan that … the board is confident we can achieve with the help of the community,” he said.

Industry struggles

Insider’s challenges mirror those faced by other local, regional and national media organizations, many of which continue to see revenue declines as advertisers move from paper to the web, Eichenberger said.

Business Insider reported last month that in the first month of this year alone, media organizations have cut or announced cuts of more than 2,000 jobs, including about 1,000 at Buzzfeed, HuffPost and Gannett, the chain that owns the Courier Journal.

But Eichenberger emphasized that while many of those organizations continue to cut their reporting resources, Insider is taking a different approach.

Insider’s leaders considered but ultimately rejected cuts in the newsroom.

“That was very much not something that we wanted to do,” Eichenberger said. “We said this is absolutely what we wanted to protect … because that’s what people are supporting” with their donations.

During those talks, three leaders within the organization agreed to step down.

Pyles said, “It had always been the plan that Insider Louisville would operate sustainably with less executive oversight transitioning to a nonprofit.”

That transition “was quite a complicated maneuver” that required getting the operational functions in place to help raise money and become sustainable, he said.

“We are a little behind in fundraising,” Pyles said, “so there were cuts beyond the two key executives running the business, but our hope is that once we get down to a more sustainable level that growth will become possible again … in late 2019.”

One additional Insider employee has moved from full- to part-time, and another is now working with the organization on a contract basis. Insider will outsource its member marketing and audience development to News Revenue Hub.

While the newsroom will continue to operate with four full-time reporters, two editors and Meece, Insider cut its monthly budget for freelance stories roughly in half. With the contributions from freelancers, the nonprofit has published about 50 stories per week.

‘Bold bet’

Mickey Meece

Meece said that the board’s actions to spare the newsroom from staffing cuts represent “a bold bet that kind of flies in the face of what’s going on nationally.”

Eichenberger said that the actions demonstrate the commitment of the organization’s leaders and employees.

“Without the reporters, I mean, what is Insider Louisville?” he asked.

“We have to protect that, and that has always been the goal of this organization to provide reporting that gets to a deeper level than anything else that’s available in town,” Eichenberger added. “Everyone that’s been involved with this, especially since the nonprofit transition … believes that. And it just came time for three of them, unfortunately, to have to say, ‘I believe it so much that I’m willing to step aside … to make sure that it continues.’”

Now, more than ever, he said, there is a need for people to be the interpreters and the explainers of the complicated things that are happening.

“The nonprofit heart of Insider Louisville is on display here,” Eichenberger said. “This is about providing this service. It’s not about anyone becoming wealthy off of what is happening here. It’s about making sure that we are able to continue the work of the journalists in our newsroom.”

Eichenberger added that as the traditional advertising-supported news model continues to deteriorate, Insider’s struggles also raise a more fundamental question about how newsrooms of the present and future are funded.

“Journalism, as an industry, has been in free fall for years,” he said. “One challenge that we have, at Insider Louisville, in Louisville and I think across the country, is changing the mindset about who’s responsible for funding journalism.”

“The larger point of what we’re doing,” Eichenberger said, “is helping people realize that it is becoming a task that the voluntary sector needs to take on, to step in and say, ‘This is something I believe in, and I want to not be beholden … just to … the private sector … I want to be able to contribute to that and know that I have partial ownership of that reporting, and it’s reporting I can trust.’”

Pyles said that much of his work in the last year has focused on audience development, membership programs and benchmarking with other nonprofit news organizations to adopt some of their practices to help Insider become sustainable.

Some of those duties now will fall away, he said, while others will be taken on by the remaining staff, including Eichenberger and Meece, as well as board members, who want to take a more active role in helping the organization diversify its revenue streams.

Besides Jones Jr. and Cottingham, Insider’s board also includes Griffin Meredith, Lopa Mehrotra, Ed Manassah, Moses Icyishaka and Lesa Seibert. Pyles may join the board after his departure.

The nonprofit generates about $500,000 annually through sponsored content and about $125,000 in donations from about 1,000 members. Additional funding comes from foundations, such as a grant of $500,000 last year from the James Graham Brown Foundation.

Eichenberger said the nonprofit now believes it has developed a sustainable plan.

“We’re confident in the community stepping up and helping us achieve this,” he said. “We’re being very responsible, and we feel that now we are positioned that once we rally this community support, we will then be able … to continue to grow the newsroom as has always been the goal.”

Meece said that her role in overseeing the newsroom operations will not change.

“Nothing’s going to keep me off that course,” she said.

At the same time, she and Eichenberger may take on more tasks related to representing Insider at community events.

“I think we have a good story to tell,” she said.