6 Challenges Facing Local Newspapers

Last year, we talked about "Five Challenges Affecting Local TV News." And last month, we talked about the challenges facing digital media ("BuzzFeed, Gannett, HuffPo All (Unfortunately) Validate Our Prediction About Media Layoffs.") This  week, we will look at problems facing local newspapers.

Unfortunately, there's a lot to talk about.

Last week, a newspaper holding company with an unlikely name, Tronc, provided more evidence that local newspapers are facing tough times.

Tronc stands for Tribune Online Content, and it is the country's third-largest newspaper publisher (behind Gannett and McClatchy) and owns 11 daily newspapers including the Chicago Tribune, Baltimore Sun, and the Orlando Sentinel. (In June, Tronc sold off the LA Times for $500M.), And last week, Tronc fired 50 percent of the staff of the New York Daily News and staffers at its other papers due to what its CEO said were because "As a public company, we have a fiduciary obligation to balance the interests of all of our constituents: shareholders, employees, readers and community."

Death by a Thousand Cuts?

An Axios article on the topic quoted The Washington Post's Paul Farhi as noting "the NYDN employed 400 journalists in 1988. After a layoff last year, it will 'have a newsroom staff of just 45, according to people at the paper.'"

It's hard to imagine even the Daily News -- perennially described as "scrappy" -- being able to cover the city that never sleeps with just 45 reporters. Or how the Daily News can survive against the New York Post, its longtime tabloid rival.

A number of journalism experts say problems started before Tronc acquired the Daily News (for only $1 in 2017 -- basically the newsstand cost of a single copy of the paper in 2016 -- along with an assumption of liabilities and 49 percent stake in property where the Daily News' printing plant is located. But things got worse after Tronc's purchase, described as ownership without strategy and that Tronc made (and continues to do so) by "making the product worse while making the public pay more."

Problems Facing Local Newspapers

in Tronc's case, some blame incompetent owners who took on too much debt through acquisitions and consolidation. This is a real concern as media giants are merging (AT&T-Time Warner; Disney-Fox, and Sinclair-Tribune -- the former parent company of what became Tronc), with the possibility that the acquiring companies may be taking on too much debt.

Beyond possibly incompetent owners, the main threats to local newspapers include:

1. Falling ad rates: The common saying is that publishers are replacing print dollars with digital dimes because online ads generate a fraction of the fees charged for print ads. So even if a newspaper retails the same number of advertisers who purchase the same number of ads, digital ad rates are much lower so newspaper revenue will drop. For example:
• For example, according to the MinnPost, a nonprofit local news site, "In 2011, newspapers lost about $2.1 billion in print advertising. Meanwhile, their digital advertising grew by about $207 million. In other words, they lost $10 in print ads for every new dollar of digital ad money.
2. Growing reliance on news aggregators and social media: Quality journalism remains expensive to produce but 67 percent of Americans get at least some of their news from social media, according to a Pew Research study. And growing numbers of us access news via Google News and Apple News, which provide free (or low-paying) access to news reported by a third-party. So even if online readership is up, some outlets are seeing revenue drop. Another problem: readers begin to rely on news aggregators instead of the news sources, making it harder for local newspapers to form strong relationships with their readers. 
3. Readers of Print newspapers (instead of online news sites) are getting older. The population of readers who rely on the printed paper is getting older while younger generations are more comfortable accessing news online for free. Newspapers need to find a way to make themselves relevant enough so that younger readers will pay for access. While the New York Times and Washington Post have seen a surge in online advertising, those two papers are exceptions because of how they've been covering national political news.
4. Smaller staffs means smaller papers and less ad space to sell. Do you see where this is going? Cutting back the size of the paper or the frequency of publishing a printed version of the paper means that publishers sell less advertising, so ad revenue continues to drop, which leads to more newsroom layoffs, and a worse product. This is a death cycle for local papers. 
5. Declining credibility. Right now, the entire journalism sector faces a tough time as credibility of the news is being questioned. But newspapers with smaller staffs won't be able to adequately cover their markets. That means they will be publishing a product offering declining value. Under those conditions, circulation and ad rates generally fall.
6. No strategy to sustainability. The long-term business model has shifted, and no one yet has found a replacement business model that will return local news to profitability. (The Daily News reportedly lost an average of $30M over the last three years, according to the New York Post, including due to circulation declines.) The one strategy that seems to be working for the Washington Post and the LA Times is to have billionaire owners who see the important of keeping newspapers running, and can afford to do so. But there are only so many billionaires who see the value of keeping local papers around. 

