Media Metrics #7: An Uncertain Future for Newspapers

by on March 5, 2008 · 14 comments

If we were to believe the rhetoric of some in Washington and various pro-regulatory groups like Free Press, you’d think we still lived in the 1800s and that a handful of newspaper barons like William Randolph Hearst and Joseph Pulitzer still dominated our media landscape. Just today, in fact, Sen. Byron Dorgan (D-ND) introduced a “Resolution of Disapproval”–largely at the urging of Free Press and other regulatory advocates like Parents Television Council–that would overturn a half-hearted media liberalization effort undertaken by the Federal Communications Commission last December.

That FCC effort dealt with just one of the myriad regulations governing media structures in this country: the newspaper/broadcast cross-ownership rule. The newspaper/broadcast cross-ownership rule, which has been in effect since 1975, prohibits a newspaper owner from owning a radio or television station in the same media market. “No changes to the other media-ownership rules [are] currently under review,” FCC Chairman Martin noted at the time, leaving many TV and radio broadcasters wondering when they will ever get regulatory relief.

In a New York Times op-ed released at the same time as his December proposal, Martin argued that “in many towns and cities, the newspaper is an endangered species,” and that “if we don’t act to improve the health of the newspaper industry, we will see newspapers wither and die.” Moreover, he wrote, “The ban on newspapers owning a broadcast station in their local markets may end up hurting the quality of news and the commitment of news organizations to their local communities.” In other words, newspapers need the flexibility to change business arrangements and ally with others to survive.

Exhibit 1
Newspaper circulation


Chairman Martin is right, and those are just a few of the arguments for scrapping a regulation that dates to a bygone era. But Martin’s FCC isn’t proposing anything so far-reaching as complete deregulation. Instead, he would loosen the rule only in the nation’s 20 largest media markets—and only for newspapers, not other struggling sectors like broadcast radio.

Despite that fact, Sen. Dorgan and his FreePress comrades decry the proposal using the sort of doublespeak rhetoric that has become all too common in media policy debates. In a press releases today, for example, FreePress urged their members to petition Congress to stop this “massive giveaway” by the FCC. Only an organization so in love with Big Government as Free Press could characterize the slight relaxation of an archaic FCC regulation as a “giveaway.” How, after all, can the partial removal of the red tape that smothers a dying sector be considered a “giveaway”!!

And, sadly, it is becoming increasingly clear that the newspaper business is a dying media sector. As Exhibit 1 above shows, daily circulation has been in a state of freefall since the late 1970s. Exhibit 2 makes it clear that readers of all ages are turning away from papers and towards the myriad other media options at their disposal. (See Media Metrics installments 1 & 2 for an overview of the modern media cornucopia.)

Exhibit 2
Daily newspaper readership by age

The gradual loss of readers has taken a toll in terms of lost advertiser revenues and stock values. Exhibits 3 and 4 shows the sector’s plummeting advertising dollars relative to other media.

Exhibit 3

Exhibit 4

And Exhibits 5 and 6 gives you a feel for how stock value has been decimated in recent years, with almost all newspaper stocks losing significant value.

Exhibit 5
newspaper stock values
[from 2007 State of the News Media report]

Exhibit 6
market cap bubbles (newspapers)

Can newspaper survive in this environment? I think many will because they have finally come to accept the realities of the Information Age and altered their business models to respond to new competitive pressures. Others, however, will struggle as they continue to bleed readers and advertisers. Remember, a newspaper costs a lot more than the couple of quarters we pay for it. Advertising is the only thing currently cross-subsidizing all that wonderful content we get in each edition. And those advertisers now have many other places to put their ad dollars in a multi-media world characterized by information and entertainment abundance.

Why then would Sen. Dorgan and FreePress want to leave in place decades-old regulatory shackles that might hinder the ability of this struggling sector to respond to their many unregulated media challengers? Either those critics are stuck in the past and believe that papers somehow continue to dominate society’s information cycle, or else they would rather just see papers wither and die because they worship at the alter of atomistic media mandates. That is, they have a sadistic desire to see papers fail and not allow any serious owners step in save them simply because they believe in some mythical “Mom & Pop” media world where Joe Blow or Jane Doe should own the local papers. In their view of things, anyone who is either (a) wealthy or (b) an owner of multiple outlets is basically evil and hell-bent on dictating the thoughts of the masses from above.

It’s what I have called the “neo-conspiratorial puppet-master theory of media manipulation” that seems to enslave the minds of many people like Sen. Dorgan and Free Press today. It’s all poppycock, of course. But, amazingly, their colorful rhetoric and creative conspiracy theories now dominate thinking about media policy in the United States. When newspapers start dropping like flies, you know who to blame.

