Every Citizen Has a Stake in the Business of Journalism
By Ed Fouhy
February 27, 2013
View the video of this talk at http://vimeo.com/62306410
Veteran journalist Ed Fouhy has 30 years experience in online, print, television and radio news. Fouhy covered the civil rights struggle in the South, Watergate and was Saigon bureau chief for CBS News at the height of the Viet Nam war. He has won numerous awards for his reporting including five national Emmys and the Drew Pearson Award for Investigative Reporting.
My topic today is the news media, how rapidly the media have changed as the Internet has gained a foothold in our lives. I also will talk about whether the media will survive and most importantly, why you ought to care.
But before I start I wanted to get some idea of the news consumption habits of this audience. So let me ask you a couple of questions – the same ones I ask students in the course I sometimes teach on the media:
Are you a daily consumer of news? How do you get it – and many of you will have multiple answers so let me see a show of hands on all of these –Do you get your news on TV, Newspaper, Online, Radio?
I’m curious why do you get news? And again more than one answer is perfectly acceptable.
Because you think you should?
Because citizens have an obligation to know what’s going on? Because the news is stimulating, or it’s entertaining? Which?
One final question: Do you think it’s possible for our form of government to survive without the news media? whether from newspapers, online or broadcast? Show of hands. Possible for democracy to survive?
Okay I think we’ve established that most of you are readers and listeners and you have a variety of reasons why you get the news. And you think the news business is essential to democracy.
Let’s begin by stipulating that the media are important factors in our lives, you’ve just confirmed that most of you spend time with the news every day. Typical Americans spend about five hours a day on average watching screens of various sizes, mostly but not exclusively television screens or reading newspapers and magazines.
SLIDE Where we get our news has changed rapidly and dramatically in the last decade — from print and broadcast to online consumption as this graph shows – the blue line shows how fast the web has captured the news audience — mostly at the expense of print but also increasingly at the expense of television, the prime source of news for most Americans.
It’s always been a source of wonder for me that our founders accepted as a fact that you couldn’t have democracy without a free press. And that was long before the press became established in our country. The founders wrote press guarantees of freedom into the First Amendment to the Constitution. Let me remind you of what it says:
SLIDE Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
All of the rights guaranteed are in the hands of the people – religion, assembly, speech, but freedom of the press was guaranteed to anyone who owned one. In those days that was mainly printers.
Two hundred forty years passed, the news business evolved and grew. New technologies came along — first the telegraph which had an enormous impact on the news business, then other technologies — radio and television and now the Internet.
SLIDE The role of the journalist in our society evolved over the years but the main values that animate journalists have stayed the same even as the definition of who is a journalist has changed. This is my definition. Note that my definition includes the word objective. But you all know that objectivity has been sacrificed on the altar of profitability especially in the cable news business which, regrettably, often dominates conversations about journalism even though the number of people who watch cable news is relatively small.
Fox is the leading cable news organization in terms of audience size but barely pretends to be objective. By throwing that value out the window, it became very profitable. Now MSNBC, which started out to be objective, but failed to attract an audience, has dropped objectivity at least in prime time and its new strategy has brought MSNBC an audience and economic success. Here are the ratings for nine o’clock last Thursday night. You can see that CNN is struggling along in third place as it adheres to the journalistic value of objectivity. Fortunately for the corporation that owns it – Time Warner — it is highly profitable anyway but that’s another story. But back to the First Amendment; it guaranteed freedom to the news business but didn’t guarantee the business would survive economic downturns. And many did not.
SLIDE Those that did survive mostly consolidated into larger and larger corporations, they went public and brought in professional managers. Those managers who were making important decisions were usually not journalists. When hard times came along in the late nineties and the first decade of this century because of
SLIDE the Internet first, and then the economic downturn, they did what managers traditionally do – they cut costs and raised prices because the realization dawned on them that the economic model that has sustained journalism was broken.
Let’s take a close look at that model and what failed. The costs of a news organization are mainly the people. Corporate owned newspapers and TV stations downsized their work force which meant laying off the people who provide their content – the reporters and photographers who go out and cover news and the editors, producers, graphic artists and analysts who organize and package what the reporters bring back. Then the corporate owners raised their subscription rates even though they knew that would mean losing some of their readers.
SLIDE THE BIG PICTURE – According to recent statistics from the Labor Department, newspaper jobs dropped by more than 40 percent in the last 10 years. In 2001, the industry employed 414,000 people, but that number fell to 246,020 people by 2011. In other words nearly the half the jobs went away, they just disappeared.
SLIDE Last April, research firm IBISWorld reported newspaper publishing was number 5 on the list of the country’s fastest-dying industries, declining at an average annual rate of 8.1 percent. That decline is forecast to continue at an average annual rate of 4.2 percent through at least 2017. Change continues but at a slower rate.
SLIDE Not all of those who lost their jobs are journalists but the vast majority are, meaning there are now fewer reporters sitting in the press section at your local government meetings, not many covering state government; there is thinner coverage of the courts and the little noticed but important enforcement agencies like zoning boards. There are fewer eyes covering foreign stories and less shoe leather being worn out in Washington. How many of you remember that Congress authorized the expenditure of 787 billion dollars in stimulus money in 2009? That’s more than the cost of the entire New Deal and it had to be spent by the last day of last month though some states got waivers. But if you are an average consumer of the news, my guess is you have no idea what it was spent on and whether any of it was misspent. The government says less than one per cent was misspent. But because there are fewer and fewer trained journalists doing investigative reporting we don’t know how accurate that figure is.
