The Social Dangers of Declining Newspaper Support

With no end of the cyclical woes in sight, at the end of this downturn, who will be left to investigate those who seek to govern?

- Michael B. Nathanson, senior analyst for Bernstein Research

In Michael B. Nathanson, "Weekend Media Blast: So Attention Must Be Paid," Bernstein Research, August 22, 2008

In a recent privately circulated report (therefore no link), respected Bernstein Research analyst Michael B. Nathanson concisely lays out key secular and cyclical trends that are affecting the system, a kind of perfect storm of problems that in his view bode particularly bad news for newspapers and radio. He worries about the newspaper “carnage” both in terms of the impact on employee lives and for its long-term implications for a free press. Two key paragraphs:

…The reasons behind this demise are fairly well-established
and we have called them the 3 Ds – Dollars, Devices,
Digital. This is shorthand for the negative structural factors
facing the content-creative industries, from the growth of
online advertising, which is eating share of traditional
advertising, to the emergence of negative technology trends,
like DVRs and satellite radio that continue to fragment the
consumer while fostering advertising avoidance. While the
trends are certainly not new, the cyclical pressures of a
softening economy are now just emerging in national
advertising.

…As we watch this carnage, that phrase "attention must be
paid" is reverberating in our heads. For starters, faced with
steeply falling demand, industries are massively cutting back
staff. According to Bloomberg, Gannett is cutting 1,000 jobs
in their community newspapers, McClatchy is eliminating
1,400 jobs (10% of total staff), Tribune is eliminating 235
jobs at the Los Angeles Times and 80 more at the Chicago
Tribune and A.H. Belo is firing 500 staffers. Of course,
there is also sadness on a personal level as affected families
struggle with the loss of income. There also should be
broader concern that a critical piece of our democracy – a
free public press – is in such a tattered state. With no end of
the cyclical woes in sight, at the end of this downturn, who
will be left to investigate those who seek to govern?

What Nathanson's trends fundamentally reflect is the power of media-buying firms to define audience trends and where media money should go. When they and their advertisers act based on their understanding of the media economy, the decisions affect the life and death of magazines, newspapers, and other outlets. Wall Street investors also play a big role in shaping a sense of what is taking place in the media world. A recent Variety article traces the reasons behind News Corporation's stock decline. Much of has to do with Murdoch's purchase of Dow Jones and Wall Street's belief that involvement with newspapers is throwing good money after bad. Supporters of Murdoch buy his belief that Dow Jones can serve as a news-and-information engine across media platforms.