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    In other words, newspapers need the flexibility to change business arrangements and ally with others to survive.

    No. They will actually do quite well as not for profits. This will of course prise away the ability of corporations to control what is said, through their control of the media.

  • http://enigmafoundry.wordpress.com eee_eff

    In other words, newspapers need the flexibility to change business arrangements and ally with others to survive.

    No. They will actually do quite well as not for profits. This will of course prise away the ability of corporations to control what is said, through their control of the media.

  • Adam Thierer

    Ah yes, another day at the TLF and another asinine corporate conspiracy theory from the enema_foundry. Seriously, pray tell, Mr. Foundry, how is it that you are so enlightened and shielded from this corporate media conspiracy while the rest of us are just mindless sheep being fed our daily marching orders from our corporate masters? Is it just the fact that I let my subscriptions to Mother Jones and The Nation lapse long ago? Do those sages offer the enlightened path to socialist slavery..er, uh.. freedom?

    Now, you’ll have to excuse me while I get back to reading the couple of trillion different news stories on the Google News main page this morning. I will do my best to sort through them carefully and see if I can discern who is feeding me propaganda versus truth. Or I suppose you also have a theory about how all those media sources are really just controlled by Google! Ironically, I am about to fly out to the Valley for a conference at Google headquarters. I will ask them if they would be so kind as to deprogram me for the day and let me see the truth that is apparently only available to your eyes.

  • Adam Thierer

    Ah yes, another day at the TLF and another asinine corporate conspiracy theory from the enema_foundry. Seriously, pray tell, Mr. Foundry, how is it that you are so enlightened and shielded from this corporate media conspiracy while the rest of us are just mindless sheep being fed our daily marching orders from our corporate masters? Is it just the fact that I let my subscriptions to Mother Jones and The Nation lapse long ago? Do those sages offer the enlightened path to socialist slavery..er, uh.. freedom?

    Now, you’ll have to excuse me while I get back to reading the couple of trillion different news stories on the Google News main page this morning. I will do my best to sort through them carefully and see if I can discern who is feeding me propaganda versus truth. Or I suppose you also have a theory about how all those media sources are really just controlled by Google! Ironically, I am about to fly out to the Valley for a conference at Google headquarters. I will ask them if they would be so kind as to deprogram me for the day and let me see the truth that is apparently only available to your eyes.

  • v

    This only tells half the story. Newspapers typically have something in the range of 20% profit margins. That’s really high, but since there’s no growth they don’t perform well on Wall Street.

    That changes the game somewhat, at least to the extent that it can still be played without apocalyptic rhetoric. I leave it to someone smarter than me to figure out how.

  • v

    This only tells half the story. Newspapers typically have something in the range of 20% profit margins. That’s really high, but since there’s no growth they don’t perform well on Wall Street.

    That changes the game somewhat, at least to the extent that it can still be played without apocalyptic rhetoric. I leave it to someone smarter than me to figure out how.

  • eric

    I live in a town dominated by the most politically biased paper known, the Des Moines Register, as judged by a Center For Media And Public Affairs study a few years ago. Since issues important to conservatives or libertarians are rarely tackled, and questions are never asked politicians or bureaucrats from those perspectives, is it any wonder they are losing subscribers? Iowa is a purple state, but the Register is saying to about half the population that their side of the political spectrum does not matter. Clinton got 59 percent positive coverage, and the early Bush years got 31 percent positive coverage. Are Republicans going to pay to be slapped in the face?

    A new Zogby poll shows 2/3 of Americans believe traditional journalism is out of touch with what Americans want from their news. 80% of Republicans, 75% of independents, and 50% of Democrats are “disenchanted” with traditional journalism.

    Plain and simple, when you offer a product that most people are dissatisfied with, can you expect a decline in sales? Blaming the internet or television or media consolidation is ignoring a large root cause. The Des Moines Register is one of the worst examples, but it is typical of a trend and a bedrock problem for newspapers.

  • eric

    I live in a town dominated by the most politically biased paper known, the Des Moines Register, as judged by a Center For Media And Public Affairs study a few years ago. Since issues important to conservatives or libertarians are rarely tackled, and questions are never asked politicians or bureaucrats from those perspectives, is it any wonder they are losing subscribers? Iowa is a purple state, but the Register is saying to about half the population that their side of the political spectrum does not matter. Clinton got 59 percent positive coverage, and the early Bush years got 31 percent positive coverage. Are Republicans going to pay to be slapped in the face?

    A new Zogby poll shows 2/3 of Americans believe traditional journalism is out of touch with what Americans want from their news. 80% of Republicans, 75% of independents, and 50% of Democrats are “disenchanted” with traditional journalism.

