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Analysis

The end of newspapers and the decline of democracy

If newspapers were a baseball team, they would be the Mets—without the hope for “next year.”

Veteran media executive Alan Mutter, who is perhaps the business’s most perspicacious observer, has been chronicling its demise one depressing statistic at a time. For instance, he informs us that during the past year:

  • Newspaper revenue fell to its lowest level since 1984, although adjusted for inflation the income is actually worth half of what papers earned back then.
  • Combined ad sales for all the newspapers in America in 2011 equaled barely two-thirds of the sales by Google alone.
  • These declines only accelerated in the fourth quarter of 2011, indicating that not only is there no end in sight, but the worst is yet to come.
  • Digital revenue, once the industry’s hope for economic revival, grew only 6.8 percent during 2011, which is not remotely fast enough to make up for advertising losses.

To retain what’s left of their rapidly disappearing profitability, the industrywide response has been to shed staff, to reduce the size of the paper itself (as well as its “news hole,” or the amount of space left in the paper for news after advertising ) and, in some cases, to not publish on certain days. America’s great newspapers have staffs that range from 50 percent to 70 percent of what they were just a few years ago. The Los Angeles Times, which has already been ravaged by staff cuts, announced yet another round of involuntary retirements just this week.

As a result of such moves, Mutter notes, newspapers are not investing in developing the products and services that would enable them to compete with the growing number of digital competitors lusting after local advertising dollars. The result is further deterioration in the value of these properties even beyond the absolutely alarming deterioration we have already seen. The drop last year in publicly traded newspaper shares was an amazing 27 percent.

(And even worse news—if that’s possible—is Rupert Murdoch’s News Corp actually increased in value in 2011 by a full 10.7 percent despite the criminal activity already uncovered in News of the World, among other properties. It was the only publicly traded newspaper-owing organization to do so, though it is deeply unlikely that it was the newspaper division that accounted for any of the rise. Alas the rest of the newspaper numbers would be even worse without News Corp—a more than 30 percent drop—all compared with a 5.5 percent increase in the Dow Jones average during this period.)

To add insult to injury, perhaps the most significant investments these same corporations made were to line the pockets of their failed executives. The Tribune Company—which is in bankruptcy, having destroyed much of the value of not only its hometown Chicago papers but also the Los Angeles Times, among others—treated its executives to nearly $100 million in performance bonuses (court-approval pending) for their awful performances. Gannett’s CEO, Craig Dubow, resigned recently, having cut more than 20,000 workers since 2005 and a stock price dropping 86 percent, from $72 per share to just more than $10. That turns out to somehow justify a severance package for Dubow worth $32 million.

Meanwhile, The New York Times Company, whose profits fell 12.2 percent in the fourth quarter of 2011 on top of massive losses and significant staff cuts for the past few years, rewarded its former CEO with a going away gift of more than $21 million, including a consulting contract that pays $25,000 an hour whether, believe it or not, she does any actual consulting at all.

Now does it surprise you that these same management geniuses have not been able to come up with any remotely promising avenues toward sustaining the business upon which democracy relies?

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It’s not that there have been no successes. The New York Times introduced an online paywall to support its journalism and surpassed even its own internally reported goal with nearly 400,000 people paying for digital subscriptions in just one year.

But as encouraging as these numbers may be, they do not presage much for the industry at large. After all, there is only one New York Times—with cuts to its main competitors falling much more heavily than at the “paper of record”—and with the Murdoch-owned Wall Street Journal increasingly corrupted by the practices of its parent company, it now stands virtually alone as America’s only “great” national newspaper. Moreover, no one at the Times ever planned for its paywall—however successful—to make up for any more than a small fraction of the losses from the past decade’s transformation of industry and ensuing collapse of the business model.

So what will the new news landscape mean politically? Well, power loves a vacuum, as the saying goes, and the gap left by the reduction of newspapers where people used to get their information is being filled by companies that repurpose information found elsewhere—primarily Google, Facebook, and so forth. Given the fact that they’ve got the eyeballs, they will continue to capture the advertising dollars that once supported the newspaper industry. Five companies accounted for nearly 70 percent of all online ad revenue last year—remember, that was what was going to save newspapers—and by 2015, we can expect Facebook to swallow up at least 20 percent of all digital display ads sold, assuming current trends continue.

While this news crisis has been apparent for more than a decade—Drudge Report broke the Lewinsky scandal back in January 1998, ushering in the era of Internet-driven news—as the Pew Project on Journalistic Excellence newest “State of the News Media” report explains, the industry “is not much closer to a new revenue model than a year earlier and has lost more ground to rivals in the technology industry.”

The net result is a loss of reliable news and more opportunities for liars and charlatans to sell their wares unconcerned by the likelihood that they will ever be called to account for their deception (whether deliberate or not). Is Barack Obama a Kenyan-born Muslim? Is man-made global warming a worldwide conspiracy of money-hungry climate scientists? Are excessive teachers’ salaries the primary cause of the nationwide fiscal crisis in state and local budgets?

The fact that these questions are even debated seriously is, in part, a tribute to the ability of liars and lunatics to communicate their messages without concern for correction. After all, neither Google nor Facebook has a fact-checking staff, and God knows Fox News would not recognize an inconvenient truth if it arrived tied to a rock through Roger Ailes’s window.

So long as our society treats the disappearance of newspapers as strictly a business matter—with no implications for the future health of our democracy—this problem will continue to worsen. Clearly the newspaper industry cannot save itself. Whether it survives at all is up to legislators, philanthropists, and other civic-minded citizens to act before it is too late. Sadly, it may already be.

This article was published by the Center for American Progress.

Eric Alterman is a Senior Fellow at the Center for American Progress and a Distinguished Professor of English at Brooklyn College and the CUNY Graduate School of Journalism. He is also a columnist for The Nation, Moment, and The Daily Beast. His newest book is Kabuki Democracy: The System vs. Barack Obama.

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7 comments
Apr 3, 2012, 10:18 am
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Bret - and a tip of the hat to you, as well.

It is, as you’ve made clear, a conversation. Cool!

Yes, piano stores do need customers. Here in Tucson, we have had as many as five stores at once. Now we have two, which is more appropriate for a market this size. Still, my point is not relevant to the number of customers but to the march of new technology.

In that context, my comment is quite germane.

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1767 comments
Apr 3, 2012, 9:57 am
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@Dan Starr

No disrespect at all, but I’m not sure your business is a good example. In my life I have actually seen people reading newspapers…

Especially growing up, I have spent a lot of time in malls. Quite often I would walk by the piano store and would never see a customer in there. I never understood how those places stay in business. I’m not pretending to be a doctorate of business admin or anything, but I do know that a business needs customers to keep going…right?

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7 comments
Apr 3, 2012, 6:09 am
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There’s a similar thing in my field:

The piano put the harpsichord manufacturers out of business. Now the advent of quality, low cost, DIGITAL pianos are putting the piano out of business and pianists everywhere are squawking.

Unfortunately for them, progress marches onward. The “old guard” laments. The public ignores them and continues to move into the future.

No wonder this clown laments the demise of his controlled news source. The Internet is the “liberty tree” of the modern day.

Notice how he cleverly manipulates statistics. We read in the first point how, once the money figures are manipulated for inflation, they are actually lower than the 1984 he quotes, supposedly to make you feel sorry for his newspapers. Whaaaa…(sound of tears falling!) He never does give the date that the manipulated money figure takes their profit back to. With this kind of “reporting” it’s no wonder folks are turning to the Internet.

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