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Newspapers – Summary Essay

By the Project For Excellence In Journalism and Rick Edmonds of the Poynter Institute
Summary Essay

Poynter Institute ethicist Kelly McBride was visiting former colleagues at the Spokane Spokesman-Review last summer, when the conversation slid into the how-bad-is-it? mode.  It has gotten so bad, one journalist said, that the independent contractors who deliver the paper are complaining that the Monday edition doesn’t have enough throw-weight to get all the way up the porch.

That’s our metaphor for the state of the industry early in 2010.  Newspapers, contrary to what is frequently alleged, are not dying in droves. Only half a dozen of any size went out of business, and most of those were second papers in their market. More papers, nearly 100, cut back at least one day a week, but most of those were very small.1

But far too many American papers are at risk of becoming insubstantial.  They lack the heft to be thrown up the front porch or to satisfy those readers still willing to pay for a good print newspaper.

As they shed circulation at an accelerating pace, they lose value to advertisers.  Worst case, the industry could simply keep shrinking, stall out as a business and be left without resources to reinvent itself.

The recent financials certainly have been ugly. Advertising losses, averaging 26% in 2009 (on the heels of a cumulative 23% loss the previous two years)2 left newspapers downsizing everything – the physical dimensions of the paper, the space devoted to news and, most painfully, their roster of news professionals.

By our calculation advertising revenues fell 43% over the three years.3

Roughly 13,500 jobs for full-time, newsroom professionals disappeared during that period, the total falling from 55,000 to 41,500, a count which includes some 284 new jobs at some online-only newspapers now included in the industry’s tallies.  That means that newsrooms have shrunk by 25% in three years, and just under 27% since the beginning of the decade.4

To put it another way, newspapers headed into 2010, devoting $1.6 billion less annually to news than they did three years earlier.5

Business prospects for 2010 are marginally better.  The advertising losses and the need for further cutting will be less extreme.  With price increases at many papers, circulation revenues are trending up modestly, even as paid circulation numbers continue to decline steeply.

Online advertising revenues should begin to grow again in 2010, and newspapers may find a way to tap profitably into emerging markets like news to mobile devices.  Incremental growth, however, seems far more likely than a surge that will transform the business and facilitate a complete switchover from print to digital. After 15 years of transition, about 90% of newspaper company revenues still come from the print business.6

Circulation losses at daily papers seem to have peaked at 10.6% year-to-year in the six-month period ended September 2009.7 Big declines are almost certain to continue in 2010. To put this in perspective, newspapers have lost 16.9% circulation in three years and 25.6% since 2000.8

The online sites of newspapers continued to add audience through 2009, although measurement of that audience remains wildly imprecise.  Typically, such sites have developed well editorially, becoming the locus of breaking news and offering an array of Web-native features like blogs, discussion chains, interactive presentations and video.

But during 2009, online advertising revenues, which had grown at a robust rate as high as 35% a year earlier in the decade, actually declined year-to-year by about 10%.9

The industry made brave noises about charging for online content and some experiments will be forthcoming in 2010.  Generally, though, newspapers have hesitated to pull the trigger on a pay wall, fearing a big loss of audience that would drive online ad revenues farther down.

Besides a handful of closings, there were significant bankruptcies in 2009. At the top of that list was Tribune Company, owner of the Los Angeles Times and Chicago Tribune, among others, staggering under the huge burden of $13 billion in debt real estate baron Sam Zell took on to acquire it.  Others included Freedom Communications (owner of the Orange County Register), Star-Tribune of Minneapolis, Philadelphia Newspapers, Journal Register, MediaNews and Morris Publishing.

In March 2009, only Washington Post stock was trading among newspaper companies for more than $5 a share and several of the companies were entering penny stock territory.10

By the end of the year, shares still traded at far below their 2006 values but had ticked back up sharply from the depth-of-recession lows.

Improved fortunes for the industry should not be confused with an all’s well.  The trends remain negative.  Particularly troublesome — so long as advertising revenues decline, companies will need to make further cuts and potentially do more damage to their print and digital franchise.

Here is a summary, category by category:

Circulation and Readership

Circulation has been falling most of this decade, but the losses reported for the period ending in September 2009 were unprecedented:  10.6% daily and 7.5% Sunday compared to the same period a year earlier.  Some of that loss reflects readers opting to get news on the Web instead or dropping their subscriptions.  But there were other factors at work, too – continued trimming of circulation to distant geographic areas, limited money to spend on promoting new circulation and the recession’s impact on people who had lost their jobs or were worried they would.

