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One sometimes underrated principle of journalism is that practitioners should care about the truthfulness of an article rather than potential personal benefits. Rewards, including cash prizes, book contracts or speaking gigs, should not a priori drive news judgments. To be socially useful, stories must be monetised in big packages, not individually.
A new US start-up called Hunterbrook aims to turn those principles on their heads.
The business will consist of an investment fund and a news reporting service. The fund will trade on the content of articles in advance of publication.
Hunterbrook insists it will rely on publicly available information. This presumably rules out scoops concerning takeovers of the kind some lawyers, bankers and PRs drop to deal reporters.
The business also promises investigative pieces. These traditionally include fresh reporting, however.
The business model is perhaps a work in progress. But some of the most successful media operations in recent years have been specialised trade publications for wealthy readers who want information they can profit from directly. In 2016, for example, General Atlantic bought Argus Media at a $1.45bn valuation. The deal made many energy reporters into millionaires. Private equity meanwhile acquired Reorg, a distressed debt news and intelligence service, at a $1.3bn valuation.
In contrast, the enterprise value of BuzzFeed is down to just above $200mn. The start-up produced acclaimed journalism alongside memes. But it has relied on advertising for revenues.
Specialist financial news businesses instead make money from subscriptions and licence fees. These revenues do not depend on making market bets and then publicising them. That activity is closer to the legally fraught business of short sellers.
The biases of these raiders are obvious. But it appears that Hunterbrook wants to be taken seriously both as a news organisation that serves the public and a fund that earns returns for investors.
Reconciling the dictates of these two missions may prove tricky.
The Lex team is interested in hearing more from readers. Please tell us what you think of Hunterbrook’s business plan in the comments section below
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