    Plain and simple, when you offer a product that most people are dissatisfied with, can you expect a decline in sales? Blaming the internet or television or media consolidation is ignoring a large root cause. The Des Moines Register is one of the worst examples, but it is typical of a trend and a bedrock problem for newspapers.

  • Hance Haney

    Who cares about local newspapers?

    Mainly politicians and political activists who like to read about themselves and accumulate power, right?

    Eric’s exactly right. Local newspaper circulation is declining because people aren’t forced to read local newspapers anymore.

    I love newspapers. I read several online, including some foreign publications such as the London Times and Le Monde. I subscribe to the Wall Street Journal and the Economist. I even subscribe to the New York Times which I disagree with ideologically because the quality is so good. Although my local newspaper’s excessive left wing slant annoys me, the main reason I don’t subscribe to it is because the content is thin and I have better options.

    Sure, people like Senator Dorgan and FreePress can limit how many media outlets a single Republican can own through media ownership rules. But that’s as far as they’re going to get. In our digital age, there’s no such thing as a captive audience – no one is going to force anyone to read anything.

    If Dorgan and FreePress want to strengthen local newspapers, the obvious choice is to allow them to address the quality problem with more resources that would come from partnering with other media outlets.

    If there is a better idea, a lot of people including myself are waiting to hear it.

  • http://www.techliberation.com hhaney

    Who cares about local newspapers?

    Mainly politicians and political activists who like to read about themselves and accumulate power, right?

    Eric’s exactly right. Local newspaper circulation is declining because people aren’t forced to read local newspapers anymore.

    I love newspapers. I read several online, including some foreign publications such as the London Times and Le Monde. I subscribe to the Wall Street Journal and the Economist. I even subscribe to the New York Times which I disagree with ideologically because the quality is so good. Although my local newspaper’s excessive left wing slant annoys me, the main reason I don’t subscribe to it is because the content is thin and I have better options.

    Sure, people like Senator Dorgan and FreePress can limit how many media outlets a single Republican can own through media ownership rules. But that’s as far as they’re going to get. In our digital age, there’s no such thing as a captive audience – no one is going to force anyone to read anything.

    If Dorgan and FreePress want to strengthen local newspapers, the obvious choice is to allow them to address the quality problem with more resources that would come from partnering with other media outlets.

    If there is a better idea, a lot of people including myself are waiting to hear it.

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    Adam:

    Thanks for the thoughtful comment. It’s good to see you are taking the high road, like Richard Bennett did.

    First, I don’t categorize my thoughts at all in the ‘conspiracy’ genre. I don’t think that there’s a direct process where someone in a corporation says ‘I am going to stifle free speech today so I’ll go out and buy a newspaper.’ Rather what will happen is that a newspaper, once under control of a corporation, will become more concerned with maintaining the status quo and not ‘rocking the boat’ But that is exactly what a free press should do.

    Second, you may be entirely right about the profitability of newspapers being on the decline, but how would mere change of ownership make newspapers more profitable? Any synergies that you see probably come at the expense of the functioning of the free press.

    Third, I look at the functioning of society as a whole, not just a part. Having a free but marginally profitable press is better than having a profitable but unfree press.

    Fourth, it is you who posit the “neo-conspiratorial puppet-master theory of media manipulation” which very few of those who criticize your positions on media regulation actually believe in. Why don’t you respond to the actual points made by your critics instead of building a straw man?

  • http://enigmafoundry.wordpress.com eee_eff

    Adam:

    Thanks for the thoughtful comment. It’s good to see you are taking the high road, like Richard Bennett did.

    First, I don’t categorize my thoughts at all in the ‘conspiracy’ genre. I don’t think that there’s a direct process where someone in a corporation says ‘I am going to stifle free speech today so I’ll go out and buy a newspaper.’ Rather what will happen is that a newspaper, once under control of a corporation, will become more concerned with maintaining the status quo and not ‘rocking the boat’ But that is exactly what a free press should do.

    Second, you may be entirely right about the profitability of newspapers being on the decline, but how would mere change of ownership make newspapers more profitable? Any synergies that you see probably come at the expense of the functioning of the free press.

    Third, I look at the functioning of society as a whole, not just a part. Having a free but marginally profitable press is better than having a profitable but unfree press.

    Fourth, it is you who posit the “neo-conspiratorial puppet-master theory of media manipulation” which very few of those who criticize your positions on media regulation actually believe in. Why don’t you respond to the actual points made by your critics instead of building a straw man?

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    Well, Adam here’s my post. Please do respond if you’ve something to say:

    Post Responding, politely, to Adam T. without name calling…

  • http://enigmafoundry.wordpress.com eee_eff

    Well, Adam here’s my post. Please do respond if you’ve something to say:

    Post Responding, politely, to Adam T. without name calling…

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