Total U.S. Daily Newspaper Circulation
Weekday and Sunday Editions, 1990-2008
Design Your Own Chart
Source: Editor and Publisher Yearbook data
2008 based on E&P estimates

Industry boosters correctly point out that newspaper Web site audiences continue to grow and that the total reach of a news organization’s print and digital offerings is probably greater than ever.  That hardly masks the business problem in print circulation declines – fewer ad impressions at the premium rates print commands, fewer copies distributed with packets of advertising inserts.

Advertising and Earnings

Advertising began improving late in 2009, in the sense that the percentage decline in year-to-year comparison was slowing.  Most public companies were reporting ad losses of 15% to 20% in the fourth quarter compared to fourth quarter 2008. An actual upturn in ad revenues is unlikely until mid-2010.

The woes are familiar:  loss of the once-lucrative classified franchise to electronic competitors like Craigslist and low rates for online display. And, of course, there was the recession. A remedy is less obvious, although continued improvement in targeting online ads to demonstrated user interests (as the industry has done through the Yahoo Newspaper Consortium) together with a share of the action in new ad formats like mobile or local search could help.

As expected, earnings continued to plunge in 2009, with many companies just breaking even once they made interest payments on their debt and paid down some of the principal.  The good news, if there was some, was that by dint of very deep cuts in operating budgets, most companies were squeaking out an operating profit by year’s end.

Breakdown of Daily Newspaper Print Ad Revenue
Design Your Own Chart
Source: Business Analysis and Research, Newspaper Association of America

But 2010 should pose a pair of challenges. Most predict revenue will continue to fall, perhaps in the 10% range.  The cutbacks from the last two years thus probably will not be enough to keep papers profitable as that happens. A major task will be to minimize damage to the news report and customer service.  And then, once revenues do pick up — if they do — companies will need to strike a balance between improving profits and investing in rebuilding depleted news reports, together with starting up new ventures to diversify their revenue streams.

Newsroom Cutbacks

The dismal trends of 2007 and 2008 continued through 2009 and 2010.  The American
Society of News Editors census estimated 2,400 full-time professional newsroom jobs lost in 2007 and 5,900 in 2008.  Absent final numbers we expect at least as many losses in 2009.

Minorities include Native Americans, African Americans, Latinos and Asian Americans.

Newspaper Newsroom Work Force
Design Your Own Chart
Source: American Society of News Editors, Newsroom Employment Census, 2008. ASNE dates its data according to the release date. PEJ presents the data according to the year they were compiled.

Papers are allocating much less space for the news report.  Separate business and features sections have been eliminated at many metros.  Lighter advertising days like Monday and Tuesday are especially skimpy in contrast to the Sunday edition, where ad revenues are relatively stronger and readers have more time to read long articles. One consequence of all that cutting is a pronounced drop in time-consuming investigative projects and serious day-to-day local accountability reporting


Shares of publicly traded companies couldn’t fall much lower than the rock bottom prices of spring 2009. Indeed, they did rally, and stocks by the end of the year were up anywhere from 40% to 1,000% from their lows (though they are still typically down 80% to 90% from mid-decade peaks).11

With depressed earnings and shaky prospects, few newspapers were sold in 2009.  The still-profitable Austin American-Statesman in a big-state capital and growth market attracted bidder interest, but owner Cox pulled it off the market in August rather than accept what its publisher called “a fire-sale price.”12

After soliciting bids, the New York Times Company ended up in the fourth quarter selling neither the Boston Globe nor the Telegram-Gazette of Worchester, which had been for sale.

Through bankruptcy proceedings, several papers did pass into the hands of private equity firms specializing in distressed debt.  The Star Tribune of Minneapolis and Journal Register papers emerged from bankruptcy under creditor control.  Creditors were also seeking control of Philadelphia Newspapers and the Tribune Company. Platinum Equity acquired the San Diego Union Tribune at a bargain liquidation price. It appears that 2010 will be the first test of how these nontraditional owners run papers once they take over.

So how bad is the condition of the industry?

It is certainly fair to say without the major cost structure cuts of the past couple of years, the majority of metros would have been facing a death sentence. That is not a likely outcome, however.

