Fallout: As the Coronavirus Wipes Out Ad Dollars, Will the News Industry Recover?

On April 1, Gannett, the nation’s largest newspaper chain and owner of USA Today and 260 other daily publications, announced it was implementing pay cuts and furloughs across the company as the coronavirus pandemic forced businesses to close and local advertising to plummet.

Lee Enterprises, which operates newspapers in 25 states, announced the executive team would take a 20 percent reduction in the third quarter, while all other employees would be subjected to either a pay reduction or furlough equivalent to two weeks of salary.

After announcing bankruptcy in February, McClatchy, owner of 30 U.S. newspapers, revealed in April it would furlough about 115 employees, while CEO Craig Forman would take a 50 percent pay cut. Several executive positions were also eliminated.

In Florida, the Tampa Bay Times drastically scaled back its daily print production, only printing on Sundays and Wednesdays now. The Times also placed some staff on furloughs for eight weeks and reduced work hours for others.

Although Times chairman and CEO Paul Tash said these changes were temporary, he told Rick Edmonds at Poynter (owner of the Times), “This is the plan for today…These next several weeks will teach us a lot. In some ways, we are field-testing the future.”

It’s not just newspapers living day by day.

TEGNA, which operates more than 65 television stations, implemented one-week furloughs for most employees and temporary pay reductions for upper management and the board of directors. In order to avoid layoffs, BuzzFeed announced it was cutting pay for its employees (up to 25 percent for some executives), while CEO Jonah Peretti would forego taking a salary. Meanwhile, Bustle Digital Group laid off two dozen staffers and completely shut down culture website, The Outline.

Print was already considered a dying medium, and news companies were already cutting staff before the coronavirus disrupted our daily lives. Now it has only sped up those decisions.

“An Extinction-Level Threat”

The clock is ticking, especially when the “business of journalism is facing an extinction-level threat,” as Craig Silverman, a BuzzFeed News reporter, put it in a recent article.

“Virtually all entertainment advertising is gone, restaurants gone. Automobile advertising is starting to get impacted,” Alan Fisco, president and CFO of the Seattle Times, told Silverman.

Axios reported that more than half of U.S. small business owners will not be able to continue operating more than three months due to economic strain caused by the coronavirus pandemic. The Goldman Sachs survey, which consisted of 1,500 small business owners, also found that 96 percent of owners have already been impacted by the outbreak, while only 13 percent were confident about their contingency plans to maintain business.

Alternative weeklies were the most impacted by those decisions as most entertainment venues, bars and restaurants were forced to close. Nieman Lab reporter Joshua Benton compiled a list of alt weeklies that have been affected and it is staggering: the Portland Mercury in Oregon stopped printing and laid off 10 employees; Seattle’s The Stranger suspended print production and temporarily laid off 18 employees; Voice Media Group, which publishes alt weeklies in Arizona, Colorado, Texas and Florida, cut staff salaries by at least 25 percent; the San Antonio Current laid off 10 employees; the Pulse in Chattanooga, Tenn. ended its print publication…it goes on and on.

John Heaston, publisher and editor of The Reader, the alternative publication in Omaha, Neb. and president of the Association of Alternative Newsmedia, said in a recent E&P Reports podcast many alternative publications are now launching or ramping up membership programs. According to Heaston, a few publications are measuring how many registered digital users are turning into paying users, and they’re seeing returns five to 10 times the rate.

“We don’t have paywalls, so these are people voluntarily stepping up to support journalism,” he said.

A big reason as to why people are, according to Heaston, is that they have been upfront about their challenges.

Leonard Woolsey

Leonard Woolsey, president of Southern Newspapers and publisher of the Galveston County Daily News in Texas, also believes being transparent with readers is key to finding support during this difficult time.

The Daily News announced in March it was shifting to a five-day-a-week printing schedule (but it won’t lose the Daily in its name). Woolsey said total payroll was also reduced by 10 percent in March to prepare for April.

