Print news publishers in the US and UK are facing a bloodbath with sections cut, job layoffs and advertising spend sliding into freefall.
The New York Times has had its Moody’s rating changed amid concerns about slipping advertising sales. After reporting an 11 percent drop in second-quarter advertising revenue the investor service changed its outlook for The New York Times from “stable” to “negative”. Announcing the downgrade Moody's said it expects the company will take measures to "mitigate the effects of the advertising downturn and to manage its balance sheet conservatively, and these are key factors in Moody's affirmation of the existing ratings."
This is par for the course for the newspaper sector in the US, UK and parts of Europe where a recession is cutting deep into news business models dependent on advertising. Newspapers are responding by cutting staff, thinning content, changing editorial focus or doing a blend of all three.
“There’s carnage in the newsrooms overseas, particularly in the States where some five thousand people have lost their jobs this year alone,” says Guy Berger, Head of School of Journalism and Media Studies at Rhodes University. “There’s also been a massive reduction in reporting on foreign news and certain categories of news,” adds Berger warning that the print sector in South Africa is starting to feel the pinch but still has some time to reorganize and respond astutely. “Cost cutting alone is not a good enough strategy. While locally we are seeing investigative journalism taking a back seat, in the US cost cutting is not affecting investigative journalism which is seen as a unique benefit. Instead, certain categories of jobs are being cut. We’re seeing photographers and subs leaving newsrooms while more shrewd newspapers are reinvesting. The Wall Street Journal is investing in online subs, online video and other Web skills.”
Locally, print news media is responding to the front end of an economic downturn by restructuring, closing titles and looking for more ‘innovative’ products for advertisers. Discussions with Naspers’ Media24 showed that print news, broadsheet and tabloid titles would look at more advertorial and a change in advertising content. “Overall you are looking at growth in ad revenue that is only set at some 10% monthly. Then if you take media inflation into account we are in negative growth territory,” said Amanda Brinkman, Sales and Strategy Director for Naspers owned Ads24. “We’re feeling the effects of a downturn and decline in advertising in that we are finding it difficult to make budget and pay commissions. Then advertisers are pushing as much as possible for the best deal and discounts, budgets are shifting, the outlook is very fluid and difficult to predict.”
Naspers’ print news, broadsheet and tabloid titles are responding to the downturn by ‘innovating’ advertising product. “We’re moving toward a more innovative use of environments where we’re looking to engage the consumer. We’ll use less hard sell, and more brand elevation to connect emotionally with the consumer. We’ll bring in branded consumer entertainment and mix editorial with advertising, but do so carefully not to compromise editorial. This is a creative advertising approach which will see old block style adverts changing completely with an accent on advertorial, targeting and surprising and delighting readers.”
Berger warns Naspers and other titles following an overtly commercial strategy that they could be sliding down a ‘slippery slope’. “If SA newspapers are cutting back on good editorial content in favour of advertising content they are going against US trends and this is a mistake. If you cut the unique value add you are losing brand identity, as well as the credibility and viability to attract a distinctive audience. Our media is already facing immense criticism from political circles about their credibility. What our media does not want is criticism about content being determined by hidden commercial agendas. The media could open themselves to a double whammy of attack if they respond to the downturn in this way. Together with accusations that the media is representing secret political agendas, you will have the accusation that their credibility is being undermined because they are blurring editorial and commercial interests.”