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Newspapers
Introduction
Content Analysis By the Project for Excellence in Journalism Over the course of 2008, newspapers provided news consumers with a wider range of coverage than was available on most other platforms – even on just their front pages. In the media over all, for instance, fully half of the newshole in 2008 was devoted to combined coverage of just two stories – the election and an economic slowdown that became a meltdown. Those stories filled 42% of the front-page newspaper coverage, leaving more room for attention to other subjects. 1 In turn, print front pages devoted more attention to subjects such as immigration, health care, U.S. anti-terrorism efforts and the war in Iraq than any other sector. And within the newspaper universe itself, there were some notable differences in the news agenda. In some important ways, the smallest papers – those with circulations under 100,000 – offered a different portrait of events in 2008 than found anywhere else. Unlike their larger counterparts, the No. 1 story in the smaller dailies by a significant margin was the economic downturn rather than the election. And the main story of the war in Iraq was about how it was affecting the home front, even more than events unfolding inside Iraq. These findings suggest that the more community-oriented dailies were well positioned to report on national or even international issues by covering the local angle to a bigger story. Top 10 Stories: Newspaper vs. Media Over All
* Includes stories about the campaign, results, and the transition The Most Coverage of the Economy In 2008, the newspaper sector devoted 19% of its front-page space to coverage of the deepening financial crisis. That was more than any other media sector and about one-third more than in the media over all (15%). This is part of a trend that began in 2007, when evidence of the economic crisis began to manifest itself and newspapers were quickest to jump on the story, with particular attention to the problems in the faltering housing market. In 2008, as the narrative of the unfolding economic story shifted several times, newspapers continued to pay the most attention to the story. In every month in 2008, newspaper front pages devoted more coverage to the economy than cable news, network, radio or the online sector. The one exception was a stretch from May through July 2008, when network news focused on rising gas prices and pain at the pump – a story that in the end missed the coming banking and financial collapse.
Not only did newspapers cover the economic meltdown more heavily on their front pages than other media did over all, but they also covered it differently. In print, the story of the economy was much more closely tied to housing and mortgages that it was in the media generally. And politics of the bailout plan, very much a Washington-centric narrative, was not a dominant story.2 In print, about 18% of the economic coverage was tied to the housing crisis and troubles afflicting federal mortgage funders Fannie Mae and Freddie Mac, compared with about 13% generally. Roughly another 11% of the economic story in newspapers was about the discussion of a recession – about 20% higher than the proprotion in the media over all. In turn, newspapers devoted about 40% less coverage to the politics surrounding the federal bailout plan as the media in general. The ups and downs in the stock market accounted for only 2% of the newspapers' economic coverage compared with 4% in the media over all. And newspapers offered about 20% less coverage of the troubled U.S. auto industry – and efforts to bail it out – than the media in general. Given a deepening and multifaceted economic crisis that proved difficult for the media to track in real time, newspapers amassed a track record for this, the most extensive coverage of the second-biggest story of 2008. There may be several reasons for this. With the exception of a handful of national papers, they tend to be local insitutions first and foremost. And as we found especially to be the case of the smaller dailies, that gave them an opportunity to use their own communities as a way of telling the bigger story. At the same time, many newspapers have traditionally maintained a seperate business section as well as the roster of experienced business writers and reporters to deploy on a story like this. Newspapers and the Presidential Election – Less Coverage, More Tone When it came to the election, three things stood out in the coverage of American newspapers. The election dominated agenda in the print less than elsewhere. The coverage focused somewhat less explicitly on the horse race and more on personal biography. And while it may not have been so much about the polls, it nonetheless appeared to reflect their influence, for the coverage, often interpretative, was even tougher on McCain and more favorable to Obama than in the media generally. Over all, even though the 2008 election ranked as the No. 1 story on newspaper front pages, less than a quarter of the coverage that began on the front pages (23%) was devoted to the election of 2008, compared with 36% in the media generally And in a year in which horse race coverage of tactics, strategy and polling accounted for a majority of the coverage over all (57%) from January 6 to November 3, newspapers produced modestly less of this (54%). But that slack was not taken up by coverage of where the candidates wanted to take the country in policy terms. Newspapers devoted a lower percentage of their campaign coverage to policy (11%) than any other media sector. What newspapers did to leverage their advantages in reporting time and resources, instead, was to produce the most front-page coverage of personal issues.
That coverage took the form of a number of lengthy profiles later in the race. From mid-September through Election Day, larger papers offered no less than a dozen such front-page profiles. Ranging in length from about 1,800 words to over 5,000 words, four were on the Democratic ticket – one on Joseph Biden and three on Barack Obama. Eight were on the GOP candidates – three on Sarah Palin and five on John McCain. A number of the pieces on McCain focused on his time in Vietnam, where he was a prisoner of war. There seemed to be some general patterns to these profiles. The Palin pieces, which examined her record as an elected official in Alaska, often talked about her as a polarizing figure. The Obama pieces emphasized evolution or transformation. And the McCain stories were framed by his wartime experiences in Vietnam. On September 14, the Washington Post ran a 2,299-word story on Palin with the headline “As Mayor of Wasilla, Palin Cut Own Duties, Left Trail of Bad Blood.” On the same day, the New York Times ran a 3,221-word story headlined “Once Elected, Palin Hired Friends and Lashed Foes.” Also on September 14, the San Francisco Chronicle profiled Barack Obama in a 3,236-word article entitled “Transformations: A lifetime of evolving and adapting his identity has helped propel Barack Obama near the pinnacle of U.S. politics.” A subsequent Washington Post 3,989-word profile of Obama appeared on October 9 with the headline “From Outsider to Politician.” In October, within the space of about a week, three lengthy pieces on John McCain were published, two of them in the Washington Post: “In Ordeal as Captive, Character Was Shaped” and “Seeing White House From a Cell in Hanoi.” The New York Times carried a 2,667-word piece entitled “Writing Memoir, McCain Found a Narrative for Life.” Newspapers also stood out, at least during the homestretch of the general election phase (from September 8 to November 2) by being even more critical about McCain’s campaign, and more favorable about Obama’s, than the media over all. Fully half of the Obama newspaper stories were positive during this period, compared with 38% in the media generally, while 23% were negative (compared with 27% over all). That represents the highest percentage of positive Obama stories of any of the five media sectors studied. Conversely, the tone of newspaper coverage of McCain was tougher than the already negative portrayal in the media over all. In newspapers, only 5% of McCain’s stories were positive (compared with 14% in the media over all) and 65% were negative (compared with 57% in the media over all.) That represented the lowest percentage of positive McCain stories of any media sector examined. What would explain front-page newspaper coverage that magnified the over all media narrative about the two candidates? Perhaps format and deadlines played a role. Because newspapers are reporting on what happened yesterday and have the luxury of more space and time than the instantaneous media, their coverage of the candidates tended to be more analytical. While cable news may stage debates, often those are people disagreeing. Newspapers are more prone to come to some bottom-line conclusion. That may well have translated into more coverage focused on explaining and analyzing the prevalent strategic dynamic, which was a story of Obama running a more effective campaign than McCain. Tone of Coverage: Obama vs. McCain
Newspapers Lead in Coverage of Iraq War, Immigration, Health Care and Terrorism Like all other media sectors, newspapers found themselves with a narrower news agenda in a year dominated by the election and economy. But even so, the front pages remained more varied than much of the media menu. In practice, that does not mean that newspapers maintained their 2007 level of coverage for some of these stories, but rather that they decreased their attention to a lesser degree than other media platforms. Given the range of news, the numbers often are small, but they add up across topics to a substantially more breadth. Among the items that got more coverage in print than elsewhere: the Iraq war, immigration, health care and U.S. efforts to combat terrorism. Even as coverage of the war in Iraq plunged by about two-thirds in newspapers from 2007 to 2008, for instance, the front pages still devoted substantially more coverage to Iraq than the media over all (6% vs. 4% of newshole). While the impact of the war on the U.S. home front was largely absent in the rest of the media, it remained a sizable story in print, thanks largely to the more extensive coverage in the smaller community-oriented dailies. Immigration, another big story from 2007 that diminished in 2008, remained about twice as big in print as in the media over all. Beyond the usual coverage of immigration policy and legislation, immigration raids and other enforcement-related issues, newspapers also spent time looking at the immigrant communities.
Even as coverage of the war in Iraq plunged by about two-thirds in newspapers from 2007 to 2008, for instance, the front pages still devoted substantially more coverage to Iraq than the media over all (6% vs. 4% of newshole). While the impact of the war on the U.S. home front was largely absent in the rest of the media, it remained a sizable story in print, thanks largely to the more extensive coverage in the smaller community-oriented dailies. Immigration, another big story from 2007 that diminished in 2008, remained about twice as big in print as in the media over all. Beyond the usual coverage of immigration policy and legislation, immigration raids and other enforcement-related issues, newspapers also spent time looking at the immigrant communities. A 2,000-word article in the Los Angeles Times chronicled the path of a 60-year old Hispanic woman hoping that working for Mary Kay cosmetics would help to propel her into the middle class. The Wall Street Journal described how an influx of refugees from Myanmar, the former Burma, had helped the Swift meatpacking plant in Cactus, Texas, get up and running again after a federal raid in 2006 arrested 297 illegal aliens working there. And the Colorado Springs Gazette looked at how tougher immigration laws and the deepening financial crisis in the U.S. have resulted in a reverse migration back to Mexico for many immigrants. Another subject that newspapers paid more attention to attracted little notice elsewhere in the media. Over all, health care accounted for 1% of the newspaper newshole – more than double the coverage in the media over all – and registered as a top-10 newspaper story, just behind coverage of the Olympics and ahead of coverage of Pakistan. And driven by coverage in the larger dailies with the most resources, newspapers also offered the most coverage of issues related to U.S. efforts to combat terrorism – almost 50% more attention than the media in general. One key component of that coverage was the controversial prison at Guantánamo Bay, Cuba. Smaller Papers and Big Stories The Financial Downturn Hits Home An examination of newspaper coverage of several major stories reveals a significant distinction based on the size of the publication. In several cases, the smallest papers – those with a circulation less than 100,000 – devoted the most coverage to a major story, the economy, in large part by mining the local community. The biggest papers (650,000 circulation and up) and major metros (100,000 to 650,000) devoted a nearly identical percentage of their front-page newshole (18% and 19%, respectively) to the economic crisis in 2008, their second-biggest story for the year. But in mid-sized and small newspapers (under 100,000), the economy was the biggest story of 2008, ahead of the election. For the year, fully a quarter of the coverage that began on the front page (26%) was about the economy and much of it dealt in real terms with the impact of the nation’s financial crisis on the day-to-day struggles of families and local businesses. Top 10 Stories by Newspaper Circulation
* Includes stories about the campaign, results, and the transition As the year began, much of this echoed the discussion in the national media of recession fears, falling home sales and rising foreclosures. In hometown papers it was illustrated by local examples. In the second quarter, the stories became even more specific – a local golf course up for sale, more people shopping at thrift stores, local layoffs and residents using bicycles to avoid paying high gas prices. In the third quarter, coverage was sparer, and tracked the national bank failures. The only unusual local angle was coverage of rising home foreclosures. But in the final months of the year, as the national media focused on the financial industry bailout in Washington, the coverage on local front pages showed a sharp increase in more finely grained stories about how local people, communities and states were attempting to cope. The crisis was hitting Main Street, not just Wall Street. The Colorado Springs Gazette, for example, carried articles about what local residents were doing to get by in hard times and how utility bills were expected to rise by 23%. The MetroWest Daily News outside Boston wrote about homes – vacant because of foreclosures – that were flooded by burst pipes. The New Hampshire Union Leader reported on local layoffs. And the Modesto Bee in California produced stories on divorced couples who were forced to remain in the same house. As these papers proved, it can be easier to track and illustrate an economic downturn of massive dimensions by chronicling the fallout closest to home. The impact of the Iraq war was also different in smaller newspapers than in the national media. While the home front was a small story nationally even in print (1% of the coverage in the biggest papers, 2% in big metros), the effect of the war at home was the major component of the Iraq story in the country’s smaller-circulation papers (fully 5% of all coverage). These were stories that included homecomings, funerals, celebrations and remembrances (about a third of the coverage), about the impact of the war on families and communities (another third) and on conditions for wounded veterans – recovery from injuries, the Wounded Warrior program, as well as those struggling with mental health issues, homelessness, financial problems or substance abuse issues (about one out of six stories). The Chattanooga Times Free Press recounted the emotions of the friends and family of a young Marine killed in Anbar Province as they waited for his body to arrive home. The Bakersfield Californian recalled the life and death of a local 21-year-old killed when a roadside bomb exploded near his Humvee in 2006. In September and October, the New Hampshire Union Leader carried a five-part series on a member of the local National Guard critically wounded in Iraq, and his fight to recover. In many ways, smaller papers with a more intimate sense of their community were best positioned to examine the many different human costs of the war. The Colorado Springs Gazette, for example, reported on a Fort Carson soldier working as a teacher’s aide with kindergarten and first-grade students who found the job helping him with cognitive problems caused by an explosion. “I had trouble keeping up with adult conversations,” he told the paper, “but I could keep up with the kids.” Local Olympic Heroes One other story was clearly bigger in the small newspapers in 2008: the Olympics, where the coverage was about double what it was in larger papers. More than half the stories highlighted hometown links to the Games – local athletes either competing in qualifying events or actually heading to Beijing, a local reporter going to China to cover the games, a local chiropractor selected to join the health care team, as well as reactions of local residents to media coverage or to stories of inspiring athletes. The MetroWest Daily News in Massachusetts profiled Natick sports chiropractor Scott Gillman, selected by the World Olympians Association to join the health care team in Beijing, as well as staff reporter Chris Bergeron, who – having previously lived and worked in China for seven years – was returning to a vastly transformed country. The Colorado Spring Gazette’s stories, focusing on individual athletes, were, for the most part, more poignant. There was the story of Mike Farrell, a Colorado Springs resident who suffered nerve damage after being bitten by the family dog when he was only three days old, competing in the U.S. Paralympics cycling trials. (The Paralympics were held in Beijing a few weeks after the Olympic Games) And the tale of another local resident, Roger Stewart, the first known deaf wrestler to qualify for the U.S. Olympic trials. Colorado Springs is the headquarters of the U.S. Olympic Committee. Footnotes 1. Only the online sector devoted less of its newshole (39%) to the year’s two top stories. 2. According to the weekly News Interest Index, which measures which stories are being followed “very closely” by the public, eight of the top 15 stories related to the economy. http://people-press.org/report/479/internet-overtakes-newspapers-as-news-outlet Audience By the Project for Excellence in Journalism and Rick Edmonds of The Poynter Institute Over all, the audience for what newspapers produce continued to grow in 2008. But for an industry that for advertisers must still separate print readers from online, the news was not good. The declines in print newspaper circulation, which had begun to accelerate alarmingly in late 2003, only became deeper in 2008.
