Community newspapers, those familiar once- or twice-weekly papers that line family scrapbooks with tales of athletic glory, county-fair ribbons and Main Street parades, are as much a part of the region's history as courthouse statues and church steeples. A newspaper was often among the very first businesses in a new town.
In the past two decades these small publications have created online editions as a rearguard defense against the Internet, merged and sold to corporate publishers, and in a few cases closed their doors forever. Somehow, most survive and some even prosper, but it's always a sometime thing and good news can become bad news in a financial as well as journalistic sense.
That might be the case with Washington's newest publisher, attorney Stephen Routh, who runs the West's largest foreclosure-services business from offices in Bellevue. Routh also runs RIM Publications , through which he has purchased five small community papers, three in Washington.
He says he wants to add more newspapers to his collection, and that has gained the attention of regional publishers. Always wary of changes in their embattled ranks, they have perquisites to protect in the field of legal notices, a system dating to a time when newspapers were the dominant form of mass media. Routh makes no bones about his purpose in purchasing the small papers: to legally game a system that to him makes no sense in the Internet era.
For Routh, and for some small papers, the bad news of the housing crash and subsequent foreclosure boom has — financially — been good news. Routh is the go-to guy for lenders trying to unload foreclosures. His Northwest Trustee Services Inc. and associated firms created a vertically integrated model that processes foreclosures for lenders, providing legal and escrow services, process serving, property management, even auctioneers. In the last two years, Routh has begun closing the final link in the chain — the community newspapers that publish legally required notices of foreclosure.
Foreclosures are big business and Routh is the biggest operator in the region; his companies employ about 1,000 people, including 51 lawyers in seven western states; in his peak year (2009) he handled about 48,000 foreclosures. Every one had to be advertised in a newspaper of general circulation in the county where the foreclosure was taking place.
The price for these notices, long columns of dense property descriptions and legalese, could be as low as $300 or as high as $2,000 on a typical residential foreclosure, depending on the size of the newspaper and competition within the county. The requirement for publication is a boon for small papers in big counties. For instance, a small paper in Pierce County charges less for a foreclosure ad than the Tacoma daily, but it only delivers a few thousand readers, practically none of whom are looking for foreclosed property to buy. But the legal publication requirement is met.
"This is a waste of money and it doesn't make any sense," Routh told me in a telephone interview. "The huge majority of people get their news (about foreclosures) not from dry legal ads but from the Internet."
Forced to work with a system that he believes is obsolete, Routh in the last two years has purchased three small Washington papers in three large counties: the Eatonville Dispatch in Pierce County, the Capitol Hill Times in Seattle and the Monroe Monitor & Valley News in Snohomish County; total circulation: 17,950 in an area with 3.4 million people. RIM also has bought small papers in the Boise suburb of Kuna-Melba and on Maui, Hawaii.
Foreclosures notices for Northwest Trustee Services Inc. are already being printed in those papers, resulting in bulky special sections wrapped in with a small news section. Online, these RIM newspapers may carry more than 100 foreclosure notices, vastly overshadowing their news coverage.
A veteran Washington publisher, who is well-informed on this phenomenon, observed, "When things (the foreclosure market) really started to heat up, Routh realized he could keep more of the money for posting the legals if he owned the paper in which they were printed. So he went shopping for one paper in each county. This way, his company could prepare the legals, get paid for that, and publish them too and get paid again."
Routh has also started the Washington Legal Journal and the Oregon Legal Journal, primarily to print foreclosure notices, although they carry some wire stories and an occasional local story. In Oregon, some editors believe Oregon Legal Journal fails the test of a paper of general circulation; the OLJ published a rebuttal to that charge. By publishing in both the law journals and the small papers, Routh is covering all his bases in terms of legal requirements.
While Routh is an outsider representing a field that seldom enjoys public esteem, he seems to be simply adapting to a law that may no longer make sense. Buyers of foreclosed homes include some ordinary families hoping to afford a home, but more buyers are professionals who earn their income by flipping houses or serving as middlemen. Neither set of buyers is likely to thumb through pages of mind-numbing legal notices looking for a description that fits their needs. Sooner or later, they will find their way to Routh's web site or another like it that is organized to help them navigate the verbiage.
In the West, the biggest site is USA-Foreclosure.com, which Routh owns. The web site currently lists 27,228 properties for sale in 10 states, primarily in the West. California has 10,219 of those foreclosures; among Northwest states Oregon has 5,854; Washington 3,836; and Idaho 1,740. Not all foreclosures, of course, are posted online. USA-Foreclosure describes itself as, "the nation's largest non-subscription based Web site publicizing property scheduled for foreclosure auction."
The requirement for printed legal notices was based on the idea that there should be some way for the public to learn about properties up for auction; this would counter "insider deals" emanating from courthouse or financial politics. Public agencies have also long been required to advertise governmental bids, requests for proposals, and many civil actions, in a newspaper within their county. These "legals" have long been a steady and reliable source of revenue for small weekly papers.
In the past two decades, the Internet has revolutionized journalism and very little remains the same. The business was changing rapidly by 1999 when James Bush described an "odyssey through the backstreets of Seattle journalism" for Seattle Weekly, chronicling some papers that are now long gone or at least under new ownership.
Washington's independent community press grew more corporate when the Canadian press mogul, David Black, brought Sound Publishing to the region and in the last two decades swallowed up most of the small papers in the islands and shorelines around Puget Sound. Some of his 46 Washington papers are better than their predecessors and some are not, but all are operated as journalistic endeavors and hew to standards of the trade. As Sound has expanded, adding four newspapers in the past three months, family-owned papers are becoming rare and any RIM expansion would cut further into their ranks.
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