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Consolidation Won't Save the Media
Allowing a few big companies to swallow up local newspapers created journalism's problems. More of the same can't solve them
Last week, House speaker Nancy Pelosi, whose hometown San Francisco Chronicle is in trouble, asked attorney general Eric Holder to consider loosening antitrust laws to help out struggling newspapers by allowing more media mergers. Holder responded by saying he is open to revisiting the rules.
Pelosi's request sounds innocuous at first - after all, struggling newspapers seem to need all the help they can get. But opening the door to more media consolidation is not the cure for the crisis in journalism. More of this bad medicine will only weaken reporting and worsen the health of our democracy.
As a few big companies swallowed up more local media outlets, they gutted newsrooms. The Project for Excellence in Journalism reports that the industry lost 5,000 journalists last year and has slashed 16% of its news staff since 2001. Is it any surprise that fewer people are buying newspapers when reporters are being taken off their beats and bureaus are being shuttered?
But media consolidation hasn't been a disaster only for dedicated journalists or the public who rely on reporters to keep an eye on their leaders. It's also been bad for business.
Just a few years ago, the average profit margin for newspapers was over 20% - with some bringing in twice as much or more. But that did not satisfy the newspaper executives or Wall Street. Instead of investing in the quality of their products and innovating for the future, the big media companies have been obsessed with short-term gains. Instead of bolstering their news-gathering or adjusting to the new media landscape, companies like McClatchy, Tribune and Lee Enterprises used these astronomical profits to buy up other properties.
While federal regulators rubber-stamped these mega-mergers, the media giants took on massive amounts of debt. Even though newspapers themselves are still profitable, their corporate bosses are drowning in IOUs.
A recent Advertising Age article reported that McClatchy's newspapers earned a 21% profit margin last year. But struggling under the $2bn it owes after acquiring Knight Ridder in 2006, the company has slashed its work force by nearly a third in the past year. The Tribune Company earned a 5% profit margin in its newspaper division for the first three quarters of 2008, but it still declared bankruptcy in December.
Gannett's newspaper holdings earned an 18% profit margin last year, with some properties earning as much as 42.5%. Nevertheless, Gannett slashed 3,000 jobs and required employees to take a week-long furlough. The company is also expected to sell off or shut down the 139-year-old Tucson Citizen this week. Despite taking pay cuts, Gannett's top executives still received sizeable six-figure bonuses.
Of course, poor leadership and debt aren't the only problems facing the newspaper industry. Ad revenue has been down 23% across the industry in the past two years. Today, advertisers have cheaper options online to reach their target audiences, a major problem for newspapers relying on print advertising for 90% of their revenue. Even though more people are reading newspapers online than ever before, online advertising still makes up just a small percentage of a newspaper's earnings.
We can't put the Internet back in the bottle or restore newspapers' monopoly on local advertising. Instead, what we need to figure out is how to support news-gathering, investigative journalism and beat reporting in a world in which Walmart coupons and car-dealership ads will no longer cover the costs of bureaus in Baghdad or Boise.
But if the same handful of conglomerates now coming to Washington for handouts had been held in check earlier, many of these newspapers and their employees would stand a better chance of weathering the economic storm. And if regulators hadn't looked the other way as these deals went through, newsrooms would probably have 10 years left to experiment, adjust and adapt - instead of what feels like 10 minutes.
Green-lighting more consolidation will only serve to prop up a failing business model. It won't create any new jobs - in fact, more reporters are sure to be sacked. And it won't add any new voices to the marketplace of ideas. Letting Dean Singleton, who already owns multiple dailies throughout the Bay Area, put out the same cookie-cutter content under the Chronicle banner won't bring back readers or help the industry.
If Pelosi and Holder believe that newspapers are critical to our democracy and worth saving, then they have to explore real structural alternatives that give media ownership back to local communities; figure out short-term ways to fund serious reporting during the bumpy transition to the Internet; and look for changes in tax or bankruptcy policy that might encourage local, diverse and non-profit owners who'd be happy to see the 10 to 15% profit margins that are still the industry average.
How to support serious journalism and local coverage in the new media landscape is a complicated question that surely requires a menu of answers, forward-looking policy ideas and lots of experimentation.
But we know what won't work: the exact same policies that got us into this mess in the first place. Media consolidation is the problem, not the answer.
- Posted in
14 Comments so far
Show AllOh yeah, private enterprise is soooo efficient and always knows what to do with its money, huh?
keepitsimple
Obviously, Pelosi and Holder find media conglomerates more compatible with their desired form of government. Let the propaganda bells ring joyously!
