Peter Barbey's great-grandfather John started the Reading Glove and Mitten Manufacturing Co. 120 years ago. Known today as the VF Corp., it owns outdoorsy brands like Timberland and North Face. In its last fiscal year, VF reported nearly $14 billion in revenue and $1.5 billion in net income. Its market cap hovers around $35 billion.

The Barbeys, who still own around 20 percent of the company, are very rich.

Barbey, 62, went to the University of Arizona. He met his wife, Pam, there. They planted roots in Phoenix, where he invested in commercial real estate while also running the city's most beloved independent bookstore, Houle Books. But in 2011, Peter and Pam moved to Reading, Pennsylvania, to take charge of another property that had been in the Barbey family for over a century: the Reading Eagle. With a Sunday circulation over 70,000, a team of sports writers as good as any in Pennsylvania, and a news staff that took seriously its watchdog role, the Eagle was one of the best medium-sized newspapers in the state, if not the country.

When I asked Barbey recently how he felt about leaving behind his life in Arizona to become president of the Eagle, he shrugged. "I'd been on the board since 2000," he said. "I knew the company well. And I felt it was my duty to my family's legacy, and to this community, to take this on."

Eight years later, the Barbey family no longer owns the Reading Eagle.

In May, the paper was sold to MediaNews Group Inc., the newspaper company owned by the hedge fund Alden Global Capital LLC, which has a well-deserved reputation for asset stripping and layoffs. Barbey cared deeply about the Eagle; he sold it with great reluctance, helpless to reverse the newspaper's economic decline.

All in

You sometimes hear journalists saying that if only their paper's owner had beefed up the staff, had given reporters more time to do better stories, had made the paper indispensable to its community, maybe the economic decline of the paper could have been averted. What is instructive — and discouraging — about the Reading Eagle is that is exactly what Barbey did. He bet that good journalism could keep the Eagle solvent. And he bet wrong.

"It was like playing a game of chess where you just run out of moves," said Barbey when I met him recently in New York.

By the time Barbey became the chief executive of the Reading Eagle Co. in 2011, it was far from the immensely profitable paper it had once been. Classified ads were long gone, done in by Craigslist and its imitators. But local grocery stores, drugstores and car dealerships were still advertisers. Circulation was declining, but not disastrously so. And though the Eagle was losing money, the losses were small.

A few years earlier, the company had bought a new press capable of printing magazines as well as a newspaper. One of Barbey's first moves was to start a publication about rural Berks County that subscribers received as a weekly insert. (He also started a regional business magazine.) It quickly became popular. Small advertisers flocked to it.

"It made good money," Barbey recalls. "Better than the internet."

He began beefing up the news staff. He hired an investigative reporter, Fred Turner, from the Patriot-News in Harrisburg, and set him loose. Turner wrote a series of hard-hitting investigative stories. The Eagle covered the opioid crisis, which had hit Berks County hard. And he gave the editors the go-ahead to hire a dozen or more young, ambitious journalists.

"Peter believed very strongly that he could make print work," said Garry Lenton, who joined the Eagle in 2012, and became the editor in 2018.

For a while, it seemed as though he was making print work. Although the decline in circulation and advertising revenue never completely stopped, it slowed considerably. The company became cash-flow-positive for the first time in years. Morale among the news staff was high, as reporters realized that their boss was counting on the Eagle's journalism to pull the paper through.

"The newsroom was doing it," Barbey told me. "We felt we were really competing."

Bottom drops out

It all started to fall apart in 2016. Barbey can't explain why that was when his formula stopped working; he just knows it was. Quarterly circulation declines accelerated. And as circulation declined, so did the Eagle's ad revenue. In 2017, the grocery stores stopped printing inserts in the Eagle and switched to direct mail. The drugstores stopped advertising, as did the car dealers. Painfully, many of the small advertisers that had once flocked to the Berks County magazine left as well. "It was one blow to the solar plexus after another," says Lenton.

Lenton was then running the Eagle's digital side. He recalls going to the salesperson who solicited ads for the magazine. "The man said, 'I don't know what's going on. I can't figure out this market anymore.'"

But it wasn't that hard to figure out. Both the Eagle's subscribers and its advertisers were gravitating to the internet, especially Facebook. Using Facebook, advertisers could target Reading consumers for a fraction of what an ad cost in the Eagle. Subscribers, realizing that they could get all the Reading news they needed via Facebook, stopped paying $180 a year for the newspaper.

Here was the worst part. Even though the Eagle had a paywall, many readers were still able to access its articles via the internet without paying the newspaper a penny. And there wasn't a thing Barbey could do about it.

For this, he blames the Digital Millennium Copyright Act of 1998, which exempts platforms like Google and Facebook from direct copyright infringement. The result is that readers can create their own newspaper, using, say, their Facebook newsfeed, without ever paying a newspaper for its content.

"When they passed the Digital Millennium Copyright Act, why didn't they think this would happen?" Barbey asked.

Bleeding revenue

Barbey's job changed from trying to grow his operation to trying to staunch the bleeding. The business staff was reduced though layoffs. Barbey protected the newsroom, though when journalists left or retired they weren't replaced. The Eagle pushed hard to generate digital subscriptions. But with the cost to subscribers a mere $7 a month, digital subscriptions didn't make much of a dent. Between 2016 and 2018, ad revenue dropped from $17 million to $12.6 million, while the company's losses went from less than $1 million to $4 million.

In May 2018, the Eagle eliminated 13 newsroom positions. It still had more than 60 journalists, but the handwriting was on the wall. "I started getting invoices from the wire services that were 30 or 60 days late, and they were threatening to cut us off," says Lenton, who took over as editor in 2018. "I would have to go to the accounting department and tell them they really had to pay this one."

The Eagle had one last moment of glory: It was named the 2018 Newspaper of the Year by the Pennsylvania NewsMedia Association. But in March 2019, a year after those first newsroom layoffs, the Reading Eagle Co. filed for bankruptcy. In the bankruptcy filing, the company said that the only way it could stem the losses would be to make large cuts in the newsroom, which "cannot bear millions more in cuts."

Hedge fund takeover

Although several companies kicked the Eagle's tires, Alden Global soon emerged as the only serious bidder. The hedge fund owns other papers in Pennsylvania and can consolidate business-side functions. And, of course, Alden Global is never going to sweat layoffs the way Barbey did. Ruthless cost-cutting is at the heart of its business model.

Alden Global laid off 81 employees soon after it bought the Eagle.

As our interview was ending, I asked Barbey what lesson he drew from his experience running the Eagle. Without hesitation, he replied, "You can't write your way out of this." A big national newspaper like the New York Times might be able to revive its fortunes by going all-in on digital, but that won't work for a mid-sized paper like the Eagle. You can't make enough money from digital subscriptions or ads to turn a profit. And paywall or no paywall, the Eagle's content was too easy to find online.

Putting out a good newspaper just isn't enough anymore. On Monday, the top of the Eagle's homepage featured six stories. This was one of them: "Phone lines are down at Reading Eagle offices."

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast, "The Shrink Next Door."

Editor's note: The Day remains an independent newspaper owned by a split-interest trust charged with operating the newspaper and supporting a charitable foundation. With the support of our subscribers and advertisers, we expect to long continue serving the people of southeastern Connecticut.