Monday, October 31, 2016

The future of newspapers: owners seek safety in numbers


Dramatic events this summer such as the UK’s referendum vote to leave the EU and Donald Trump’s unconventional march on the White House boost­ed circulations across newspapers, from The Guardian and the New York Times to the Daily Mail.
However, the surge was temporary and the outlook for print advertising has gone from bad to worse. Print newspaper ad spending in the UK, for instance, is set to fall by £135m to £866m this year, even steeper than the £112m drop in 2015, says Enders Analysis. “These are big numbers,” says Douglas McCabe, an analyst at Enders. “This is not advertising that is going to come back.”
Media owners have already shown some effects of the carnage. Last month Guardian Media Group revealed a full-year operating loss of £69m, which was high­er than expected, and said it would cut 250 jobs. Daily Mail and General Trust also said it would make deep cost cuts and vowed to cut 400 jobs due to “challenging” market conditions.
The fillip provided by big news events cannot ultimately save the sector from its structural problems, the main one being a shift by readers — and consequently advertising budgets — from print to online disrupters of traditional media led by Facebook and Google.
The advertising switch from print is “a fact of life that will continue to be a fact of life,” says Mark Thompson, chief executive of the New York Times. “It’s likely we’ll see some moderation [in the declines] but we don’t know.”
Digital advertising has swung into favour among advertisers, and television has held up well this year, leaving print squeezed. “There was this massive migration first from print to online, and now from online to mobile,” says Tim Elkington, of the Internet Advertising Bureau, a UK trade group. “All you have to do is look at the consumer to understand the newspaper numbers.”  
Newspaper owners have look­ed to fill the print gap with digital sales, but now they are also losing market share in digital to Facebook and Google, which together ac­count for about 75 per cent of new online ad spending globally.
The brutal declines in ad revenues have prompted some of the UK’s biggest newspaper owners, including Telegraph Media Group, Trinity Mirror and News UK, to discuss forming a single advertising sales operation. The aim would be to make it easier for agencies to buy display ad inventory, and thereby compete better with broadcasters and digital media companies.
In the US four leading newspaper publishers — Gannett, Tribune, Hearst and McClatchy — this year created a company called Nucleus Marketing Solutions to sell ad­vertising across their local titles, there­by offering brands a larger potential audience.
Similarly, consolidation of ownership has swept the sector as local print titles look for scale to make themselves more attractive to ad buyers. Gannett, owner of USA Today, is trying to buy Tronc, formerly Tribune Publishing, owner of titles such as the LA Times. “[Gannett] believes they would get a whole new national presence … giving them enough big markets that they can swing some bigger advertising deals that they couldn’t swing before,” says Ken Doctor, of the Newsonomics blog.
With advertising dollars surging to­wards Google and Facebook, “no one expects [print media] to be winning” when competing for advertising expenditure against digital upstarts, says Gabriel Kahn, journalism professor at the University of Southern California. “It’s about surviving.”

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