Is there an industry or business out there that survived "consolidation" or "deregulation"? I don't think so. Small and competitive is always better and technology has upended the claims of efficiency with larger organizations.
See: E.F. Schumacher, Small Is Beautiful, 1973
-"loosening antitrust laws"
Allow me a minute to stop rolling on the floor laughing...OK I'm alright now.
It looks like the verdict is coming in on Obama nation. Got too much debt...let's borrow more from the many and give it to the few.
Too much war? Let's ramp up the wars we have and start new ones.
Now, too much media consolidation? Let's let the few mega companies further consolidate.
I think I busted a gut laughing.
Just goes to show what little good it does for "We The little people" to boycott those who wipe their feet on us.
While federal regulators rubber-stamped these mega-mergers, the media giants took on massive amounts of debt. Even though newspapers themselves are still profitable, their corporate bosses are drowning in IOUs.
Indebtedness is the Kool-Aid America has been drinking for decades and it will be a very major factor in our unstoppable decline. Debt is a form of slavery. We are now naked and in chains.
I will help the San Francisco Chronicle sell some newspapers.
Tomorrow's headline should be:
Nancy Pelosi briefed on George Bush's Torture and Spy Program and Remained Silent.
Obviously the majority of San Francisco voters still don't know this elementary story as they reelected Pelosi just recently.
The San Francisco chronicle has dug its own grave either with its stupidity or complicity.
Good riddance.
If they're unable to print what should be THE story of interest to all its readers they deserve to perish.
Hehe, great point.
In the film "All The President's Men", made in the middle 1970's, a salesman is pitching to Ben Bradlee yesterday's weather forecasts for people who were too drunk to get up. Bradlee smiles, waves a dismissive hand and tells the salesman, "Go sell it to the San Francisco Chronicle."
The Chron has always been a crummy newspaper and if it goes under won't truly be missed. Since Herb Caen died there hasn't really been a reason to read it.
"Pelosi's request sounds innocuous at first"
Why would Craig and Joe think such a thing? Is Commander Peloski blasting a cannonball hole into the side your ship an innocuous act? Gee whiz, Craig and Joe, the breakdown of a society was caused by an act of nature, not of elite interference, ehh? Go easy on the elites because they ARE the great providers!!
"How to support serious journalism and local coverage in the new media landscape is a complicated question that surely requires a menu of answers, forward-looking policy ideas and lots of experimentation."
It's not a complicated question and we don't need forward-looking ideas or lots of experimentation. The breakdown of this society is well understood. During the enlightenment era, western civilization acquired a decent volume of wisdom that other civilizations have known for millenia. Craig and Joe forget about this, and it's too bad.
The media has to serve the people's better interests, like every institution has to serve the people's better interests. This is the formula of success for each and every one of society's institutions. This implies a few things such as keeping the profit motive under tight control.
Can Craig and Joe open their eyes to the wisdom of the ages? Or will they continue to perpetuate the misunderstanding that characterizes the decline and fall of western civilization after its enlightenment era peak?
Why haven't Craig and Joe brought in the scholars to apply the wisdom of the ages to this problem? Maybe it's because USans aren't so scholarly. Hmm. Pursuing millions of dollars of material wealth, but ignorant of the wisdom of the ages. Craig and Joe, maybe you need to take a walk on over to academia and get someone to package the wisdom in a way to bring the people around to it.
[the big media companies] have been obsessed with short-term gains.
As have the banks
As have the home builders
As have the Detroit 3
Spotting a pattern yet?
It's real simple. The newspapers and other main stream media outlets are failing because they refuse to be real journalists and tell the truth. Nobody likes to
be lied to and we have options now. We can find the truth on the WEB we don't
have to be lied to any more.
Fred in Boston
Let's see no more Watergates, no more Tiger Force (Toledo Blade Pulitzer) many more papers will die because of the pervasive struggle for profits and the absolute loss of the sight of what a paper was started for in the first place: to enlighten the public to the NEWS that is critical for their well being and to help make critical decisions. I get more news, truly news from the internet than I do the Libertarian rag that has been fostered on this town. Go Al Jazerra!!!!
The irony here is obviously Pelosi cannot read. At least to a meaningful level of comprehension. If she could would she have gone along with such criminal behavior as the PATRIOT Act, the memos and attendance to Dumbya's torture classes where she had to have signed something to get out alive without reading it. How else could she commit such treason as taking 'impeachment off the table' and blackmailing the entire Democratic Party to fall in line? And no it isn't the botox in face doing the charm work. There are no Democrats in the House. They all are millionaires trying to get even richer by controlling the passage of laws that they benefit from. Any crumbs that fall off their plates to us is their ticket to re-election. The people of Pelosi's district proved their worth...nada.