After they die, local TV will benefit—but probably no one else
The warnings and elegies for the big-city newspaper have been done to the point of exhaustion, and I don't want to beat a breaking-down horse of a medium that I actually like. But the picture keeps worsening. Yearly ad falloffs at many such places are accelerating past 15%. At sundry recent points I've mistaken some twitch in the data for a market bottom, and each time I've had newspaper executives tell me I'm completely wrong. It's now time to start considering what was once unthinkable: the post-newspaper media economy in our nation's cities.
Oh, O.K., fine, big-city dailies are not all going away tomorrow. And I'm not talking about newspapers in smaller towns or national dailies à la The Wall Street Journal or The New York Times. (While hardly immune to problems, both types face less gruesome environments.) But the big-city guys are shrinking, and quickly, in head count, revenue, and ambition. Executives have admitted that some papers may not publish on certain days of the week. McClatchy (MNI), which has a portfolio weighted to metro dailies, cut 1,400 jobs beginning in June and just announced plans to drop 1,150 more—and this comes after the company had already cut 13% of its mid-2006 head count. Family owners are throwing up their hands, hanging out For Sale signs on major newspapers amidst the worst selling environment in, perhaps, ever. ("If there was someone who wanted to buy newspapers and would pay a decent price, they could buy a lot," admits one executive familiar with media markets.) And remember: All these gears were in motion long before the current financial crisis hit.
So who would profit from a disappearing newspaper? Local TV and cable, for starters. The city daily is still the biggest single media entity in virtually any market. Its main pitch to advertisers is brutally simple: We have more craniums to dent with your message than anyone else. After newspapers, TV "is the last mass-branding medium," says Gordon Borrell, CEO of local-media research firm Borrell Associates, and thus will snap up dollars that would have been newspapers'. And, while '08 will be lousy for local TV, no one expects any major stations to fall off the dial anytime soon.
In the largest and most affluent cities—Los Angeles, San Francisco, New York, Chicago, Houston—look for the decline of the newspaper to strengthen the lighter-than-air free upscale glossy monthlies. For good or ill, the vacuous expanses of the likes of Niche Media's Gotham and Los Angeles Confidential, which are assembled with a very gentle hand for the very rich (or those who like to gawk at them), are well-positioned to suck up additional business from high-end retailers. I'd be more convinced that highly targeted variations of these magazines—like those aimed at local brides—would also flourish in a post-newspaper world, had informed executives not doubted there's enough local dollars for such entities.
Which brings me to a disquieting conclusion. The obvious venues for all this displaced journalistic energy are a gazillion new independent online endeavors, be they individual blogs or bigger efforts like MinnPost.com. They will make for fascinating media ecosystems within individual cities, and some will become hits. It is much less certain whether ad dollars will follow. Ultracheap classifieds site craigslist has simply "destroyed revenue," says Dave Morgan, a former newspaper executive who founded behavioral targeting firm Tacoda, and revenue that no longer exists won't shift to new ventures. Others point out that key newspaper advertisers—local auto dealers and realtors, say—already have many outlets for ads online, not least of which are their own Web sites or national sites such as Cars.com that serve up targeted ads.
For those sensing untapped riches in ads from pizzerias and dry cleaners, well, good luck, says Borrell. "Local is a very unorganized and dirty business," he says. "People look at local as this one-ton gorilla, but in fact it's 2,000 one-pound monkeys." And no publisher can afford to sit down with a city's 2,000 small fry to sell each a $50 ad. The bitterest pill of all for newspaper denizens is that, while nature abhors a vacuum and all that, in this case there may not even be one left to fill.