Although the choice to cut printing wasn’t an easy one, Woolsey said when 70 percent of the newspaper’s revenue came from local advertising, they had no choice but to adjust.

“Our initial thought is that we rather have the Daily News around than not have it around at all,” he said.

The five-day-a-week schedule (Tuesday to Saturday) is now their model for the future, but they will continue to publish daily online. Woolsey said during this time, digital-only subscriptions have seen double-digital gains and he expects digital subscription revenue to pass print single copy revenue.

Woolsey said he can’t rule out more changes, but he won’t know what the future will look like until local businesses re-open.

“Normal may never be normal again,” he said. “It’s going to be tough, but we will get through it.”

Woolsey pointed to past economic downturns in 2001 and 2008 and how the slices of the advertising pie changed both times.

“We should be prepared to receive less revenue on existing traits, but if we’re smart, we will create new streams coming out of this,” he said. “We can do quite well if get ahead of the curve. We know we’re going to spill milk, as long as we don’t tip over the glass.”

LNP|Lancaster Online recently launched an ad campaign “We’re all in this together” with sponsorships from local businesses.

Fighting for a Tomorrow

Despite Silverman’s words of journalism facing extinction, there are solutions and resources currently being offered to media companies that will help them see another day.

The Facebook Journalism Project, in a partnership with the Lenfest Institute for Journalism and Local Media Association, gave 400 local newsrooms in the U.S. and Canada a $5,000 grant to support their coronavirus reporting. According to Facebook, the total grant pool was doubled to $2 million after more than 200 publishers applied in the first 48 hours after the application launched. A second round was announced in April with relief grant amounts ranging from $25,000 to $100,000.

Mitch Pugh

The Post and Courier in Charleston, S.C. was one of the first 50 newsrooms to be awarded a grant in March. According to executive editor Mitch Pugh, the money will be used to cover costs for journalists traveling to markets outside Charleston, specifically in rural hot spots where they have seen spikes of people affected with the virus.

Another early grant recipient was El Paso Matters, a new local online news organization in Texas founded by former El Paso Times editor Bob Moore. When the non-profit launched in February, Moore had plans to reach out for donations from foundations in order to hire three or four full-time reporters. Now with both local and national foundation funds being “hammered,” Moore said those plans are on hold. To work around that, he decided it was best to hire freelancers instead, which is why he decided to apply for the Facebook grant.

Bob Moore

“Our pitch was we needed to focus on the vulnerable population, on areas not getting covered by traditional media whose resources are being constrained,” Moore said. “This is where El Paso Matters can step up. Our content is available for other media companies to use because the key thing is to get information in front of audiences.”

The money will also be used to translate content from English to Spanish so that Spanish-language media outlets can repurpose them for their readership.

In Pennsylvania, the Philadelphia COVID-19 Community Information Fund will put $2.5 million into Philly newsrooms. Created by The Independence Public Media Foundation, The Lenfest Institute for Journalism, the John S. and James L. Knight Foundation, and The Knight-Lenfest Local News Transformation Fund (Knight-Lenfest), the fund will “support a broad array of media and other community organizations as they provide accurate and actionable information (and) focus on listening to and addressing the information needs of Philadelphia’s most vulnerable communities at this time of acute need.”

In April, the fund’s first grants, totaling $1.75 million, was awarded to Resolve Philly, WHYY, the Philadelphia Inquirer and WURD Radio. A separate call for proposals for a total of $750,000 will be announced later.

At the end of March, a $2 trillion coronavirus bill was signed into law. As reported by the Washington Post, it “authorizes the Internal Revenue Service to send $1,200 payments to millions of Americans and creates programs to disburse close to $1 trillion in business loans and guarantees to millions of large and small companies throughout the economy.”

In early April, a coalition of more than 45 organizations and scholars called on Congress to include at least $5 billion to support local journalism in the next stimulus package.

