As pandemic shutdowns have reduced ad spending, what’s next for newspapers?


The Press & Journal, a weekly covering Middletown, a small town near the capital of Pennsylvania, closed in July 2020 because its advertising revenue collapsed during the pandemic. Its editors, Joe and Louise Sukle, decided there was no future for the newspaper, even after securing an emergency small business loan of $ 146,000 from the government and donations from the community. while seeing the traffic of his site increase.

The city lost a local news source that covered council meetings, school board meetings, police, and important projects in the area like a new train station.

“What really hurts us is there’s a void now,” said Joe Sukle. “The people who are suffering are the public.”

The coronavirus pandemic, a high-stakes US election and racial calculus have broadened audiences for many newspapers and TV news channels, making 2020 a successful news year. But it was terrible for the finances of the newspaper industry – and also for the public who rely on original reporting to keep them informed of local governments and communities. The overall industry contraction – now over a decade old – is expected to continue into 2021.

Newspaper industry revenues fell 16% in 2020, to $ 20.2 billion, according to FTI Consulting, as pandemic shutdowns shrunk the economy and suppressed ad spending. The fact that this was also a banner year for digital subscriptions didn’t help much, as these tend to generate a lot less revenue than print. This year, the drop in revenue will approach recent historic levels, with a 2% drop this year, FTI predicts, as some ad spend returns and digital subscription growth continues as print continues to grow. blur.

Consolidation and cost cuts are now widespread, especially now that financial firms like hedge fund Alden Global Capital control a growing share of US newspapers. More than 2,000 newspapers have closed in the past 15 years, while more than half of journalism jobs have disappeared, according to a 2020 report from the University of North Carolina. Most of the remaining newspapers have gotten thinner, although national newspapers like the New York Times, Washington Post, and the Wall Street Journal and cable news channels like CNN gained larger audiences during Trump’s presidency – what is called the “Trump bump”.

News organizations in small towns America may also have had a “COVID bump” in readership, said Ken Doctor, longtime media analyst and founder of a local journalism startup called Lookout Santa Cruz in California. But now these newspapers need new strategies to retain their readers while convincing them to pay for information online.

The onset of “media weariness” this year could complicate this crucial task. The New York Times, which has around 7 million digital subscribers, noted a slowdown in subscriber growth as the news cycle has calmed down.

Lookout, which launched in fall 2020, has removed “COVID” from the name of its evening newsletter “PM” and launched a new entertainment guide as people emerge from coronavirus cocoons and want to do things, said the doctor.

“The past year has seen a dramatic increase in global news consumption,” said Maribel Perez Wadsworth, president of news at Gannett. “We’ve certainly seen some normalization from that.” She said the Gannett newspapers were trying to focus more on sports and other areas targeting a country emerging from pandemic-induced isolation, in addition to the investigative pieces.

Businesses focused on local news have a much smaller number of digital subscribers. Gannett, which has more than 250 dailies in cities and towns across the United States, including Phoenix, Detroit, Cincinnati and Indianapolis, as well as the national newspaper USA Today, has 1.2 million online subscribers, or only half of it. of its 2.4 million subscribers to the written press. Digital broadcasting is growing but only represents 3% of the company’s current turnover. (Print newspaper subscriptions are typically more expensive for customers than digital subscriptions.) Gannet aims to increase that number to 10 million by the end of 2025, while retaining its remaining print readership. It has lost approximately 100,000 of those printed subscribers in the past year.

The Associated Press, which derives most of its revenue from clients like newspapers, TV stations, and networks, and websites that sign multi-year contracts to use its stories, photos and videos, is more immune ups and downs of the advertising market. Revenue fell 4% in 2020, to $ 467 million, and has fallen more than 25% since 2010, according to documents filed with New Zealand regulators.

The company expects revenue to decline “by a few percent” this year due to a large increase in revenue in 2020 from special products related to the US election. Excluding this activity, 2021 revenues will be flat or even slightly up, AP CFO Ken Dale said. He said he was “not aware of any concerns about news fatigue” and noted that traffic to AP’s own news site was increasing.

Yet local media rely primarily on local advertising and don’t have enough potential digital subscribers to rely exclusively on it, said Penny Abernathy, Northwestern professor and local news expert. For her, the main takeaway from 2020 was the “recognition in Congress down to the local level of how important local news is to us and what is at stake for our democracy if we don’t have it.”

So far, the government’s efforts to address the problem have not gone very far. A bill in Congress would allow publishers to band together to negotiate terms with technology platforms for the use of their stories. Lawmakers also introduced bills that would provide tax credits to support local media and create a committee to recommend solutions to help local media.

At the state level, Massachusetts is establishing a new commission to review business models and local news coverage. A bill that would create a task force on local news in Illinois awaits the governor’s signature. Abernathy said she is aware of at least eight states that are considering or have formed working groups to examine the loss of local information.


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