Over all, newspaper circulation fell 4.6 % daily and 4.8% Sunday for the six-month period ended September 30, according to the Audit Bureau of Circulations. That was even worse than the 2.6% declines daily and 4.6% Sunday reported for the period a year earlier.1 That still left daily circulation at 48,408,000 Sunday at 48,786,000.2 The news about newspapers’ online audiences was mixed but more positive than not. One measure, unique visitors -- or the number of different people who visited newspaper websites each month -- was up 15.8% to 65 million in the third quarter of 2008 over a year earlier, according to measurements by Nielsen Online. Page views—the number of different pages within each website viewed each month—were up 25.2 %.3 Total audience, or the number of people who read the paper either online or in print (once those who read it in both places were accounted for), also appeared to be growing. A study by the circulation bureau with Scarborough Research for the six-month period ended September 30, attempted to measure the combined reach of 130 participating newspaper websites. On average, the unduplicated Web audience added 8.4 % to the print readership in their home markets.4 An independent check on these industry measures came in the every-other year survey of news consumption habits by the Pew Center for the People & the Press. The study, released in August, found that those who said they had read a newspaper yesterday was 34%, compared to 40% two years earlier, while the number who said they read news online yesterday jumped to 29% from 23%.5 For all that, however, the time people spent on each site fell at many papers, suggesting much of that traffic comes from searches with users lingering only briefly rather than reading the news as they would in a print paper. The print circulation slide from 2001 to 2008 totals roughly 13.5 % daily and 17.3% Sunday.6 The decline in print circulation, while bad, is not as catastrophic as some might think at first glance. First, because their demographics are so strong and print ads are considered effective, newspapers still do not have to tie their ad rates in line with circulation numbers the way some other media do. Some of the print circulation losses have also been intentional and strategic. Especially in a year when cost-control was all-consuming, large metros and even smaller papers deliberately discontinued circulation to the more remote sections of their home area. Those papers are particularly expensive to deliver (in a year when gas prices went for a time to more that $4 –a gallon). Distant readers are also less valuable to hometown retail advertisers, and it adds to editorial costs to cover those faraway towns. Another factor fueling the circulation declines, during a difficult year for revenues, is that seeking or even maintaining circulation is expensive. Most newspapers sell subscriptions by phone. The already expensive practice has become more costly since the federal do-not-call registry eliminated millions of homes that could be called And the yield is not very good. Most trial subscribers do not take a full-term, full-cost subscription, setting off new rounds of startup sales and a cycle of churn. Newspaper executives are now saying that they are better off with a lower but stable number of core subscribers. As is typical, the average numbers were made up of widely varying results among papers. Some highlights.7 ●As through most of this decade, national papers did better than the norm. USA Today and the Wall Street Journal stayed even for the six months ending in September compared to a year ago. The New York Times circulation was down 3.4% daily and 4.1% Sunday, but with aggressive price increases, it was a rare paper that showed a gain in circulation revenues. ●Big city metros continued to fare worst of all. Only 2 other of the top 50 papers in circulation (aside from the three nationals) had increases in daily circulation – the Cincinnati Enquirer (up 0.5%, benefiting from the closing of the Cincinnati Post) and the Pittsburgh Post Gazette ( up 0.4 %). ●Six of the largest 50 had double-digit losses year-to-year -- the Houston Chronicle (down 10.6%), the Star-Ledger of Newark, N.J. (down 10.6%), the Philadelphia Inquirer (down 10.7%), the Atlanta Journal-Constitution (down 13.4%), the Orange County (Calif.) Register (down 14.4%) and the Miami Herald (down 12.1%). The Houston, Philadelphia and Newark papers had double-digit losses on Sunday as well. ●All told, excluding the three national papers, Deutsche Bank analyst David Clark calculated that the top 50 newspapers (which account for about a third of all circulation) were down 6.3% daily and 5.9% Sunday. ●The contribution of newspaper websites to expanding audience reach varied as well. The San Francisco Chronicle was tops, adding roughly 24% to its print audience when monthly unique visitors to its web site, SF Gate, were included. Other large papers that did best in adding audience were the Boston Globe, the San Diego Union-Tribune and the Atlanta Journal-Constitution.8 Several years ago, there was vague talk that the industry would work through shedding less-desirable subscribers and that print circulation numbers might stabilize if not turn back up. That now appears less likely as the gradual shift of audience to the Internet continues and financial pressures rule out aggressive investment in building print circulation for most metro and mid-sized papers. So expect circulation totals to decline again in 2009 and 2010. New Audience Strategies Raw numbers do not tell the entire audience story. Changes in strategy are at work that mirror the aspiration of newspaper organizations to transform themselves into diversified publishing ventures on multiple platforms. Besides the basic news audiences in print and online, the companies are looking for additional audiences that will interest local advertisers and build revenues. For a start, many newspapers have ditched the traditional circulation department in favor of a broader audience development and marketing department. Some of the traditional functions, including delivery and customer service calls, are prime candidates for outsourcing to save money. What remains crucial for the newspaper is to identify groups of audiences to be served within its market and a suite of products that will deliver those audiences to advertisers. Most papers have specialty publications, distributed to high-income ZIP codes and driven by advertising for luxury goods. Health and fitness or other topics with advertising support get the same niche publication treatment. Besides the main website, papers typically have specialty or micro sites with distinct ad bases and topics that will draw reader participation and comment. At Gannett’s 85 community newspapers the big three are moms, high school sports and nightlife. A few papers – the Chicago Tribune, St. Petersburg Times and the Dallas Morning News are notable examples – have free distribution print products targeted at youth audiences or other groups. All this may seem to have little to do with traditionally defined news, but it gives the newspaper organization’s sales force, some of them now specialists in online options, a briefcase of solutions to sell the prospective advertiser. One other factor could also affect circulation. United States newspapers are notoriously underpriced – selling a single copy typically for about half the going rate in Europe and Asia. As a result, circulation generates only about 15% to 20% of the typical newspaper’s revenues here; abroad a 50-50 split between circulation and advertising revenues is common. Even with the recession, many papers are becoming more aggressive about pricing -- most McClatchy papers went to 75 cent a copy in the fourth quarter—which can drive circulation down but may strengthen the paper.9 Online, the continuing strategy is to build out websites with even more breaking news, multimedia content and user participation. Newspapers are reconciled to having many visitors arriving by search or from sites that aggregate news reports from many sources, at the same time hoping to have enough to offer that local users will linger. The companies seem to be betting that online advertising, disappointing in the last several years, will increase in volume and command higher rates with better targeting. (See more detailed discussion of this in the Economics section of this chapter). In 2009, new rules from the Audit Bureau of Circulations will be phased in. Paid circulation will mean paid by individuals. Paid distribution by third-party groups or distribution at hotels and conferences now count as separate categories. That is consistent with the industry’s story that it wants quality circulation and recognizes the other categories are of less worth to advertisers. However, there is a loophole – paid circulation can be for any amount, allowing a return to deep discounting should a paper choose to go that route. A final strategy might be called a roll of the dice by drastically scaling back the daily print product. Most metros are now producing a paper smaller in every dimension than the one they were publishing three years ago – thinner paper, narrower page width, less space for news and a smaller staff covering a shrinking geographic area and range of topics. We have expressed skepticism about a less-is-more editorial report in previous editions of State of the Media. Logic and empirical research by Phil Meyer in his 2004 book, “The Vanishing Newspaper,” suggests that a bare bones newspaper will have difficulty holding marginally committed readers.10 The cutters are probably right in suggesting that hurried readers will accept a tightened report – to an extent. But the deep cuts of 2008 raised concerns among observers beyond the usual academics and media critics. Goldman Sachs analyst Peter Appert asked A.H. Belo CEO Robert Decherd during an earnings conference call in July, “How do you maintain editorial relevance and quality as you are doing such dramatic cuts in staff?” Decherd replied that the right mix of materials would keep “our products more than relevant, actually essential, to the local news and information needs of our communities.”11 In addition to a diminished daily product potentially alienating readers, the strategies at some papers to reduce print delivery to a few days a week (Detroit is a prime example) also will test whether cutting some of the daily print cycle brings big advertising losses. Throughout the industry, 2009 circulation results will bring a fresh test of a question – are newspapers still substantive enough to hold readers? Or is their skimpiness going to drive deeper audience losses? Number of U.S. Daily Newspapers Over all, the total number of daily newspapers continued to decline for the fourth straight year. In 2007, the most recent year for which data are available, daily newspapers were down to 1,422 in that year from 1,437 in 2006.11 Of the total number of daily newspapers, evening papers continued to decline, while those in the morning continued a trend of growth. In 2007, the number of evening papers declined by 49. This compares with a drop of 31 evening papers from 2005 to 2006.12 Morning newspapers, on the other hand grew by 34 in 2007, continuing a trend of growth after adding 16 from 2005 to 2006.13
Readership Demographics As has been the case for several years, newspaper readership continued to steadily decline in 2008. Across all demographic groups PEJ looks at – age, ethnicity, education and income – fewer people across the board are picking up daily and Sunday newspapers. Among readers of all ages, readership declined between 2007 and 2008. Young people in the age groups of 18 to 24 and 25 to 34 continue to have the lowest readership levels of daily newspapers. Among readers 18 to 24 years of age, 31% say they read a newspaper yesterday, according to data from Scarborough Research. This represents a drop of two percentage points from the prior year. Those in the 25-to-34 age group do not demonstrate much better numbers. Readership of daily newspapers was down to 32%, also down two percentage points from 2007.14 Those aged 35 to 44 and 45 to 54 also showed declines in readership in 2008. Readership of daily newspapers was down to 41% and 51%, respectively, among the age groups.15 And even the most faithful readers of newspapers, older people, or those ages 55 – to 64 and 65 and above have shown sharp drops in readership since 2000. In 2008, readership was down to 57% among 55-to-64-year-olds, a drop of nine percentage points since 2000. Those 65 and older showed an even greater drop. Although 64% say they picked up a newspaper yesterday, this number has declined from 72% in 2000, an eight percentage point difference.16