The beginnings of overall economic recovery will bring at least some of the disappearing ad revenues back.  It remains an open question whether newspapers and their digital operations will grab a significant share of the recovery ad dollars or whether companies will shift big portions of their budgets to new digital marketing formats without news content.

With deep expense cuts in place, even modestly improved revenues will drop easily to the bottom line.

For the time being, advertising inserts remains a strong business (while tilting ad revenue further to the Sunday edition).  Industry advocates continue to argue that the reach of print newspapers, even if circulation has fallen, is attractive and valuable as media fragmentation increases. Similarly, branding campaigns are not going away, and that may be an area where newspapers, along with other traditional media like television and billboards, hold their own against trendier digital and search alternatives.

But those arguments, familiar for more than a decade, cannot gloss over weak print readership by younger people.  And papers are flirting with a tipping point where the cutbacks are so great that even loyal audiences give up.

The plight of the industry and the erosion of journalism’s civic contribution have caught the attention of Congress and agencies like the Federal Trade Commission and Federal Communications Commission.  There is little consensus yet within government – or even within the industry – about what action would help or even whether government can be involved without damaging traditions of independence.

The problems are not uniform across the industry. Big-city papers continue to have the worst of it in these difficult times.  Small dailies and community weeklies, with the exception of some that are badly positioned or badly managed, still do better.  The latter come closer to the late-20th century position of newspapers as the dominant source for local information and the place for local merchants to advertise.

The three national dailies, never so dependent on classifieds, had a rough advertising year in 2010, but are positioned relatively well as the economy rebounds.  The three papers – the New York Times, Wall Street Journal and USA Today — all have strong Web sites (as does the Washington Post) with a growing national and international audience and comparatively strong ad base.

In a possible sign of shifting industry dynamics, the New York Times launched regional supplements to its San Francisco and Chicago editions, drawing on the work of well-financed donor-sponsored startups.  Similarly, ESPN launched regional sites in Chicago, Boston, Dallas and Los Angeles, challenging papers there for dominance in sports reporting. The Wall Street Journal is rolling out regional supplements as well and increasing its local coverage of New York City.

But if this is, as it appears, a case of well-off national media lions (and some new media challengers) feasting on sickly antelopes, watch for many metros to fight back in 2010.  Already, for example, the Seattle Times has responded to the rich collection of neighborhood Web sites in that city by partnering with and aggregating 19 of them.13

The Dallas Morning News announced late in 2009 that it was adding back a handful of reporters and editors to strengthen the paper, for which it will charge a proportionately higher price.  Dallas is trying to please advertisers that may be worried about the paper’s falling circulation with a separate, free quick-read paper delivered in higher-income Zip codes.

Similarly, Gannett has established Sunday Select, essentially to deliver an insert packet to targeted nonsubscribers.

All of these developments suggested a thaw. Post-recession, newspaper companies are beginning to make small strategic investments in their future.  We still see the first half of 2010, though, as mostly a continuation of the hunkering down of 2009.

After that we may soon see the return of an old choice.  Do papers extract most of the returning ad revenue in higher profits?  Or will they recognize the damage done by the financial hurricane that swept through the industry and apply some substantial investment to developing new lines of business and rebuilding skimpy news reports in print and online?


1. Ken Doctor, interview with PEJ, March 4, 2010.

2. Newspaper Assocaiton of America, Trends and Numbers. Fourth quarter 2009 is Edmonds estimate.

3. Newspaper Assocaiton of America, Trends and Numbers. Fourth quarter 2009 is Edmonds estimate.

4. American Society of News Editors Newsroom Census. Includes Edmonds estimate for 2009.

5. Rick Edmonds, “Shrinking Newsrooms Have Created $1.6 Billion News Deficit,” Poynter Online, October 12, 2009.

6. Newspaper Assocaiton of America, Trends and Numbers.

7. Richard Pérez-Peña, “US Newspaper Circulation Falls 10%.”  New York Times, October 26, 2009.

8. Newspaper Assocaiton of America, Trends and Numbers.

9. Newspaper Assocaiton of America, Trends and Numbers.

10. Yahoo Finance.

11. Yahoo Finance.

12. Claudia Gresales and Lori Hawkins, “Statesman owner decides not to sell the newspaper,” Austin American-Statesman, August 3, 2009.

13. Ken Doctor, interview with PEJ, March 4, 2010.