The real problem is that local newspapers serve as a check-and-balance of local government and we need local oversight of government.

Some cities are seeing the rise of nonprofit news sites (like MinnPost) and others. But some are very small operations; and you can't effectively cover a big city with just two reporters/bloggers. (In some cases, these bloggers are not much more than citizen journalists, without real journalism experience.) 

So what's the solution?

In an article entitled, "Who suffers when local news disappears," The Cumbia Journalism Review says, given declining resources, the quality of local papers will decline so much that:

At some point not terribly far in the future, even those of us who believe powerfully in the need for a vibrant local news landscape are going to be hard pressed to make a case that many of these outlets should be saved.

For much of this decade, no one has been able to develop a true workable solution. Readers' relationships with their local papers and with journalism in general has changed. And, as with the coal industry, there's no turning things back to how things used to be. 

Certainly newspapers -- as with all news operations -- need to figure a way to ensure they publish quality journalism, coverage that is credible and compelling, and available across different channels (print, online, text, video, social). But they also must find ways to charge for access. A number of top news sites provide access to a limited number of articles per month, so when readers hit the limit, they may be inclined to subscribe. Right now, readers seem to wait out until the next month.

Sustainable local newspapers is important for journalists and good government. But it's also important for marketers, who need credible vehicles through which to communicate their messages.

What's Wrong with Newspapers?

In the June issue of The Atlantic, James Fallows writes an interesting essay, 'How to Save the News," which starts at an unexpected place: Google.

Noting that people assume that Google is one of the reasons newspapers are suffering, Fallows makes the point that Google is actually trying to help save newspapers, based on the premise that people are searching for compelling content, and that if they don't have interesting content -- like that from newspapers -- they won't need search engines.

What I think is interesting is a point I've made before but one that's validated by Eric Schmidt, Google's CEO (and a former client, when he was CEO of Novell):

"I observe that as print circulation falls, the growth of the online audience is dramatic. Newspapers don't have a demand problem; they have a business model problem."

Google's perspective, Fallows reports, is that people will of course pay for online content, even if they haven't done so up until now. The key is to find the right subscription solution for each publication -- it may not be the same answer for every paper.

Can Local Papers Survive?

I think they can. But it's not going to be a cakewalk. Local broadcasters are having trouble this year.

Check out an interesting profile in the Times by Richard Perez-Pena, "A Reporter With a ‘Tom Sawyer Business Plan’ Buys a Newspaper.

Interesting Case Study on a Small Newspaper's Survival

I think that small newspapers will survive because it's still the best way for people in a town to get a sense of what's going on in that town.

According to Daniel Akst, a freelancer who contributes to the Wall St. Journal, New York Times, Fortune Small Business (FSB) and other outlets, the Hudson-Catskill Newspaper Group is surviving on a formula of local "coverage and cost control."

I think we can agree on cost control, but Akst's point is that a lot of local papers don't actually offer local news: "Small-town papers often pay lip service to local news while filling their pages with generic wire stories," citing Prof. Philip Meyer's book, "The Vanishing Newspaper: Saving Journalism in the Information Age," which claims "that big-market papers typically have a lot more local coverage than small-market papers. One study found that over a four-day period the Detroit Free Press had roughly twice the proportion of local news as the Macon Telegraph."

I've seen that generic wire service copy in lots of small town papers. That's how services like NAPS and NewsUSA, which distribute matte releases, can offer pickup in hundreds of papers. (Though not my local paper.) I understand the rationale of matte releases, and on occasion, have recommended clients consider them.

But I do think it's a problem when too high a percentage of the local paper is filled with non-local news. That's when the paper is not doing it's job.

Check out Akst's article, "Write Local: How Small Newspapers Are Surviving."