According to demographic data of newspaper readership by ethnicity, the group most likely to read newspapers—whites – declined to 47% from 49% the year before. African Americans and Asians, however, held their readership steady between the two years, at 42% and 41%, respectively. For African Americans, this broke a slow but steady decline in readership that began in 2002. Asians readership, which had been seeing slow but steady readership decreases, has held readership steady for the past three years, since 2006. And after a slight increase in readership in 2007, Hispanics – the group least likely to read a newspaper – showed a decline in readership in 2008, down to 29% from 31% in 2007.17
Among readers of varying levels of education, newspaper readership also declined across the board between 2007 and 2008. One of the two groups most likely to read newspapers – those with some post-graduate education – showed a drop of three percentage points in 2008, to 56%, the largest drop among groups of any level of education. Those with post-graduate degrees also declined, down to 60% from 62% the year prior. College graduates showed the least decline, dropping only one percentage point to 52% in 2008. Readers with some high school and some college both dropped off two percentage points, to 44 and 48% respectively, since 2007.18
Footnotes 1. Jennifer Saba, “FAS-FAX: Most Major Newspapers Continue Circulation Declines,” Editor and Publisher, October 27, 2008 2. Newspaper Association of America, “Trends and Numbers” at NAA.org. Most recent figures are as of the end of 2007, adjusted for further losses in 2008 3. “Newspaper Web Site Audience Increases 15.8 % in Third Quarter to 68.3 million,” Newspaper Association of America, October 23, 2008 4.David T. Clark, “Weak Circulation Trends Across Industry,” Deutsche Bank Securities,” analyst’s report, October 27, 2008 5. Pew Center for the People and the Press, “Key News Audiences Now Blend Online and Traditional Sources,” August 19, 2008 6. Newspaper Association of America, “Trends and Numbers” at NAA.org. Most recent figures are as of the end of 2007, adjusted for further losses in 2008 7. David T. Clark, “Weak Circulation Trends Across Industry,” Deutsche Bank Securities,” analyst’s report, October 27, 2008 8. David T. Clark, “Weak Circulation Trends Across Industry,” Deutsche Bank Securities,” analyst’s report, October 27, 2008 9. Rick Edmonds, “What Should a Newspaper Cost?” Poynter Online, May 2, 2008 19. Philip Meyer, The Vanishing Newspaper, University of Missouri Press, 2004 11. A.H. Belo Corporation Q2 2008 Earnings Call, Seeking Alpha, July 28, 2008 12. 2008 Editor & Publisher International Yearbook Data, "Circulation of U.S. Daily Newspapers by Circulation Groups, Number of Daily Newspapers." 13. 2008 Editor & Publisher International Yearbook Data 14.2008 Editor & Publisher International Yearbook Data 15. Scarborough Research Center , survey data spring 2008 16. Scarborough Research Center , survey data spring 2008 17.Scarborough Research Center , survey data spring 2008 18. Scarborough Research Center , survey data spring 2008 19. Scarborough Research Center , survey data spring 2008 Economics By the Project for Excellence in Journalism and Rick Edmonds of The Poynter Institute A single statistic provides a good illustration of how bad 2008 has been for newspapers. In 2006, total industry advertising was $49.3 billion. In 2008, it was about $38 billion (estimating fourth-quarter results) – a decline in the two years of 23%. 1 At a number of metro dailies, especially where real estate has crashed the most, the percentage loss was worse. And further declines are on the way in 2009. The immediate financial problem for newspapers has become hunkering down for survival. Can the traditional cost structure – people, paper, presses and delivery fleets -- be reduced at the same pace revenue is falling? For that matter, can newspaper companies with significant debt earn enough to make their interest payments? Beyond the immediate, other questions linger. To what extent has the hunkering-down strategy newspapers are engaged in slowed, or even stopped, efforts at innovating new revenue streams online? Heading into 2008, many newspapers were convinced they had to approach their websites as their first product, and print as second. Is that approach, considered a key to innovation, a luxury papers couldn’t afford as the year went on? And to what extent have newspapers been weakened by the recession that will inhibit their ability to survive when the recovery finally begins? For now, the industry has developed an array of cost-cutting strategies -- cuts in news staff, the physical dimensions of the paper and the space devoted to news, most obviously. The playbook now also includes sharing reporting and business functions with former rivals, outsourcing support functions as far afield as India and even, in a few cases, dropping print editions in favor of online-only publication some days of the week. With these adjustments, the majority of newspapers remain profitable (although not nearly as profitable as they once were), and that may surprise some casual observers. Why not just break even, rather than cutting back on operations? The answer varies. Some companies must make a profit to stay in business, others to pay off lenders (who are paid from operating profits). It is also important to sustain shareholders-- given the damage to stock price and company values. They can always rehire and build back. Still, despite making a profit, the damage has been considerable. Newspaper stocks, which had lost 42% of their value from the start of 2005 to the end of 2007, lost an astonishing 83% of their remaining value during 2008.2 Only the Washington Post Company, among those whose stocks are publicly traded, now commands more than $10 a share (and its share price has been in the hundreds for years because it did not do splits as value grew). A number – including former high-flyers McClatchy and Lee – were trading for less than $1 a share in early 2009.3 The longer-term issue for the business is quite different, but also daunting. Newspapers hope to revive online advertising growth. Online advertising for newspaper sites was growing at 33% a year earlier in the decade. But that is now over. In the final three quarters of 2008, online ad revenue declined.4 As we have noted in earlier years, the most important fact about the Internet is that it has in some significant way decoupled advertising from news. It is now clear, if it wasn’t before 2008, that the industry will need to invent new revenue streams altogether. Internet advertising alone will not sustain the business. Of the $38 billion in advertising that the industry was estimated to have drawn in 2008, only $3 billion came from online.5 Put another way, roughly half of newspaper readers now access the papers online for at least some of their news. But the Web produces less than 10% of the industry’s revenue. The new revenue streams could include serving news content and geo-specific advertising to the burgeoning smart-phone mobile market or providing downloadable versions of the paper to devices like Amazon’s Kindle, which are rapidly improving in ease of reading. It could mean arranging point-of-purchase revenue from online sales. Or it could involve rethinking the free-content model, perhaps in cooperation with Internet service providers. The book publishing industry was successful in negotiating a royalty agreement with Google for the electronic reproduction of some books. But our sense is that little spadework has been done in any of these areas. The problem is that the willingness to seek multiple new revenue sources and ability to do so are two different things. Newspapers have neither the profits nor the access to capital to finance rapid business transformation. Some critics think that industry leaders lack the needed business creativity as well. There is one more mid-term/long-term possibility that is little talked about. What if marketers’ flight to digital advertising and other non-media formats accelerates? What if some of the winning new advertising/marketing solutions have little or no relation to news content? After all, the surprise successes of this decade including -- most prominently Google, Craigslist and Amazon – do a job for buyers and sellers without an expensive news effort. That leaves the industry with an eye on another route in which it has had little success to date: getting much more financial support from readers or patrons who value what newspapers do in gathering and making sense of the news. Profits and Stock Performance Newspapers’ profitability picture is changing and rapidly deteriorating. Here is a summary of where the industry stands after the battering of 2008 and an awful start in 2009. Broadly, newspapers were not able to reduce cost structure as quickly as revenues fell. With results for three quarters in, public companies were typically reporting costs down about 8%. Revenues, however, fell by twice that. Operating profit margins fell to the high teens in 2007 and sunk into the low teens in 2008.6 If you consider fourth quarter the norm going forward, 2009 is almost certain to be worse than that. Saying that newspapers still have relatively healthy margins – some hovering around 20% -- is true as far as it goes, but misleading. If a company continues to make a high margin on revenues that are down, its actual earnings are down, and it is actual earnings that matter – in making debt payments or providing a reasonable return for shareholders. The overall averages also mask a range of results. Smaller newspapers (up to 75,000 circulation) typically are doing better than the industry as a whole—with much more modest revenue declines and margins in the high teens. They have lighter competition from online alternatives and may be the sole outlet for local coverage and retail advertising in their communities. A number of major metropolitan papers have reported that they are now losing money to the tune of $1 million a week, the Atlanta Journal-Constitution, the Boston Globe and the San Francisco Chronicle among them. The Seattle Times, the stronger paper in its joint operating agreement with the Post-Intelligencer, is also operating at a loss. The Denver Post, the stronger of the papers in another joint operating agreement, is also losing money and could lose even more as its former partner, the Rocky Mountain News, has ceased publication. The Washington Post ran at roughly break-even in 2008 – a result the company can afford for at least a while because of strong earnings by its Kaplan Education, cable and local television station groups, together with extremely low debt. Companies that strive to maintain margins and profits as high as they can may argue they have little choice given debt obligations and the forces depressing advertising. Nonetheless, the strategy carries a pair of risks – weakening the print product and leaving a depleted kitty for investments in Web development or other new revenue streams. Last year we reported on the two-year swoon of publicly held newspaper stocks. But 2008 was even worse – the public group lost 83% of its remaining value and shares have fallen even further in early 2009.7 The chart below provides detail. Stock Values, Select Newspaper Companies
Source: Yahoo Finance Bad and uncertain earning prospects are the basic cause of Wall Street’s disenchantment, but there are two additional factors weighing against newspapers. Institutional investors (who make up most of the market) typically have a horizon of 12 to 18 months. Even industry optimists have a hard time arguing that the business will revive in that time frame. Institutional investors are also wary of businesses that might “go to zero” even if the odds of failure are slight. That sort of pick, gone wrong, can damage a fund’s ratings and hurt in attracting and holding customers for whom it manages money. For an investor able to absorb such losses, newspaper stocks are a bargain at these prices if you believe that they will find a way to survive. That helps explain why Mexican billionaire Carlos Slim Helú was willing to put $250 million into the New York Times (at 14 % interest) in January 2009 when other lenders might not.8 Where Did the Advertising Go? Earlier editions of this report have discussed the decline of newspaper advertising with emphasis on the precipitous fall of print classifieds. The short story of 2008’s distress is that those downward trends were compounded – probably doubled – by the recession.
