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The State of the News Media: Bleak

COMMENTARY | March 17, 2009

The sixth annual report by the Project for Excellence in Journalism sees 2008 as the bleakest year yet. “It’s not an audience problem or a credibility problem…it’s a revenue problem,” the report says.

By Nonna Gorilovskaya

The authors of the sixth annual State of the News Media Report call it their “bleakest” yet. As if to underline the news industry’s plight, the March 16th release of the report coincided with the announcement that the next day would be the last for the print edition of the Seattle Post-Intelligencer.

“The problem facing American journalism is not fundamentally an audience problem or a credibility problem. It is a revenue problem,” according to the report from the Project for Excellence in Journalism. (Writing the report was a group effort; click here to see how it was put together.)

From newspapers and magazines to network news and even the ethnic press, there was bad news to go around. Shrinking audiences, staff cuts and falling ad revenues were recurrent themes. More and more Americans are getting their news on the Web but no successful model to harness ad revenue online exists to fund the transition. Cable news networks saw both their audience numbers rise and profits grow, but the report’s authors lament the excessive and opinionated coverage of the presidential race to which they owed their high ratings.

The report identifies six trends or concepts that are emerging in 2009. The first is that the search for a viable model to finance the news industry may be misguided. Two of the most talked about solutions are micro-payments for online content and nonprofit financing. But the report argues that the micro-payments have already been experimented with and rejected. Foundations’ ability to fund investigative reporting should not be confused with their ability to underwrite all other news coverage. And although there is no clear winner out there, other economic models should be explored more seriously.

Secondly, the report proposes that media organizations derive part of their profits from Internet access fees and establish online retail malls instead of just ads. The report discusses a possible power shift to individual journalists and away from news organizations.

The third is the push to distribute news content through as many platforms as possible, including social-networking sites such as Facebook and the video site Hulu.

The fourth is the rise of the partnerships in financially dire times, prompting newspapers to share copy and launch joint ventures, like CBS Radio’s partnership with AOL and Yahoo.

The fifth is the trend toward continuous, opinionated political coverage propelled by the success of cable news. As the report puts it: “The minute-by-minute assessment of daily campaign maneuverings, many offered by partisan spin doctors in ways deliberately coarse and provocative, are now snap judgments about governance…. Incrementally, it feels as if the line between unfiltered personal thought and public discourse is evaporating a little more.”

Finally, the news media are seen as falling short in investigating political candidates. The Washington Post, for example, produced only three major profiles on Barack Obama’s record in 2008 compared to the 13 it ran of Bill Clinton in 1992. Interestingly, the report draws a parallel between coverage of George W. Bush and Barack Obama: “Similar to 2000, most of what we know about the new president came from his campaign rather than from media enterprise. And very quickly his political agenda…has proved more sweeping than advertised.”

The bleakest news is reserved for the newspaper industry. Circulation fell 4.6 percent daily and 4.8 percent Sunday, although Web traffic is estimated to have made up for most, but not all, of those readership losses. Total ad revenue plunged 16 percent. Online ads, which never brought as much money as print ads, used to be an area of growth and looked upon by some as the way to salvage newspapers in the digital age. However, these too fell 0.4 percent and accounted for less than 10 percent of the total revenue.

The Rocky Mountain News closed, The Christian Science Monitor went digital-only and the day when a major city will have no newspaper may not be too far off. The Tribune Company filed for bankruptcy last year while Minneapolis Star-Tribune went into bankruptcy this year, but the authors argue that most of the newspapers impacted by bankruptcies “are still profitable, and could continue in business once separated from the parent company’s debt.”

An estimated 5,000 full-time newsroom jobs or 10 per cent of all jobs were cut in 2008. And the forecast for 2009 is grim: “By the end of 2009, the newsrooms of American daily newspapers may employ somewhere between 20% and 25% fewer people than in 2001.” Newspapers are eliminating their overseas bureaus and their state and national coverage. As a result, “half the states no longer have a newspaper with staff based in Washington, DC.” 

2008 was a pivotal year for the Web, which has become the most popular source for news with the exception of television. The top news Web sites saw traffic increase 27 percent and the four most popular news site had some 23.6 million unique visitors a month. More and more Americans are turning to the Web as their primary news source and young people are leading the way, sharing news content over social-networking Web sites. The popularity of the Web as a news destination has not translated into big profits for the news organizations but instead shown that “the economic model largely responsible for financing journalism in the old media, advertising, will not do so in the new.” On the one hand, online ad revenue spending increased by 14 percent in the first three quarters of the year, but the beneficiaries were mainly search providers like Google. Banners and other display ads, the crucial source of revenue for news organizations, grew by only 4 percent.