“We can’t get through this pandemic—or the next one—without resilient and community-centered media,” Craig Aaron, president and co-CEO of Free Press Action, said in a press release. “Right now, journalists are essential workers. We need reporters out there reporting, especially in working-class and immigrant communities and communities of color, where COVID-19 has had a devastating impact. If we don’t act now, many vital newsrooms won’t make it through this crisis.”

Also making this call is the News Media Alliance, National Association of Broadcasters, National Newspaper Association and America’s Newspapers. In its summary document, the “organizations specifically call for Congress to ensure the ability of local media to seek relief under the Paycheck Protection Program and to fund federal advertising spending on local media through directing current U.S. government advertising campaigns to local news and media outlets, and providing the Department of Health and Human Services, the Small Business Administration and other relevant agencies with an additional $5-10 billion for direct funding for local media advertising that would be evenly distributed to local media in communities of all sizes,” according to a press release.

Traditionally, newsrooms aren’t receptive with taking money from the government, so it doesn’t jeopardize their integrity and independence, but these are unprecedented times they’re facing.

“I’ve been rethinking my own views,” Moore said when asked if a stimulus package is the right answer. “I think as long as you don’t give them additional control or access, and you put in those barriers, it’s something I would consider.”

Although he isn’t a normally a fan of the government giving money to businesses to stay afloat, Woolsey said with the right circumstances and the right industry leaders working with government officials, he would be in favor of a package.

“This is a government matter since it was the government who told local businesses to close, so they’re the ones who created this need,” he said.

Meanwhile, some publications aren’t waiting for Facebook or the government to come through with aid.

In Canada, Postmedia Network Inc. was able to offer readers free online access at 16 of their newspapers for the entire month of April, thanks to a partnership with Mary Brown’s Chicken, a Canadian fast food chain.

Pictured is a template advertisers can choose from for the “advertising stimulus program” offered by Sagamore News Media.

The Sagamore News Media in Indiana (owners of the Paper of Montgomery County
the Times of Noblesville) is offering an “advertising stimulus program” for clients. The idea came from office manager Jennifer Callis. After speaking with a longtime client who had to stop advertising, Callis came up with a solution—give the client free advertising instead. The idea morphed to offer free ads for any interested business. All they have to do is fill out an application online. The 2×4 ads will appear at least twice a week. To help offset the costs, Paper of Montgomery County publisher Tim Timmons explained they approached large corporations for donations. So far, they have raised $1,000.

Jennifer Callis

On the first day the application was open, they received seven applicants—all of them businesses who had never advertised before.

“Our goal is to help the local business community while at the same time opening the door to creating relationships with businesses who maybe either used to advertise or never have,” Timmons said. “We would hope that by the time June rolls around and business doors are open again that we can take those new relationships and have more advertising clients. We think that’s a great definition of win-win.”

In Pennsylvania, LNP|Lancaster Online recently launched an ad campaign called “We’re all in this together.”  The campaign appeared on billboards, the Sunday print edition and on the website. The first ad was accompanied by a large red rose (the city’s symbol), a reassuring message, and a note to post the red rose on the front windows of their homes to show unity.

Alex Henry

The idea came from social media manager Claudia Esbenshade. Brand and communications manager Alex Henry said the turnaround took about four days, and they were able to find a sponsor the first day. A second ad campaign focused on thanking healthcare workers was also sponsored. Henry said future campaigns will focus on other essential workers, such as first responders and grocery store workers. Director of client solutions Chris Stahl said they have approached hospitals, banks, grocery stores and other larger companies in the county to partner in the program.

Chris Stahl

“Our advertisers are saying they will be back when they are able to open (or) they just cannot afford to continue, even with branding, while they have no revenue coming in and bills still piling up,” Stahl said. “We have had a few continue their campaigns by changing their messaging to messages of hope and togetherness, (and) even though they are not open, this is a great example of the type of branding campaign that will help businesses come out of this top of mind in the eye of consumers.”

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