In early 2009, companies in many industries began announcing huge layoffs and otherwise buttoning down to weather the economic crisis. Advertising has been cut and stands to be cut further. The leading edge of the classified troubles came early in the decade with the fast rise of Monster -- an ingenious and potent electronic system for matching the needs of employers with the availability and ambition of job seekers. It was simply a better mousetrap than column after column of print advertising in which each extra word increased the cost. The industry rallied with a copycat service of its own. By 2007 and 2008, that service, CareerBuilder, had built a comparable volume of listings. But by the second half of 2008 many companies had stopped hiring. Job-listing revenues were down 43.6% in the third quarter compared to the same period in 2007.9 Craigslist was a second killer competitor for classified advertising. Its listings – except those for jobs in the biggest cities – were free. If offered a no-frills (no news –content) marketplace for such things as general merchandise, used cars, apartment rentals and jobs. Users could go on at length, for instance describing the virtues of a car being sold and including a few color pictures. Meanwhile, Google grew to become an indirect but potent competitor for advertising. The great majority (98 %) of the company’s revenue comes from advertising and the great majority of that is linked to search.10 Google News carries virtually no ads, and its business function is to drive users to search. Search advertising is easy to place and much of it priced by an auction, but its greatest appeal to marketers is being highly targeted to interests users display in their search choices. It is a moneymaker to Google because of the sheer volume of search advertising in the system. Two-thirds of all U.S. searches go through its system, allowing it to make billions a year from pennies per search ad. Put it all together with similar competitors in real estate and autos, and the newspaper industry has seen classified volume shrink from $19.6 billion in 2000 to about $10.2 billion in 2008 (estimating the fourth quarter).11 Of the 23% total two-year decline in advertising, highlighted at the start of this section, four-fifths comes from plunging classifieds. Lauren Rich Fine, a media analyst, suggested to publishers at a meeting in early 2008 that they might prudently plan for print classifieds to go to zero over the next five years.12 The performance is unlikely to be that bad – but the point is that print classified is nothing to count on any more. Several subcategories within newspaper classified are experiencing especially hard times. Real estate has crashed and real estate advertising with it. This is particularly painful to papers in California, Florida and some cities that were raking in cash during the middle of the decade from the big ad budgets for new subdivisions and condos. The troubles of the auto industry also hit particularly hard. The number of local dealerships is being reduced and those remaining get smaller advertising allowances from the manufacturers. Beyond the classified debacle, there are other challenges: ●Retail has been hit by the wave of mergers, which may now have run its course. The loss of market share by traditional department stores (once the most prolific newspaper advertisers) to Wal-Mart and other discounters (who use newspapers only lightly) continues year to year. Hunting for a few nuggets of good news in this rubble, here are several: ●Print still works for a number of advertisers. The stack of inserts jammed into most Sunday papers attests to that. Price point promotions and coupons can be replicated on the web but shoppers do not seem in a hurry to change. ●As much as half of the current declines relate to the recession rather than changing media preferences. When the recession is over, sooner or later, there is a potential for bounce back, even in such disaster categories as real estate and cars. ●With improving news websites, specialty sites like those for moms or nightlife and niche print publications targeted at youth or the luxury market, newspaper sales people have a rich array of options from which to sell a package solution to a given advertiser. ●The percentage declines paint a depressing picture, but $38 billon is a pretty good residual base of business. Some of the hottest Web phenomena – YouTube, Facebook and Twitter, to take three examples – have all kinds of potential but no advertising to speak of yet. Cutting Costs Deeply and Broadly If advertising revenues go down 23% or more in two years and more declines are on the way, aggressive cost-cutting is a necessity rather than an option. The newspaper industry has responded to its revenue crisis by ramping up the cost-cutting strategies of recent years and working on some new wrinkles. Most obvious to the readers is the continuing reduction in newsroom staff and the space devoted to news. Along the way free-standing sections like business typically get so small that they are tucked into another. These changes are the focus of the next section of this report, News Investment. A related money-saving strategy is to reduce the physical dimension of the printed newspaper, both the weight of the paper and the size of the pages. Our sense is that the present almost-see-through thickness that is widely used is about as far as most can go without becoming tissue-like. The cycle of downsized pages, on the other hand, is likely to continue on during 2009. Though all but a few papers have resisted the option of converting to tabloid or the slightly larger Berliner format, the most radically trimmed are backing into dimensions only a bit larger. Most of the bigger holdouts – the New York Times, the Wall Street Journal and the St. Petersburg Times – did reduce their width in 2007 or 2008. Remaining wide-body papers like the Concord Monitor look a little odd and antique but can still capitalize on the options for photo display and design variations. Using less paper was a particular focus because after several flat years, newsprint prices rose sharply from the end of 2007 through most of 2008 – going as much as 25 % higher year-to-year.14 Minimizing paper consumption (together with circulation losses) defrayed what could have been a killer expense. Very soft demand eventually put an end to the increases. Rates peaked in early November, have fallen since and are expected to decline through 2009, but by a few percentage points, not by 25. Another big target for savings was circulation, especially delivery. Here, too, price was a factor. Mid-year 2008 gas prices of $4 a gallon or more got the attention of any managers who were not already figuring ways to cut the fuel costs of a delivery fleet. As with paper, the price situation had eased greatly by year-end, even if $2 a gallon gas is more a respite than a trend going forward. A popular strategy, especially for metro papers (detailed in the Audience section of this chapter) is to trim circulation in the state, the region and even to more distant parts of the metro area. Those are the most costly papers to deliver and the audience is not of much value to local advertisers. Newspapers are also finding ways to outsource circulation costs. The New York Times now routinely contracts with local papers to deliver its national edition. And, in late 2008, it took the step of shutting down the business it owned that delivered newspapers and magazines in the New York area. Other companies have contracted phone solicitations for new subscribers or even complaints about missed deliveries to call centers elsewhere in the country or abroad. Other outsourcing strategies, started in late 2007 and continuing on through 2008, include moving overseas the jobs of composing, designing or laying out advertising, often to India, or subcontracting routine business functions like payroll to outside vendors More and more newspapers are quietly also leaving the business of printing their own papers. In fact a large segment of the industry seems to be reorganizing itself into those that want to continue printing and take on extra jobs and those that are ditching the function. As the recession deepened, other tactics emerged, such as salary freezes and suspending company payments to retirement funds. Gannett announced that it would require all employees (up to the CEO) to take a week’s unpaid furlough during the first three months of the year.15 That practice seems likely to catch on and may at least signal that management, like outside critics, wants to avoid the solution of cutting staff and downsizing the print product again and again. Selling Assets For many newspaper companies, trimming operating costs is not enough. A next recourse may be selling assets. Some big papers are in process of selling all or part of their headquarters buildings. Among the sellers: the New York Times, the Chicago Tribune, the Los Angeles Times and the Philadelphia Inquirer. The Miami Herald has been trying to sell a large parcel of vacant land downtown. In early 2009, Tribune was trying to sell the Chicago Cubs and the New York Times its 17.8 % share in the Boston Red Sox. Small television holdings or other stray businesses are also candidates for sales to raise cash. Sometimes the assets are valuable and profitable businesses. Landmark Communications of Norfolk sold its Weather Channel subsidiary to NBC Universal and two private equity funds for an estimated $3.5 billion in June 2008.16 The St. Petersburg Times sold the book division of Congressional Quarterly in 2008 and put CQ itself, a family of information products about Congress and politics, on the block in early 2009. As noted in the ownership section of this chapter, companies would be willing (and some are trying) to sell some of the newspapers they own and pull back to one or two they consider core. The trouble is, though, that there is little buyer interest and those few potential buyers who may be interested are likely to have trouble finding financing. Omitting Print Editions For some papers, trying all of the above still is not enough. They may be operating at a loss or making a profit but not enough to make debt payments. Staying the course does not make sense. In late 2008 and early 2009, several strategies emerged for such distressed papers. One is to limit print publication -- or at least home delivery – to certain days of the week and steer readers and advertisers to the online version on other days. Small-circulation papers in Madison and Superior, Wis., were first to make the shift. Then in the fall, the East Valley Tribune, serving the eastern suburbs of Phoenix, announced that it would print just Wednesdays, Thursdays, Fridays and Sundays (switching to free distribution), relying on its online version for the other days. At the same time, it discontinued coverage and distribution in the older close-in suburbs of Tempe and Scottsdale, focusing on the more remote and fast-growing communities of Mesa, Chandler and Gilbert. Then in early November the Christian Science Monitor announced that it would become an online-only publication, except for a single, magazine-style weekend issue. The Monitor’s unusual business model relies almost entirely on circulation revenues and a subsidy from the Christian Science Church. It gets a minimal amount of advertising and thus was not sacrificing much revenue by eliminating print versions. Its readers tilt older, however, so there is some risk in trying to get them to follow to online. The new publication schedule also solves a problem particular to the Monitor. Its modest circulation of just under 50,000 is scattered nationwide. That requires delivery by mail – and a noon deadline for midday delivery the next day, hardly a match to the growing expectation that news or analysis will be available as soon as it is finished. In December, the joint operating agreement agency in Detroit announced that its papers will be home-delivered only three days a week (the Detroit Free Press on Thursday, Friday and Sunday, and the Detroit News on Thursday and Friday). The papers will print compact print editions the other days but they will be distributed only in racks and retail outlets. The Detroit deal illustrates both the logic and possible perils of this strategy. The agency’s president and Free Press publisher, David Hunke, said that a majority of print ad revenues come from the Sunday and other late-in-the-week issues.17 So the move puts a comparatively modest amount of advertising at risk, and the papers can hope to retain some of that in the compact editions or move it to later in the week. At the same time, the reduced print schedule will save on delivery and paper costs and probably allow some reduction in pressroom staffing. Of course, the savings fall well short of what could be realized by dropping print altogether in favor of online. That would take paper, delivery and pressroom costs to zero. Hunke said that the big change made more sense than continuing to whittle away at staff and news space. He seemed to be acknowledging, without underscoring the specifics, that the move had substantial risks. First, it is not a sure thing that the savings will outweigh the loss of advertising and circulation revenue. More subtly, there seems to be a problem in telling loyal seven-day-a-week subscribers that the print paper is expendable some days. Robert Dickey, president of Gannett’s newspaper division, told us in December that he was glad that nearly all Gannett papers (except the Free Press) are profitable enough that it was not necessary to try a strategy about which he has serious misgivings.18 Even if the early-in-the-week papers generate less advertising revenue, he said, they bring readers in and keep them around for the more profitable days at the end of the week. Still, with the recession locking metro papers into losses, we expect to see more experimenting with a partial movement to online-only during 2009. Bankruptcy and Closing Down Altogether Two other responses to distress are strictly financial. Sam Zell’s Tribune Company led the way in December and the Star Tribune of Minneapolis has followed in filing for bankruptcy protection. That basically means that assets fall short of debts, and usually that operating income is not covering the cost of debt service. But it is a little more complicated – typically the company filing is looking for a window in which it can partly repay some of its debts and shed some and then continue to operate a smaller company. Major lenders and smaller creditors may instead seek to oust management and force the sale of assets. It is hard to predict an outcome in the early phases of the proceedings. Meanwhile, the newspapers involved continue to publish. A final option is simply to close an unprofitable newspaper. The Rocky Mountain News in Denver, owned by E.W. Scripps, took that course in late February 2009. Earlier, two Journal Register papers -– in Bristol and New Britain, Conn. -- had been threatened with closing, but Michael Schroeder, an experienced publisher, stepped forward at the last minute to buy them. The owners of the Seattle Post Intelligencer (Hearst) and Tucson Citizen (Gannett) announced that those papers would be closed in the first quarter of 2009 unless a buyer can be found. Those two, like the Rocky are the weaker papers in a joint operating agreement, an arrangement that has not worked well in good times and whose weakness – trying to divide up advertising in a market that naturally supports just one paper -- is further exposed in a recession. Also in the early months of 2009, management at several metro papers – the Seattle Times, Denver Post and San Francisco Chronicle – have demanded concession from unions and threatened bankruptcy or closing should those negotiations fail. Our guess is that there will be more bankruptcies and at least a few more closures this year. Will Online Ad Growth Resume or Other Rescue Prospects Emerge? We have posed the question in past reports of how quickly online advertising revenues (or those from other ventures) will need to grow to make up for declines in print advertising and print readership. Our initial answer three years ago was that the base was so small that even growing a third a year (a hard pace to sustain), online advertising revenues would not draw even with print advertising revenues until late next decade. Since then, print has gone from flat to falling quickly, but online growth stalled out too. A consensus view within the industry is that online growth can rally after the recession, perhaps even get a second wind as technical improvements like a developing partnership with Yahoo make it easier for advertisers to place and target their sales messages.19 That is an enticing promise. Obviously, a higher volume of display advertising at higher rates is exactly what is needed to snap newspaper websites out of their business doldrums. But it is now unlikely to ever reach the point where newsrooms could operate at the levels of newsgathering they once did, even after the cost savings of eliminating printing and distribution. One of the few encouraging bits of advertising news in 2008 from McClatchy and others was that online display advertising rose sharply and that the first tests of the Yahoo system were yielding additional sales.20 Over all, however, online ad revenues declined slightly because much of it is still tied to a combination with print classifieds. And the industry has been sluggish about developing easy self-placement systems for online classifieds, which is part of the appeal of Google and other electronic rivals.