In spite of the proliferation of citizen news sites and new nonprofit journalism ventures, legacy sites remain the greatest providers of news content. Some 22 out of the 25 most popular news websites in 2008 were owned by the richest 100 media companies.

Network TV continued to lose viewers, albeit at a slower rate than before. Today, only 22.8 million people make up the combined audience for the three evening newscasts each night. Network news magazines also saw their audiences shrink with the exception of 60 Minutes. NBC was singled out as the only serious profit-maker in 2008. Unlike the year before, TV newsrooms were spared of massive cuts but this is not expected to hold for 2009. By the end of 2008, all three networks stopped sending full-time reporters to Iraq.

It was a bad year for local television, even as it held on to its spot the most popular destination for news. Ratings remained either flat or fell while revenues decreased by 7 percent, an especially devastating number during an election year. Newsrooms faced staff cuts. More long-term, the future of the relationship between networks and their local affiliates is coming under question. CBS suggested that within a decade it may shed its local affiliates and produce directly for cable.

Cable TV thrived in 2008. The average monthly audience for three major news channels (CNN, MSNBC, Fox News) grew by 38 percent to a high of 2.2 million while profits increased by a third to an estimated $1.1 billion. The presidential race was responsible for part of this growth in audience and advertising and thus 2009 may not be as strong. However, unlike other media, cable news is more insulated from weaker ad revenue because half of it comes from subscription fees to cable. According to one estimate, investment in newsgathering is set to increase by an average of 7 percent at the three cable networks. CNN opened one-person bureaus in 10 U.S. cities and will be launching a wire service.

2008 was a defining year for the news magazine industry and one that “may be seen as the year when the traditional audience model finally collapsed,” according to the report. U.S. News & World Report went monthly while Newsweek announced plans to transform itself into a magazine for a niche audience. The Economist was notable for both increasing its circulation and advertising revenue in 2008.

No significant changes were recorded for radio audiences. The use of podcasting is on the rise but only a minority of podcasts are devoted to news programming. Last year, NPR cut seven percent of its staff and cancelled two programs. Newsroom cuts are expected in 2009.

The picture for ethnic media was mixed—better than for mainstream media but not as positive as in the years before. There were new Web and print ventures in the Spanish-language media but, overall, circulation for Spanish-language and African-American newspapers fell. Univision thrived while BET expanded its reach. The candidacy of Barack Obama resulted in more investment in news coverage by the African-American and Hispanic media and the election brought in greater ad revenue for some. With the recession, however, there is fear that some of the smaller organizations will be forced to shut down.

Media coverage across the five sectors examined was notable for a narrow news agenda and its failure to forecast the economic crisis. The rise in gas prices, an issue not crucial to the September collapse, was the focus of economic coverage in the run-up to financial crisis. Notably, the coverage of the economy actually declined right before crash, filling just 5 percent of the newshole in August.

The economic crisis and the presidential election became the mega stories of the year, accounting for half of all coverage in 2008. This was about twice as much space as had been devoted to Iraq war and the presidential election, the two top stories of 2007. Notably, coverage of Iraq plunged by some 75 percent in 2008. Cable had the least variety in its coverage—about two-thirds of its programming was devoted to the election. The smaller daily newspapers managed to more comprehensively cover the economic. Coverage of foreign news fell across all media this year to 17 percent of the newshole, but the online sector remained the most devoted to international affairs (27 percent of the newshole). The Hispanic and African-American media provided an important watchdog function this election by educating their readers about the specifics of voting and what to do if they couldn’t vote, an area where the mainstream media fell short.

The dearth of diversity of coverage, exemplified by the super-sizing of the mega stories, the report suggests, is reflective of structural changes in the industry. “Shrinking reporting sources, a diminishing commitment to overseas coverage, and a talk show culture that amplifies only the biggest stories probably helped create the top-heavy news menu in 2008,” according to the report. The accelerated migration from print to Web and the economic crisis, meanwhile, have made the news industry’s already tough search for a new economic model all the more urgent. As the report sums it up, “In trying to reinvent the business, 2008 may have been a lost year, and 2009 threatens to be the same.”

The report also contains an essay by Tom Rosenstiel, head of the Project for Excellence in Journalism, and Bill Kovach, a senior adviser (and former Nieman Foundation curator) on lessons of the coverage of the 2008 presidential election.

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