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Doctor says. And he’s forecasting a 30% to 50% drop in the second quarter

Newspaper and digital outlet advertising dollars for years have migrated to Facebook and Google. 

American newspapers have lost more than 70% of their advertising dollars since 2006, according to Doctor. The hit has come largely in print. Although online advertising and digital subscriptions have grown across much of the industry, those gains have not offset the Business News print advertising losses. 

In March, advertising revenues will be off 10% to 25%, Doctor says. And he’s forecasting a 30% to 50% drop in the second quarter. And things will only get worse if stores and other businesses remain closed, layoffs continue to mount and purse strings cinch tighter. 

“Clearly this is going to be an extinction event for some news publishers,” Doctor said.

The fallout from the crisis will hit publishers unevenly, but the most vulnerable will be those that have not weaned themselves off a near total dependence on advertising, Doctor says. 

“It is an acceleration of trends that we have already seen,'' he says. "Those companies that are most reliant on advertising as a way to operate their businesses have been in free fall for 12 years now." 

Few local and regional newspapers have attracted enough digital subscriptions to make up for the print subscriptions they've shed. Even when online readership shoots up during major news events, digital advertising has not filled the coffers the way print ads did.

With coronavirus dominating every home page and headline, some advertisers are recoiling. They don’t want their brands appearing alongside sickness and death, even if that's what people are obsessively reading. And with many businesses shutting down as Americans hunker down in their homes, demand for advertising has fallen, as have advertising rates.

Advertising budgets are shrinking “both because advertisers are trying to stay away from the content and because of what’s likely to be relative weakness in the overall advertising industry,” said Brian Wieser, president of business intelligence for GroupM, the media buying arm of advertising giant WPP Plc.

Amid the gloom, Ed Wasserman, dean of the UC Berkeley Graduate School of Journalism, says the pandemic marks the biggest opportunity since the Sept. 11 terrorist attacks “to restore to the news media this central importance to civic life that it used to have.”

He recalls how, during World War II, The New York Times refused to cut back on its news coverage only to reap the benefits in reader loyalty and public goodwill after the war ended.  

During the coronavirus, “people are discarding all of this dark undercurrent of suspiciousness about news media, and the belief that the media were in the business of fabricating things. And they are now really placing their trust in the media in an extremely important way, and they are relying on news media to come through with the information that is both accurate and pertinent to how they should be living their lives,” Wasserman told USA TODAY. “That to me is an extraordinarily important moment for the media, which had been rocked back on their heels by economic reversals and by political antagonism.”

Demand for news is surging. Web traffic was up about 23% at top news sites the week of March 9 from the previous week and up 31% from the week of Jan. 6, according to Comscore, an advertising and audience measurement firm. Digital subscriptions are soaring, and fewer subscribers are canceling as reader loyalty increases during the crisis, industry analysts say. 

At the Portland Mercury, online traffic rose nearly 45% in March. Readers devoured breaking news, in-depth coverage of bleak conditions for the homeless and helpful Press Release Distribution Services For Business tips such as how to make face masks for health care workers on the front lines. 

Donations rolled in, too, along with notes of appreciation. Portland Mercury publisher Rob Thompson says nearly 1,900 readers so far have chipped in anywhere from $5 to several hundred dollars apiece.

The Portland Mercury has also had some success selling web banners, social posts and dedicated emails for restaurants offering take-out and delivery as well as cannabis dispensaries offering delivery and curbside pick-up. And the community paper is taking some of its live events online, charging admission to a streaming cannabis film festival. 

None of these small wins can make up for the massive plunge in revenue. The coronavirus has wiped out nearly all – some 90% – of revenue from advertising, ticketing fees and events, Thompson says.

Major national newspapers with bigger audiences and more diverse revenue streams may be better positioned to ride out the turbulence, but they are not immune, analysts say. The New York Times said on March 2 it expected total advertising revenues to decline by a rate in the mid-teens in the current quarter, with digital ad revenues expected to decline 10%.

Nancy Lane, CEO of the Local Media Association, which represents a broad range of newspapers, digital publishers and broadcasters, says "it's devastating given the state of (the) industry to have this hit right now."

Some newspapers had zero ads last week, she said. The publisher of an African American newspaper told her it collected $330 dollars in revenue. She's banking on philanthropic funding to help news organizations hang on. Newspapers will also have a shot at a cash infusion from the $2 trillion federal stimulus package signed into law last week, but any aid they can secure may come too late for some.

One bright spot: Seattle, where the news industry was walloped by the coronavirus earlier than anywhere else. Alan Fisco, president of The Seattle Times Co., said his company has seen a drop in both print and digital ad revenues, but so far it has avoided layoffs and print frequency reductions.

“We are now starting to model a late summer return of revenue,” Fisco said. “Again, the question is not only when it happens, but how much comes back.”

The silver lining: The newspaper's focus on paid subscriptions, which now account for nearly two-thirds of annual revenues. Digital subscriptions have increased during the coronavirus crisis, and traffic to the website is up 2 to 3 times, with spikes that have hit 10 times precrisis levels.

Local Media's Lane agrees there's reason for optimism. "If we can keep doors open through summer, I think we can come out of this," she says, but warns, "some will make it; ones that were teetering to begin with are not going to get through this."

Joshua Benton, director of the Nieman Journalism Lab, predicts unemployment in the U.S. could reach as high as 30% before the crisis subsides and newspapers could be looking at three to six months of hardship.

“This will be the event where they ask: Is this sustainable?” Benton said.

Voice Media Group, which owns six alternative weeklies in major metro areas from Denver to Miami, also implemented a 25% across the board pay cut. 

The Riverfront Times in St. Louis says it laid off nearly its entire staff "with the hope that if we act now, we can rebuild and bring them back later," the weekly paper reported on March 18. "One day, you’re a profitable newspaper, doing better every year; the next, almost all of your ad revenue is wiped out with no clear sign of when it will return."

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