Gannett and others are getting good results from specialized sites for moms and other audiences. Gannett now has a shared template among its 85 community papers for moms, local nightlife and high school sports. Each generates traffic and a high volume of free user-contributed content, plus a specialized audience of interest to local and national advertisers. Audience for newspaper sites continues to grow at a healthy pace – by 12.1 % as measured by unique visitors per month in 2008 versus 2007.21 How much time those visitors spend on site is a mixed bag. Over all the numbers are low (10 minutes or less per month is typical) and, in some cases, declining, but that is influenced by the large volume of traffic that comes via search and may stay for only an article or two.22 Sites continue to add features – blogs, discussion chains, video and audio—that would encourage the interested user to linger. So industry executives can argue, with reason, that they are developing their sites for future ad growth – even if the current business reversals mask that. A second point of consensus seems to be that continued print advertising plus website advertising will likely not be enough to sustain a healthy business. So looking for other potential revenue streams is also part of the game plan. Among the top prospects are downloadable versions of the newspaper to wireless devices like the Kindle, for which users would pay something but not as much for a print version. Also serving news and advertising to mobile devices is considered a hot prospect, especially as the devices themselves like Apple’s i-Phone have improved in applications offered and readability of display. The New York Times reported that mobile page views rose from 500,000 in January 2007 to 19 million in May 2008.23 Still there remain many details to be filled in, both in tailoring news reports to the specs of the medium and particularly displaying advertising and including a measure of geo-targeting. In fact, the jury is very much out on how well online ads running alongside news content work for users. Many readers dip in and out of sites quickly; many considering a product or service go straight to a search or shopping site and probably are just as happy that no news is getting in the way of what they are looking for. While all but a few sites (the Wall Street Journal and the Financial Times are the most notable exceptions) make access to all of their content free and have even dropped registration requirements, a number of save-the-industry essays in early 2009, including a Time magazine cover story by Walter Isaacson, a former managing editor of the magazine, advocated revisiting the decision to give away stories that are expensive to produce.24 He focused on ways to get readers to pay. A more promising option, less part of the debate at this point, may be negotiating with aggregators like Google as well as Internet service providers like Verizon to share revenue with news producers. That is not totally out of the question but, as a practical matter, most newspaper publishers have built their current online ad base and future prospects on getting as many ad views as possible with content that is free and accessible through search. All of this is meant to suggest that newspapers situation is by no means hopeless if (and it is a big if), they can weather near-term challenges. As noted at the beginning of this section, however, there are some grimmer scenarios that cannot be ruled out. What if audience begins to migrate much more quickly to digital formats, some newspaper-related but more not? What if the shift from traditional to digital formats accelerates and much of the business goes to non-news alternatives, some familiar and some yet to be invented? Internet advocates like Morgan Stanley analyst Mary Meeker argue that there is plenty of “take-away” business still parked in print budgets that logically should be diverted to digital alternatives.25 Our sense is that some sort of reallocation is happening only slowly during the recession but it might pick up momentum after. Then the new-business-model heat would really be turned up on newspaper organizations. Can they find someone else to pay for what is most valuable in the news and analysis they produce as many traditional advertisers move on? Footnotes 1.Newspaper Association of America, “Trends and Numbers” at NAA.org. Most recent figures are as of the end of 2007, adjusted for further losses in 2008. 4th Quarter projected at an 18 % loss. 2.Alan Mutter, “Newspaper Share Value Fell $64B in 2008,” Reflections of a Newsosaur, January 1, 2009 3. Yahoo Finance 4.Newspaper Association of America, “Trends and Numbers” at NAA.org. Most recent figures are as of the end of 2007, adjusted for further losses in 2008 5. Newspaper Association of America, “Trends and Numbers” at NAA.org. Most recent figures are as of the end of 2007, adjusted for further losses in 2008 6. Various company presentations, UBS Global Media Conference, New York, December 2008. Also John Morton, “It Could Be Worse,” AJR, December/January 2009 7. Alan Mutter, “Newspaper Share Value Fell $64B in 2008,” Reflections of a Newsosaur, January 1, 2009 8. Eric Dash, “Mexican Billionaire Invests in Times Company,” New York Times, January 19, 2009 9. Newspaper Association of America, “Trends and Numbers” at NAA.org. Most recent figures are as of the end of 2007, adjusted for further losses in 2008 10. Jordan Gibson: “Picture This: Guess Where Google Gets 98 % of Its Revenues,” Industry Standard, July 15, 2008 11. Newspaper Association of America, “Trends and Numbers” at NAA.org. Most recent figures are as of the end of 2007, adjusted for further losses in 2008 12. Lauren Rich Fine, Ethics Fellows Conference, Poynter Institute, March 2008 13.Newspaper Association of America, “Trends and Numbers” at NAA.org. Most recent figures are as of the end of 2007, adjusted for further losses in 2008 14. “Newsprint Price Increase Squeezes All Newspapers,” The Rural Blog, July 3, 2008 15. Joe Strupp, “Gannett Announces One-Week Unpaid Furloughs,” Editor and Publisher, January 14, 2009 16. Philip Walzer, “Weather Channel Deal Sealed For $3.5 Billion to NBC,” Virginian Pilot, July 7, 2008 17. “Detroit Free Press and News Redirect Staff, Resources to Digital Delivery of News,” December 16, 2008 18. Robert Dickey, Interview with Rick Edmonds, December 2008 19. Miguel Helft, “Yahoo Teams With Newspapers to Sell Ads,” New York Times, February 27, 2009 20. McClatchy presentation, UBS Global Media Conference, New York, December 2008 21. “Newspaper Website Audience Rises 12 % in 2008,” Newspaper Association of America,” January 26, 2009 22. Jennifer Saba, “Top 30 Newspaper Websites By Time Spent,” Editor and Publisher, February 24, 2009 23. Jean Yves Chanon, “U.S. Mobile News Market Nearing Maturity According to NYT,” Editorsweblog.org, August14, 2008 24. Walter Isaacson, “How to Save Your Newspaper,” Time, February 05, 2009 25. Mary Meeker, “Technology/Internet Trends,” Web 2.0 Summit, San Francisco, November 5, 2008 News Investment By the Project for Excellence in Journalism and Rick Edmonds of The Poynter Institute Updated April 23, 2009 to reflect estimates of newsroom job losses.1 Two years ago we concluded that newsroom cutbacks had reached the point at which the ambitions of many newspapers were now diminishing. The common claim of trimming fat no longer applied. Papers were into the bone. The result was that many had begun to concentrate their efforts on franchise areas of coverage. And the next year, that process accelerated. In 2008, for many newsrooms, the world changed altogether. For the year, a net of 5,900 journalism jobs were lost, about 11% of the total of 52,600 the industry was firlding as 2008 began. That was more than double the cutbacks of 2007 when 2,400 full-time professional positions disappeared in a single year.2 More deep cuts were in process early in 2009.
By the end of 2009, the total job loss since the beginning of 2001 will likely pass 14,000 – roughly 25% of the industry’s news workforce lost in nine years. That number may be lower than the estimates of some sources, which simply tally up announced cuts and often do not distinguish between those in newsrooms and elsewhere. Our estimates also attempt to account for those who are hired back, often on contract or to the newspaper’s websites. Given the astonishing drop in newspaper stock prices, the industry has reached a point where companies like to publicly emphasize their cutbacks, not their rehires. In what follows, we will not only discuss these patterns, but we also will give several examples of especially noteworthy cuts at companies or individual newspapers. We will not, however, try to catalog each big layoff of 2008 – there are just too many – and the financial pressures discussed in the economics section apply all over the country. Instead, we will focus on what has been lost and continues to be lost in news capacity and coverage. Among the trends of note:
How Many Newspaper Jobs Have Been Lost? The American Society of News Editors’ annual newsroom census found that 2,400 full-time professional editorial jobs were lost in calendar 2007. Another 5,900 jobs were lost in 2008. That brought total newsroom employment at American daily newspapers down to 46,700 from 56,400 as 2001 began.7 And early indicators are that 2009 will be more of the same or worse. In the first six weeks of the year, some papers and companies made cuts that had clearly been planned during budgeting last fall. With January 2009 advertising declines even worse than those of fourth quarter 2008, chains including Gannett, McClatchy and A.H. Belo announced downsizing plans for the year. So by any count, the news force is being depleted at an accelerating rate. And the effects, as we will explore later, are becoming all too evident to readers. But getting a reliable and current count is trickier than it may sound. Our earlier estimate (5,000 jobs lost in 2008) when State of the News Media was published in mid-March, for instance, was more conservative than those frequently cited from the running total on the blog Papercuts. Here is a brief explanation of why. Papercuts, started by Erica Smith, a young graphic designer in St. Louis, reported a total of 15,581 newspaper job losses in 2008 and 2,200 more through the first week of February 2009.8 Smith gathers her data from layoff/buyout announcements, supplemented by tips from readers and then records them in map format. She includes all newspaper jobs, not just newsroom. If the paper does not break them out in the announcement, she told us, she does not know how many fall in each category. Her experience, like ours, is that accounts of actions at individual papers are often garbled on this point. Working with these numbers for several years, we have found that the net job loss figures from the ASNE newsroom census often turn out to be somewhat less than one would infer by adding up the announced cuts and estimating smaller reductions that are not announced. We found, as did PEJ and Tyler Marshall in their study of newsroom staffing in 2008, that many papers announce and make a large group of cuts but soon after hire other staffers – younger, cheaper and with superior technology skills – especially for jobs developing websites.9 Papercuts does not attempt to measure the hires and its totals are for all announced cuts, including prospective reductions planned but not yet made. Thus our estimate for 2008 was more than twice as much as 2007, but we doubted newsroom losses would tally close to the 15,000 charted at Papercuts, or even 10,000. But they were plenty bad, and Papercuts is a documented and easy-to-search resource for specifics. When the industry's annual census was completed in April, it was far closer to our estimate than the unverified total at Papercuts. Newsroom Cuts of Many Shapes and Sizes To understand the cuts and begin to grapple with their implications, it may be more helpful to focus on a few major cases rather than to try to refine a long paper-by-paper list of newsroom cuts. The Los Angeles Times – Wave After Wave. As last year’s edition of this report was being completed in February 2008, the Los Angeles Times cut 40 positions from its 900-person newsroom staff. It was by no means the first such move. The paper had more than 1,100 journalists in 2003. After clashing with Tribune Company managers over cuts and whether there was a clear plan for the future, two highly esteemed editors – John Carroll and his successor, Dean Baquet – had quit or been fired. Baquet’s successor, Jim O’Shea, quit just in advance of the February announcement. Then in July, 135 more newsroom jobs were eliminated (and pages published per week were reduced by 14 percent). Then in October, citing a weakened economy, the Times cut another 75 in its newsroom.10 In February 2009, as a deeper recession settled in, came yet another announcement of a cut of 70 more news jobs.11 That brings the news staff to about 570 from 1,200 in 2001 – roughly halving the news effort. It is certainly possible to publish a daily paper even about sprawling Los Angeles with a staff of fewer than 600. Many superb journalists remain. The L.A. Times was late in developing its website but was able to make big progress in its offering and traffic during 2008. So positive thinkers in management urge the remaining staff to look at resources still there rather than those that have disappeared. But this is manifestly a different newspaper than it was six years earlier. Ambitions to rival the New York Times as tops in the United States, or compete with the Times, the Washington Post and the Wall Street Journal as papers of national rank, are gone. A Washington bureau equal in size to that of the New York Times was merged into a corporate Tribune bureau, and a subtext of the merger was to diminish the influence of the Times culture and personnel. There has been a steady drain of the top health and science writers who brought the paper several Pulitzers for long-form explanatory pieces earlier in the decade. California and extended metro coverage have thinned. A good many of the paper’s best known reporters and editors are gone. The people at the top of the paper are relative newcomers. The Star-Ledger – The Ax Came Suddenly. The Newhouse family’s Advance Publications has a well-earned reputation for improving its papers over the last 20 years with strong editors and generous staffing. Profits, though not disclosed by this very private company, are believed to run well below the industry norm with steady investments in editorial quality. But by 2007 and early 2008, Newhouse metros like the Cleveland Plain Dealer and the Oregonian were implementing newsroom cuts, if not draconian ones, along with the rest of the industry. The Star-Ledger, in Newark, N.J., did not, honoring an informal understanding with its non-union employees that it would not lay off any of them. Then with a bang, the company reversed field in