13 December 2021

Blended capital funding for independent media: An innovation by European philanthropy

On 15 September 2021, in her State of the Union Address, European Commission President Ursula von der Leyen announced thatthe Commission would deliver a Media Freedom Act in 2021. She declared:

“Information is a public good. We must protect those who create transparency – the journalists. That is why today we have put forward a recommendation to give journalists better protection. And we need to stop those who threaten media freedom. Media companies cannot be treated as just another business. Their independence is essential. Europe needs a law that safeguards this independence (…)”

Indeed, providing a policy environment that secures a free flow of quality information is a critical part of “democracy’s information infrastructure”, which provides transparency, accountability and an informed citizenry that has a say in how it is governed.

So, while a law is needed to maintain the independence of independent news media, I believe another component is needed to maintain this infrastructure: access to the right type of capital. I propose three characteristics for this funding and point to a new and concrete experiment in that sense:

Mission-aligned capital

As declared by President von der Leyen, media companies cannot be treated as just another business. In some parts of Europe, in countries suffering a democracy deficit, the lack of access to capital without strings attached remains a critical barrier to the development of viable independent media companies. Capital is required that provides mission-driven governance that balances the protection of the societal value of the company and its need to be financially viable.

Strategic media growth capital

To flourish and carry out their social role, on top of mission-aligned capital that respects their editorial independence, these companies need to be supported by state-of-the-art media expertise to drive economic growth.

They need strategic media growth expertise that allows them to effectively address the challenges posed by rapid technological change in the market and take advantage of opportunities that exist for forward-looking media.

Impact-centric capital

In a visionary prediction 28 years ago, Neil Postman described the danger of surrendering some of our civic functions to technology. Technology should be “understood as a great Faustian bargain. ‘Technology Giveth. And Technology taketh away’. If we understand that tale then with every new technology, we should ask what will it give us? What will it take from us?”[i]

One effect that the digital disruption has had is the collapse of the private news business model –summarised historically as the receding of its two basic revenue streams:

  • Advertising – The digital disruption has eviscerated this revenue, with the GAFA platforms (Google, Amazon, Facebook and Apple) taking much of the ad market.
    • Subscription sales – The rise of subscription models and paywalls has begun to inject fresh money, but many experts agree that “we are fooling ourselves if we expect people to meet the real, direct cost of providing the news.”[ii]

And one cannot omit news media consumption patterns. In the last decade, a technological revolution has transformed the way people access news and information across the world.

The urgency of finding a replacement for this business model is best expressed using Clay Shirky’s [iii] diagnostic: “The old model is breaking faster than the new stuff gets put in place.”

This implies that funding of such a new model may need to be concessionary as promoted by the growing impact investment sector. Funding that way brings both financial and societal returns. The main reasons independent news media companies are “not like any other business” is that they provide a critical social value for democracy. Their demise would carry a huge societal price.

Moreover, media markets in some European countries are distorted in favour of state-owned or crony-owned media: Capital needs to be provided on a concessionary basis to level the playing field. 

With the boom in impact investments that aim to marry financial and societal value, I believe there are lessons to  be learned from the growing number of mission-driven funds – lessons that can be applied to the provision of information for the common good.

Plurality of capital also

Media plurality gives a voice to minorities, free-thinkers and marginalised groups. It expresses their concerns and defends their rights. Democracies are by nature a product of social and political diversity. They reflect the will of the people, an accommodation of divergent viewpoints and contrasting opinions. A wide range of broadcasters, publishers, channels, titles and programmes are needed to provide this diversity. A free marketplace of ideas ensures competition and enables pluralistic debate.

But the time has come to explore the need for a plurality of capital that invests in this key democratic infrastructure.

To maintain a media company’s independence and credibility, debt equity and grant financing needs to be free from government influence given the potential power and perception of influence that comes with being a creditor or owner.

Funding should be blended with different types of funders: foundations; commercial companies; family businesses looking for impact or mission investing; and, with some very clear safeguards, public funding. 

Blended finance is an increasingly used tool in impact investment and offers two advantages when used for funding independent news media.

First, an independent intermediary organisation or fund with an independent decision-making process gleaning multiple types of funding can provide an arms-length, dissociated capital source. The governance for such an entity can be built in a way that prioritises the mission. Mission-driven ownership for private, quality news companies exist[iv], with common good driven forms of governance to sustain public interest journalism.

And second, non-commercial investors such as foundations can use resources to make the theme of news media investible for institutional investors, hence expanding the universe of capital available. 

Plūrālis: Appropriate capital to promote plurality

In a uniquely European experimentation, my organisation, Media Development Investment Fund, has partnered with a number of European foundations, news media companies and impact investors to create Plūrālis, a blended, multi-stakeholder investment facility for independent media companies to provide access to the right capital.

Its mission is to build robust independent media businesses in the long term, strong enough to hold governments to account, expose corruption and provide a platform for democratic debate. It is providing “no-editorial-strings-attached” equity that helps secure independent ownership of media companies at risk of takeover and compromise.

In addition, Plūrālis will provide these media companies with capacity building and technical assistance to strengthen and grow their business so they can thrive in the long term.

With so many parts of the world seeking new ways of funding independent information, we believe that Plūrālis and its blended capital approach ‒ which, for the first time, brings together capital from philanthropy, reputable European media companies and impact investors – should be watched closely as a promising innovation in European philanthropy to fund the news, information and debate that Europe needs to build free, thriving societies.

[i] Neil Postman. Interview on The Open Mind on December 8, 1990. https://www.youtube.com/watch?v=49rcVQ1vFAY

[ii] Alan Rusbridger, The splintering of the Fourth Estate, (The Guardian, 19 november 2010).

[iii] Clay Shirky, The Times’ Paywall and Newsletter Economics, https://blogs.lse.ac.uk/polis/2009/03/20/thinking-the-thinkable-clay-shirky/ 

[iv] Gavin Ellis, Trust Ownership and the Future of News: Media Moguls and White Knights, (Palgrave Macmillan; 2014).


Patrice Schneider
Chief Strategy Officer, Media Development Investment Fund