late July 2008. It announced that it needed to reduce total staff by at least 20 percent, including 100 jobs in the newsroom. It also demanded that union employees give up scheduled pay raises and make other concessions. Unless both goals were met within a three-moth window, the paper and the smaller Trenton Times would be put up for sale or close, the company said.12 But if the L.A. Times and the Star-Ledger are examples of large metros that have newsrooms that are now structurally different than only a few years ago, they are not alone. The San Jose Mercury News, Dallas Morning News, Philadelphia Inquirer, Hartford Courant, San Francisco Chronicle and Baltimore Sun are among those whose newsrooms are now roughly half what they once were. Other news staff reductions are large, but not as great. The Washington Post, a paper that is currently run at a break-even level and whose managers have tried hard to maintain quality, has squeezed 100 jobs out of the newsroom in 2008 after smaller cuts in 2006 and 2003, a total loss of about 23%.14 The Press-Telegram of Long Beach, Calif. – Outsourced. Long Beach hasn’t been described as a boom town anytime lately, but it is still a city of nearly 500,000 with its local paper, The Press-Telegram maintaining a circulation of about 78,000. (Both the Los Angeles Times and Orange County Register circulate there, too.) So it was a civic shock when parent company MediaNews (owned by Dean Singleton) announced that the paper’s publisher and managing editor had been relieved of their jobs, their duties transferred to another MediaNews property, the Daily Breeze in nearby Torrance. Additionally, the company announced, the Press-Telegram’s copy desk would be shut down and stories would be edited at the Daily Breeze. The city fathers, already unhappy with earlier cuts, discussed pulling local public notice advertising as a protest. This led to a bizarre scene at a City Council meeting in which the executive editor, Rich Archbold, and several dozen staffers pleaded with members not to do it. One copy editor wept as she testified that she was unsure whether she would still have a job and be transferred to Torrance. “I know how to spell your names,” she said.15 There was an element of fleeing the union in the move, and it was denounced both by the Newspaper Guild and the American Copy Editors Society. Singleton continues to praise editorial outsourcing, abroad if necessary, as a necessary response to difficult financial times. The company has made a pattern of acquiring papers concentrated in a few metropolitan areas and centralizing editing operations (the same thing has occurred in the San Francisco Bay Area). The idea has gained only limited traction to date at other companies. Meanwhile, the citizens of Long Beach, as is true of people in various Bay Area communities as well, have a local newspaper only partly produced locally. There are obvious perils here. Newspaper history suggests readers may revolt against such distant papers. And the chance for local interests to create a rival Web-only alternative is now greater. But the economies of scale, on the balance sheet, are obvious in difficult times. Gannett’s 10 Percent Solution. Gannett had been making newsroom cuts piecemeal at its 85 community papers and occasionally at USA Today, too. Then in October 2008, the nation’s largest newspaper company got systematic about it. Gannett announced that its workforce would be reduced by 10 percent – roughly 3,000 workers – by the end of the year.16 The company did not specify how many of those would be in the newsroom (though hard times have led Jim Hopkins, a former news staffer, to create a Gannett blog tracking the details). The corporate directive style continued in early 2009, when Gannett announced that every remaining employee, including CEO Craig Dubow, would be required to take one week of unpaid leave in the first half of the year.17 McClatchy took a similar tack, mandating a 10 percent workforce cut (1,400 jobs) beginning in June 2008.18 A.H. Belo, a spinoff company with only newspapers and initially no debt, has announced two major job- and cost-reduction programs in its first year – 500 jobs in July 2008 and another 500 in January 2009, a total of more than a quarter of the company’s work force.19 Are more such target-number cuts from more companies in the offing? Undoubtedly. Some exceptions. The New York Times (100 positions) and the Wall Street Journal (50 positions) each had small buyouts programs in the course of 2008.20 But the Journal boasted of increasing the staff and space for expanded international coverage. The Times adds blogs and multimedia content to its main news website at a brisk pace and has a research and development team refashioning its news report for mobile devices and downloadable electronic editions. Small papers, as noted in the economics section of this report, are doing much better than metros and mid-sized papers. They were not immune from cutbacks in 2008, but our strong impression is that the rate of loss is considerably less. Conversely, the average losses understate the impact at metros. The cuts are deeper and the new waves come after shorter intervals. It is no mean task for demoralized reporters and editors to continue to do their best work living under the volcano. By late 2008 and early 2009, the Associated Press and Bloomberg had announced limited hiring freezes. Until then, however, they – along with ESPN – have been bucking the industry trend, increasing news efforts robustly as the rest of the industry shrinks. Collectively, the AP, Bloomberg and ESPN employ easily 5,000 journalists. They are not included in the ASNE count. The AP’s generous staffing has an element of controversy, especially since editors at a number of AP’s member-owner papers were in open rebellion during 2008 over high fees for content with which they were dissatisfied. News Space and News Staff Decline Together When PEJ surveyed 259 newspapers in early 2008, 59 percent reported reductions in staff, but even more, 61 percent, said that less space was being devoted to news.21 In the year since, nip-and-tuck procedures have given way to amputations. The number of papers, and the size of those reductions, have been much greater. In December 2008, editor Tom Callinan of the Cincinnati Enquirer, not the heftiest of the papers in the first place, told an alternative paper that the Enquirer was eliminating six pages of news space in its Sunday issue and 30 pages per week the other six days. The move would probably eliminate most lifestyle and features content, he said.22 What always had the potential for a reinforcing loop has now become reality: space and staff are falling quickly in tandem. With less news space, papers do not need as many reporters and editors; with fewer journalists, the papers need less space to display their work. While the cutbacks may be unavoidable, they become part of a reinforcing downward spiral. At some point, restive readers conclude that there is not much news there anymore, that the newspaper, already something fewer people wanted in print, is just not as worthwhile anymore. We believe that a number of American papers have reached or passed that point – and that skimpiness drives a share of circulation losses. Two space-saving reductions were especially common in 2008. As papers trimmed away even more of their daily stock listings, there was not enough editorial material and advertising to fill out a six-page section. So business sections began to get folded into the front section or local news section. Similarly, daily features sections, often padded with outsized picture packages or pick-ups from other papers, were deemed expendable. The St. Petersburg Times was among many papers folding daily fronts and separate sections for both business and features. Top editors Paul Tash and Neil Brown explained the result: business and features would still have their own display sections Sunday when readers have more time; a weekly food section and entertainment tabloid would remain. Otherwise, those staffs were encouraged to produce stories that could compete for a place on the front or local front of a weekday paper; some of the rest of what they had been doing could be reduced to brief treatment inside. Brown also said that focus group research showed that the traditional full-menu six- section daily was more than most readers – at least those who work – want in the busy first days of the week. So at a paper with a traditionally big news report, some carefully executed cuts may have more minimal effect. At others, less has been less for years now, and each new reduction makes for a quicker and less satisfying read. This kind of scaling back may require a more thorough rethinking of how the newspaper should be written than is taking place. If a newspaper is smaller, what is the optimal shape of that? Should all stories simply get shorter? Or should the medium-size story be sacrificed instead, so that paper that is a rich but less time consuming read is constructed with a key group of longer stories, and many more very short stories that summarize events in brief – perhaps with longer versions of some on the Web? A PEJ content study of a new breed of commuter papers a few years ago suggested that more very short stories – easily readable in two or three paragraphs – leaving room for real depth in others but eliminating the middle ground, might be a more satisfying alternative. It is unclear to what extent papers, amid the economic crisis, are rethinking the way the paper is written or is just adjusting day by day to shrinking space. We took a detailed look in last year’s report at some areas of coverage commonly being cut back and that was reinforced in PEJ’s special study of the changing newsroom. All those trends continued and accelerated through 2008 and early 2009: ●Much less coverage of exurban areas, distant suburbs and rural communities. The Omaha World-Herald, for example, had long styled itself a statewide paper for Nebraska. It announced in late 2008 it was giving up both circulation and coverage of most of that area. Metros, to varying degrees, have pulled back circulation and news effort anywhere slightly distant from their core. James Rainey, media writer for the Los Angeles Times, recalled that when he joined the paper in the1980s, there were bureaus with eight to ten reporters scattered through the region. “We had a guy who had covered the Kremlin for UPI in our bureau,” Rainey said. “I covered Culver City [a city where the movie studios were located in the middle of incorporated Los Angeles], but I was the No. 2 behind a more senior writer. Now all those bureaus are gone, and I would be surprised if we ran more than two or three stories from Culver City in a year.”23 To those who ask what would happen if the local newspaper disappeared, this trend constitutes a sneak preview. Thousands of municipalities and millions of citizens are now doing without the watchdog/accountability reporting that experienced metro reporters provided just a few years ago. ●Statehouse and Washington coverage are both been reduced to a fraction of what they once were. The movement began earlier but picked up a lot of steam with the cuts of 2008. Rob Gurwitt opened a survey story in Governing magazine on declines in legislative coverage with this: “If you want to know what the dying days of a journalistic era look like, mount the marble steps to the fourth floor of Connecticut’s grand old State Capitol, climb the narrow stairway to the pressroom, and you'll see. Mostly, it looks like a mess. “In a large room whose inhabitants once joked that someone always had to be out reporting for everyone to fit inside, space is no longer an issue. The New York Times hasn't had anyone here for over a year and a half; its desk is piled high with mail for various Times reporters who have long since moved on to other beats. The vacated Norwich Bulletin desk has become a repository for stray press releases. The Greenwich Time and Fairfield Bulletin desk hosts a collection of Coke and Dr. Pepper bottles that await recycling.”24 The Harford Courant still assigns several reporters. An energetic young blogger takes up some of the slack. But the “ultimate indignity,” Gurwitt wrote, came in March 2008 when the New Haven Register fired 20-year veteran Greg Hladky, the dean of the Capitol press corps, and did not replace him. The Connecticut story is being repeated around the country, Gurwitt concluded. There is still some coverage and digital alternatives are beginning to emerge, but the depth and breadth of just a few years ago are gone. Newhouse and Copley have closed their bureaus in the last year. A PEJ study in February 2009, found that only a third of daily newspapers that had their own bureau in the 1980s still maintain one. More than half the states do not have a single newspaper reporter dedicated to covering federal government. Despite the reduced newspaper presence, the total number of reporters on the Washington scene has stayed close to even. But that is thanks to a surge of foreign correspondents and steady growth of professional information services like CQ. Neither group’s work is readily accessible to the general public. The New York Times Washington bureau chief, Dean Baquet, commented, “It concentrates knowledge in the hands of those who want it to influence votes. It means [for example] the lobbyists know more about Senator [Richard] Shelby than the people of Alabama. That’s not good for democracy.” Most metros have closed all their foreign bureaus by now. Some that used to have multiple foreign correspondents – like the Chicago Tribune and Los Angeles Times – continued to downsize their foreign presence in 2008 and early 2009. ●An assortment of specialty reporting is vanishing from most papers. Many have eliminated most of their local arts and culture staff, farming out what coverage there is to freelancers. Science writers and special weekly science sections were once standard in metros. Now both are rare except in the half-dozen biggest papers. Health and fitness, environmental reporting and the occasional story on local university research is the substitute. Feature writing, columns and business reporting are all being pruned. ●Copy desks are smaller, younger, less rooted in the community. Readers notice a rising tide of typos and substantive blunders. It is truer than ever that if you are a local mover and shaker you need to make a point of not dying on a Sunday – the skeleton crew putting out the Monday paper won’t know who you are. ●Space for international and national news is scaled back at all but the biggest papers. Many now aim to fill their front page with staff-produced stories, and continuation jumps take up some of the inside space in the section. The national/international report may be squeezed down to a handful of top stories and some short-item summaries. As we have commented in earlier editions of this report, there would seem to be unarguable logic to the movement for a local-local emphasis in most papers. An up-to-the-minute and free national/international report from multiple sources is easily accessible on the Internet. The newspaper’s core competence, the reasoning goes, is a uniquely strong report on the local scene. In practice, we find many metro papers stepping back a bit from the brink of an all-local emphasis. People who like newspapers seem to like their newspapers’ selection of the most relevant news from everywhere. Joel Kramer, an experienced editor and publisher, who launched the online only MinnPost.com, said one of his big surprises in his first year was that national and international content was popular.26 In summary, readers enter 2009 being offered daily papers with less of everything – breadth, depth, quantity and polish. More cuts surely await, and it is hard to envision which staples of the traditional paper are next on the hit list. In August 2008, a big regional story created an unusual moment for Texas’s two largest papers, the Dallas Morning News and the Houston Chronicle. A church bus carrying Vietnamese Christian children from Houston to a religious retreat in Missouri crashed north of Dallas, killing 15. In flush times, staff from each paper would have leapt into action, fanning out to create a complete and multiday package of coverage. Instead, editors at the two papers with different owners agreed informally to share content. Houston would emphasize stories of the families and church. Dallas would focus on the crash and subsequent investigation. Supplemented by Associated Press photos, each paper had comprehensive coverage for several days without having to send a reporter across the state.27 Later the same month, three competing papers in South Florida -- the Palm Beach Post, the Sun-Sentinel in Fort Lauderdale and the Miami Herald – announced a formal pact to share routine stories rather than duplicate staffing on them. As with the Houston and Dallas papers, each has a different corporate owner. More such arrangements followed quickly: The sharing efforts also may be laying the ground for an end-around of the AP, which many metro editors complain is too expensive and ill-focused in the news report of its state bureaus. That was the motivation of a group of six Ohio dailies that began sharing content in 2008. For all these reasons we expect the content-sharing movement to gain momentum quickly through 2009. Online – Making Up Some of the Difference It wasn’t many years ago that we shared a common criticism of newspaper websites for near-total reliance on so-called “shovel ware” – recycled content from that morning’s edition. A 2004 study at the University of Texas found that 18 of 30 papers did not meaningfully update their home pages during the course of the day.28 Today that would be a misimpression. The shovel ware term itself has faded. The typical metro site regularly breaks news first on its website, adding details and perspective for the print edition rather than vice versa. There also has been a proliferation of “Web-native” features – blogs, video reports and reader contributions of photos and comments. However, we are unaware of any attempts – by individual newspapers, the industry or scholars – to add it all up. How much content is there on a typical site that one would not have found two or three years ago? Web audience metrics are slippery and taking a measure of content even trickier. By counting column inches, you can determine that a paper, for instance, may have eliminated 20% of news space. But there is no agreed-upon measure of the extent of a daily Web report. The report is growing at most papers, but we are unable to say by how much. Similarly, discussion chains or a variety of local and national video news features are meant to make sites “sticky,” holding visitors longer. In fact, however, average time on sites is falling at a majority of papers, probably because tagging content and other search engine optimization devices is drawing more users via search who only read an article or two, not the whole paper. Web design is improving but uneven. The biggest sites like those of the New York Times and the Washington Post are easy to navigate and easy to read. Others rely on templates that have become outdated and inflexible even after just a few years. Some discussions of newspaper business models treat online production as if it were free, which it is not. Some companies are finding it hard now to put together funding for “back end” improvements of their websites, and it shows. And online breaking news is not without issues – for instance, reconciling pressure to be quick with adequate vetting of reports for accuracy and context. There are two other factors to consider when asking whether digital is making up for losses in print. User-generated content is a staple on most newspaper websites and the mainstay of specialty sites like those for moms. Much of it is light, like pet or party pictures. Discussion/debates can draw a high volume of comment but are notorious for veering off subject or degenerating into nastiness. New formats including searchable databases and mapped presentations can deliver valued information in nonstory form. A few papers – notably the Fort Myers (Fla.) News-Press – are harnessing hometown resident expertise to collaborate with professionals on investigations. Over all, though, we think it safe to say that there is not much overlap as yet between the content that has gone missing from print papers and what users are inclined to volunteer. You’re not likely to find an informed and unbiased science story or well-versed coverage of the state legislature offered by an unpaid contributor. One innovation of recent years is promising. Several cities now have online-only news publications. The best known – MinnPost.com and Voices of San Diego – are not as comprehensive as a newspaper but shrewdly focus their local resources on exactly the serious topics that metros are letting slide. Another set of startups – ProPublica, GlobalPost, a Kaiser Foundation news service on health policy, regional investigative units in New England and California – generate specialized reporting, in some cases sharing the work with established newspaper or television outlets. There is a Special Report on these efforts here. Much of this work is nonprofit but not all. For instance, Pegasus in Dallas offers a feature on its site in which users volunteer some personal information and agree to let their reading choices be noted and analyzed electronically. In time, they get a version of the site with displayed stories and adverting tailored to their interests. These are encouraging developments, and 2009 may provide the test of whether more come together quickly as traditional metro papers weaken further or even close. This year’s roster is not greatly expanded from last year’s, however. It may be that impactful independent news ventures require just the right combination of philanthropy and strong leadership and will stay comparatively rare. A more optimistic reading is that we are seeing the beginnings of a new news ecosystem in many communities. A newspaper is part of it, but not as central as it once was and likely to continue shrinking. Alternate sources – public radio, blogs, and free-standing websites – provide a supplementary or substitute news report. Right now, however, the new is not taking shape as quickly or providing the substantive coverage that is fading in newspapers. Civic life will be the poorer if current trends in news investment simply run their course. Footnotes 1. The estimate of 5,900 newsroom jobs lost in American newspapers was updated with data from the 2009 census performed by the American Society of News Editors and released April 16, 2009. The estimate used in this report at its release in March was 5,000. We have updated the narrative and charts to reflect this figure, as well as our projection for jobs that will have been lost through 2009. 2. Newsroom Employment Census. American Society of News Editors, April 16, 2009 3. Phil Bronstein, Interview with Rick Edmonds, September 2007 4. Rob Gurwitt, “Death and Life in the Pressroom,” Governing, January 2009 5. PEJ, “The New Washington Press Corps,” Journalism.org, February 11, 2009 6. James Warren, “When No News Is Bad News,” Atlantic Online, January 21, 2006 7. Newsroom Employment Census. American Society of News Editors, April 16, 2009 8.Erica Smith, “Papercuts,” graphicdesignr.net. Also Smith, interview with Rick Edmonds, February 2009 9. Tyler Marshall and PEJ, “The Changing Newsroom,” Journalism.org., July 21, 2008 10. Roger Vincent, “Times Lays Off 10 % of Editorial Staff,” Los Angeles Times, October 28, 2008. 11. Paul McNally, “More Editorial Job Cuts at the Los Angeles Times,” The Wire, pressgazette.co.uk, February 2, 2008 12. Richard Perez-Pena, “Cuts and Concessions Demanded at New Jersey Papers,” New York Times, August 1, 2008. 13.
Richard Perez-Pena. ‘Star Ledger of Newark Plans 40% Cut. New York Times. October 26, 2008. http://www.nytimes.com/2008/10/27/business/media/27paper.html?_r=1&fta=y 14. Frank Ahrens, “More Than 100 Washington Post Journalists Take Buyout,” Washington Post, May 22, 2008 15. Paul Eakins, “P-T Changes Spur Council Response,” Press-Telegram, March 5, 2008 16. Richard Perez-Pena, “Gannett to Cut 10 % of Workers As Its Profits Slip,” New York Times, October 29, 2008 17. Joe Strupp, “Gannett Announces One-Week Unpaid Furloughs,” Editor and Publisher, January 14, 2009 18. Dale Kasler, “McClatchy Cuts Jobs 10 %, Lays Off Employees at the Bee, Other Papers,” Sacramento Bee, June 17, 2008 19. “Decherd Issues Letter to Colleagues,” A.H. Belo Corporation press release, January 29, 2009 20.Erik Sass, “Fall Massacre, Gannett Cuts Thousands of Jobs,” October 29, 2008. 21. Tyler Marshall and PEJ, “The Changing Newsroom,” Journalism.org., July 21, 2008. 22.Kevin Osborne, “Paper Cuts,” citybeat.com, December 10, 2008. 23. James Rainey, Interview with Rick Edmonds, February 2009 24.Rob Gurwitt, “Death and Life in the Pressroom,” Governing, January 2009. 25. PEJ, “The New Washington Press Corps,” Journalism.org, February 11, 2009 26. Joel Kramer, “Who Will Pay for the News,” Poynter Institute conference, November 2008 27. Jeff Cohen (editor Houston Chronicle) , Interview with Rick Edmonds, August 2008 28. Rosental Calmon Alves, “Many Newspaper Sites Still Cling to a Once-A-Day Publishing Cycle,” Online Journalism Review, July 21, 2004
Ownership By the Project for Excellence in Journalism and Rick Edmonds of The Poynter Institute For decades, the newspaper ownership story was one of consolidation – big companies like Gannett swallowing up smaller ones. Then for the last several years the momentum reversed. Big public companies, including Knight Ridder and Tribune, came apart and more than 10% of the industry passed back into private hands. And 2008 marks a phase that may persist a while. It was the year no one seemed to want to buy newspapers any more. Not that there weren’t plenty for sale. At year’s end, those on the block included the San Diego Union-Tribune, the Portland (Me.) Press Herald and the Austin American-Statesman (along with several other Cox papers). Landmark Communications papers – the Virginian Pilot in Norfolk, the Roanoke (Va.) Times and the Greensboro (N.C.) News-Record – went on the market in January 2008, but were withdrawn later in the year for lack of buyer interest. News Corp. tested the market for the half-dozen Ottaway papers it had not sold already and then decided to wait for better times. There was a single notable exception. The Long Island paper Newsday was sold in May to Long Island-based Cablevision for $650 million with competing bids from owners of the New York Post and the New York Daily News.1 Why did the market dry up so abruptly, when some of these papers could have presumably be purchased at relatively low price? There were obvious and not so obvious explanations. Top of the list was the dismal state of the business – advertising revenues in steep decline and certain to get worse in 2009 before (and if) they get better later. Nor, significantly, were there obvious turnaround strategies new owners might employ if they chose to take on a property at a bargain price. To add to the flashing danger lights for prospective buyers, two private groups that had acquired metro papers in recent years – Avista Capital Partners in Minneapolis and Brian Tierney’s investor group in Philadelphia – were both struggling to make interest payments from their cash flow and comply with other conditions of their loans. Avista’s Star Tribune and the Philadelphia newspapers both filed for bankruptcy protection in early 2009. Financial markets have made credit tight, so a prospective buyer might have difficulty obtaining financing even for a still profitable paper in an attractive local market. The notion persists that nonprofit ownership could be an alternative, given the deterioration of the for-profit business model for the industry. But the current volatility of the business and the scope of the industry’s challenges would put any investor’s money at risk, even one willing to forgo profits. And by our reckoning, there is a significant question about whether the nonprofit model could supplant commercial ownership. How many communities could muster the tens or hundreds of millions in nonprofit capital needed to buy a newspaper and similar amounts to absorb potential short-term losses and invest in improvements? For the moment, two other trends became features of newspaper ownership. In 2008, two public companies split in two. A.H. Belo took the Dallas Morning News and three other newspapers to a new company, leaving its collection of local television stations in “old” Belo. E.W. Scripps worked a variation, leaving its 15 newspapers and 10 local television stations in the legacy company while spinning its successful and fast-growing cable networks like HGTV and the Food Networks into a new company, Scripps Networks. The transactions left the new companies debt-free and able to focus on transition to new business models. But with weak operating results in the second half of 2008, neither got much buy-in from Wall Street. Scripps then closed the Rocky Mountain News in February 2009 after it was unable to find a buyer for it. The other phenomenon of 2008 was the busted company but with individual newspapers still operating at a profit. Tribune Company, which filed for Chapter 11 bankruptcy protection in 2008, was the most conspicuous case. Its papers – the Los Angeles Times, Chicago Tribune and others – are not as profitable as they used to be, but still make money, just not enough to cover the staggering $13 billion debt obligation real-estate mogul Sam Zell took on when he took the company private a year earlier.2 Among public companies, Journal Register and GateHouse media closed 2008 effectively worth nothing, and Journal Register filed for bankruptcy in February 2009. Once high-flying Lee Enterprises also saw its stock plunging to near-zero value as it had difficulty negotiating extension of one of the loans it used to buy Pulitzer in 2005. Debt obligations were also weighing heavily on some private companies like Georgia-based Morris Communications and, to a lesser extent, Dean Singleton’s MediaNews (in which Hearst holds a large position and an option to buy a controlling share). An assortment of scenarios will play out at these companies and others in 2009. These include closing of some of the weaker papers or selling some and applying the proceeds to saving others. Some companies will operate under more explicit directives from lenders (not that they know any better than management how to turn the business around). Without buyers in sight, it will typically fall to current owners (and their lenders) to do the best with what they are stuck with, playing out the present industry contraction and search for a lift in revenues to its conclusion. Begging for Buyers: Paper by Paper The lone 2008 financial highlight on the acquisition front was Tribune’s sale of Newsday to Cablevision for $650 million in late July. In a year when many papers for sale attracted no buyer interest, Newsday was the exception. The Long Island tabloid would have had operating synergies if combined with either the New York Post or the New York Daily News. Both Rupert Murdoch’s News Corp. (owner of the Post) and Morton Zuckerman’s Daily News were runner-up bidders at $580 million. The attraction for Cablevision was less obvious, though not without some business logic. With 3 million cable television subscribers on Long Island, the company could use that base to sell newspaper subscriptions and sell advertising packages including both platforms. The combination might also offer possibilities for an Internet service provider experimenting with incorporating some subsidy for Web content into its access fees. The company’s controlling family – CEO James L. Dolan and his father, Charles F. Dolan – have acquired an odd mix of businesses through the years including the New York Knicks basketball team and the Sundance Channel. It is inferred that with deep Long Island roots, they also simply wanted the prestige of owning the newspaper as Rupert Murdoch had coveted the Wall Street Journal. 3 The Newsday deal worked even in bad times: with a traditionally profitable paper in a strong market and suitors rich enough to absorb weak results or even losses for several years. None of that came together in timely fashion for the many other newspapers on the block in 2008. A group of Maine citizens, including former Senator and Secretary of Defense William Cohen, reached a tentative deal to acquire the Portland Press Herald and several smaller papers from the Seattle Times. But as a deadline passed at the end of December, the group had not been able to nail down financing. Similarly Landmark Communications announced that it had a buyer for its Virginian Pilot in Norfolk, but later canceled the deal because of the potential buyer had difficulty borrowing after Wall Street’s reverses. Landmark had earlier pulled the Roanoke (Va.) Times and the Greensboro (N.C.) News-Record off the market for lack of buyer interest. The biggest paper for sale was Copley’s San Diego Union-Tribune (24th in daily circulation). A decade ago, both the Los Angeles Times and the Orange County Register would have been eager to annex the huge market to their south. But with the Times caught up in the Tribune bankruptcy and the Register’s parent, Freedom Communications, under financial pressure and selling newspaper properties, neither emerged as a buyer – nor did anyone else. A final test case for how hard it may be to sell a newspaper was the Austin American- Statesman, which went on the market with several of Cox’s community newspapers in mid-August. Besides the stable base of a huge university and state government, Austin is home to Dell computer and assorted other high-tech enterprises – an ideal fast-growing city market, in short. Five buying groups have expressed interest but no deal has yet been struck. While not exactly a sale, two newspaper companies – the New York Times and Media General – did attract an aggressive minority shareholder, sometimes the prelude to putting a company in play as happened a few years back with Knight Ridder. In each instance, the stock purchase was by Harbinger Capital Partners and Firebrand Partners, two high-profile hedge funds. They accumulated 20% of Times shares by early 2008 and were rewarded by two seats on the board (in exchange for withdrawing a competing slate) in March. Harbinger/Firebrand’s position was that the Times needed to sell off old media properties and put the proceeds into digital acquisitions or start-ups. Some analysts spotted a hole in that logic early on. Old media properties were trading at depressed prices (and that was before the worst hit), while any substantial digital enterprise commanded a premium. So moving fast to change the mix of properties would trade away revenues and earnings for uncertain future prospects. The Times management also countered that it was already doing what the insurgents asked – gradually moving to digital, selling television stations and other holdings along the way. The Times closed the year by announcing it would borrow up to $225 million against the value of its new high-rise office building and putting its stake in the Boston Red Sox up for sale.4 So dire was its situation that an article in The Atlantic mused about its imminent demise – something the paper and other analysts dismissed.5 The Harbinger team took essentially the same approach with the same timing in acquiring a 18% share of Richmond-based Media General, a mid-sized collection of mostly Southern newspapers and local televisions stations. With support from longtime minority stake holder Mario Gabelli’s firm, it won three seats on the board in April.6 But by November, there was little sign that the company was embracing the Harbinger agenda and the insurgent group sold off nearly half its stake. Both the Times and Media General have family control of voting stock. They could not ignore their unwelcome associates, but, in the end, had the votes to stay on their preferred course. Mega-Deals Revisited We wrote a year ago that Sam Zell’s purchase of Tribune and the acquisition of Dow Jones, publisher of the Wall Street Journal, by Rupert Murdoch’s News Corp. showed that at least two money men had faith in the industry and were ready to put billions behind it. The Murdoch bid had played out as high corporate drama with his premium $60-a-share offer gradually wearing down resistance among some members of the Bancroft family, which had majority control of the voting stock. The sequel in the 18 months since has been less than tumultuous. Murdoch did not, as some of his critics feared, gut the Journal, make it tabloid flashy or use its pages to push pet political causes. He had promised investments in editorial improvement and did indeed increase the space devoted to foreign news. Not that Murdoch took a hands-off approach. He worked frequently from an office at the Journal. He parted ways with managing editor Marcus Brauchli (who landed on his feet later in the year as the executive editor of The Washington Post). In Brauchli’s place Murdoch installed Robert Thomson, a fellow Australian and former editor of the Times of London. Those who thought Murdoch’s Journal would take on the New York Times for primacy as a general interest newspaper found some evidence as it pushed coverage of the presidential race out to the front page daily. In truth, though, the Journal did not come close to matching the breadth of the Times' political coverage. Conversely it excelled, as one might have expected, at digging out some of the more arcane details of derivatives and hedge funds – the leading edge of the 2008 financial industry collapse. There is doubtless more to come, but the Journal closed 2008 looking much the same as it had in mid-2007 – with some of the more conspicuous changes like re-sectioning and the Saturday edition the work of the previous regime. Zell’s Tribune was a very different story – a painful downward spiral that began just days after he took control in December 2007. Zell, candid and reasonably accessible, admitted the obvious – his winning bid for the company was made just as newspaper advertising turned from soft to tailspin. Zell’s get-acquainted tour of his properties included several jolting exchanges. He cursed out an Orlando Sentinel photographer after she had criticized running “puppy dog” pictures.7 He told the chain’s Washington bureaus that they were balkanized, way overstaffed and producing a large volume of journalism no one cared about. “This is the first unit of Tribune I’ve talked to that doesn’t generate any revenue,” he said. “So all of you are overhead.”8 Soon after, Zell installed Lee Abrams, one of several recruits from the radio industry, as “chief innovation officer.” Abrams’ lengthy, stream-of-consciousness “think piece” memos urged the troops to aim for splash and excitement. Several of the Tribune papers quickly executed redesigns in roughly that spirit, emphasizing bold photos and info-graphics, while scaling back conventional stories. Dismayed reader reaction to some of this new look, especially at the Tribune, led to promises of more retooling. Zell’s promotions also led to a notable exodus of some of the corporation’s most experienced and senior talent. Editor Ann Marie Lipinski and managing editor George de Lama of the Chicago Tribune resigned within months of each other. Los Angeles Times editor Jim O’Shea and Baltimore Sun editor Tim Franklin also left later. Los Angeles Times publisher David Hiller and Chicago Tribune publisher Scott Smith, both longtime Tribune Company executives, also resigned. At least some insiders say the company also expunged many of the remaining Times Mirror managers and newsroom leaders and the influence – and tension – they represented. Many of the people atop Tribune are figures with relatively little record in the newspaper industry. Tribune has now stopped reporting its financial results but in its final release for the first two quarters of 2008 said that it was roughly tracking the downward course of the industry. For the second quarter, it reported cash flow of $221 million on revenues of $1.1 billion, but nearly all of that was needed to cover interest payments.9 As results deteriorated and more debt deadlines were looming for 2009, the company filed for Chapter 11 bankruptcy protection in early December. So now both a creditors’ committee and the bankruptcy court will have a say in conducting the company’s affairs in the coming year, but it is too early to say what further disruptions that may bring to the company’s newspapers. Some tensions were beginning to emerge under the new Newsday ownership as well. In January 2009 editor John Mancini and two managing editors staged a five-day walkout after being pressured to soft-peddle a story about accusations of sexual harassment against a New York Knicks player. (The team is owned by Newsday’s new parent company, the Dolan family’s Cablevision). The top editors stayed out during both the dramatic rescue of the people aboard the airliner that crashed in the Hudson River and President Barack Obama’s inauguration, but they prevailed in their insistence on editorial independence – at least this round. Nonprofits and the Future of Ownership It is not so simple, however. Even a newspaper owned by a nonprofit has to peel out some earnings for investments in the old print product and new ventures. And a lightened commitment to turning a profit earns an organization no exemption from difficult industry trends. The St. Petersburg Times, owned by the nonprofit Poynter Institute, for instance, contended with an even worse than normal-for-the-industry downturn in real estate and related advertising as did other Florida papers. There is another difficulty journalistically. The executives of a nonprofit news organization (or community investment groups indifferent to profit) may be prone to stumbling into business mistakes or editorial conflicts. While some critics always worried about advertising wielding influence over the news. But most publishers always have understood that newspapers had so many advertisers that no single advertiser, or even group of them, could wield undue influence. That insulation is gone in a nonprofit arrangement if the funder has its own political or civic interests, and some other new firewall would need to be developed. There is also no obvious roadmap for transition from for-profit to nonprofit status. Unless the owner is ready to give the property away, who will pay a fair amount (or figure out what is a fair amount)? Our sense, thus, is that the nonprofit sector is gravitating toward targeted and smaller scale online-only ventures unburdened by the traditional cost structure of existing newspapers. We do look for many more of those, but only a few groups to try to buy an existing paper outright. So what are the keys to relatively successful ownership headed into 2009 and 2010? Paradoxically, the companies doing the best recognized the value of diversification years ago and invested in other growth businesses (the Washington Post’s Kaplan education and Scripps’ lifestyle cable networks). Gannett continues to be an acquirer, but of early-stage digital companies. Its only U.S. newspaper transaction this decade was a swap. Top national newspapers like the New York Times and the Wall Street Journal or others with a traditionally high investment in news also seem to have an edge in holding readers and advertisers. As a theoretical proposition, whoever first cracks the case of a successful transition to a new business model might have a running start at converting that expertise to bigger ownership positions. In the meanwhile, also, 2009 will almost inevitably be the year when we find out what happens next when a newspaper company – with profitable papers – fails because it cannot meet debt obligations. Footnotes 1.Suzy Jagger, “Cablevision Buys Newsday for $650M,” Times (of London), May 12, 2008 2. Andrew Ross Sorkin, “Tribune files For Bankruptcy,” New York Times, December 8, 2008 3.Tim Arango and Richard Perez-Pena, “Cablevision Offer Baffles Wall Street (Again),” New York Times, May 12, 2008 4. Staci D. Kramer, “New York Times Reportedly Shopping Its Red Sox Stake, Looking for $200 Million in Tough Market,” Paidcontent.org, December 24, 2008. 5. Michael Hirschorn, “End Times,” Atlantic, January/February 2009 6.“Gabelli Backs Harbinger’s Media General Slate,” Reuters, April 16, 2008 7.Ryan Tate, “Sam Zell Says, ‘xxxx xxx,” to His Journalist,” Gawker, February 9, 2008 8. From a recording of Zell’s meeting with Tribune Washington bureaus obtained confidentially 9. “Tribune Reports 2008 Second Quarter Results,” press release, August 13, 2008
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