In any case there are far fewer reporters in the field, asking questions, being skeptical, cutting through the spin, getting the facts straight, staying independent, objective and unafraid to speak truth to power. All those job cuts affected every news orgnization, large and small including such national organizations as the Associated Press, CBS News and The New York Times, news organizations that are absolutely essential to informing citizens so they can make wise choices.
SLIDE Behind the job cuts — declining revenue. This chart from Business professor Mark Perry at the University of Michigan shows that revenue today for newspapers is about what it was in 1950 when adjusted for inflation.. The numbers represent all advertising, local, national, retail and online. Web sites, primarily Craigslist, Monster and Google grabbed the money that used to go to newspapers and funded their vigorous reporting staffs. Consider this: Google’s advertising revenue last year was greater than the ad revenue of all of the daily newspapers in the country added together.
SLIDE What does all of this gloomy news mean for you? Most of you I venture to say live in cities where there is a daily newspaper monopoly. I live on Cape Cod in Massachusetts, home to about 200,000 full time residents and just one newspaper, The Cape Cod Times owned by the Dow Jones Local Media Group, which is a subsidiary of Rupert Murdoch’s News Corporation. The News Corp does not break out revenues for its local newspapers so it’s impossible to say precisely what the financial picture is for the Cape Cod Times but there’s no reason to think it’s much different than it is for the rest of the industry. For many years The Times had news bureaus in the cape’s regional centers: Provincetown and Orleans. Those bureaus were closed around the time the paper was acquired by Murdoch in 2007. Circulation for the Times has gone from 50, 896 daily in 2004 to a daily circulation of 40,091 according to last September’s report from the newspaper audit bureau.
SLIDE The nearest big city, Boston still has two newspapers, a bropadsheet and a tabloid as does New York and Chicago and Philadelphia, but both are struggling and display all the symptoms of the economic disease ailing most dailies around the country. There is the Boston Globe, owned by The New York Times which has siphoned away its profits since it bought the paper 20 years ago. Last week the New York Times announced it will put the Boston paper up for sale; experts think it might fetch around $150m, far less than the original price of $1.1 billion the Times paid for the newspaper. The second newspaper is the Boston Herald which has suffered all the ills of the industry — its circulation is steadily sinking, it seems out of touch with the city it covers and the owner recently sold off the real estate that was one of its chief assets. I doubt the Boston Herald will survive to the end of this decade.
So what if the Herald goes out of business? It’s a trashy tabloid that prints more opinion than news.
A Boston Globe reporter once said to me, “The only people who read the Herald are the editors of the Boston Globe.” Competition in the news business drives quality. If the Herald goes under the Globe will be unchallenged. Not a happy state of affairs for those of us who depend on the Globe to tell us what’s going on in our state, our region, our biggest city, Boston, seat of the state government with a budget of about 32 billion dollars of our money.
SLIDE Corruption flourishes in a one party state and Massachusetts is certainly that. The last Speaker of the House who was NOT indicted left office more than thirty years ago. Without experienced journalists on watch one can only guess how many public dollars will continue to disappear.
What can be done to stop and reverse the crisis in the newspaper business? Well the answer for many publishers is the pay wall. For ten years or more newspapers gave away their product online for free. They valued the news they published so little that they didn’t charge for it, they simply shoveled it onto the web and let people find it. And they did. By the time the wonderfully prosperous publishers of newspapers – where margins were often 30 or 40% – caught on to what was happening to their news report, it was too late. First readers migrated to the Internet and then advertisers left. I’ll repeat what I said earlier, in 2012 Google alone sold more advertising than all of the 1700 or so newspapers in the country combined.– just under $38 b
SLIDE Its easy to see that what’s happened in Boston has played out around the country. Newspaper circulation and ad sales are shrinking at a remarkable rate. Last month CBS’ Sixty Minutes broadcast a SLIDE fascinating report on New Orleans, the largest city in the country to lose its daily newspaper. New Orleans, had long had a newspaper as quirky as the city. It’s called the Times-Picayune. It is now published just three days a week, and the Cleveland Plain Dealer may be the next big city newspaper to follow its lead, because the two have the same owner
SLIDE Advance Publications, one of the largest newspaper companies in the country, owners of dailies in Portland, Oregon, Newark, New Jersey, Staten island New York and Harrisburg Pennsylvania, Advance also owns Conde Nast that publishes magazines such as Golf Digest, . House and Garden, the New Yorker, and Vanity Fair and the Discovery channel on cable TV.
Advance has decided as have many other publishers – about ten years too late in my judgment – that the prescription for survival is the pay wall. Publishers have finally decided the Internet is here to stay. People need to know the news, so they will publish on the web which is wonderful for the owners. It means no trucks, no ink, no expensive newsprint – people will buy access to the news and they will live happily ever after their sources of revenue restored.
But it has not been easy to get people to change their news consumption habits. The New York Times which instituted a pay wall in March 2012 has been the exception attracting around 640,000 digital subscribers according to the most recent numbers I could find. But the Times is unique because of the high quality of its journalism. If you have an interest either personal or professional in knowing what is going on in the country and the world, reading the Times is essential. But it is not typical. The Boston Globe followed its corporate parent in establishing a pay wall but with far more limited success, about 28,000 subscribers in a city with a very young and web savvy population. More than 400 other newspapers have established pay walls with varying levels of success.
The timeliest and best report on the state of the news business is published annually by the Project for Excellence in Journalism funded by the Pew Trusts. I was a consultant to the annual report until this year. It’s most recent report noted:
SLIDE “Advertising revenues over all were down 7.3%, despite gains in online revenue of 6.8%. Ad revenue was at $23.9 billion – less than half its peak of $48.7 billion in 2000. Circulation revenues added a little less than $10 billion in 2011. Over all, therefore, newspapers are now less than a $34 billion-a-year industry, down from $59.2 billion in 2000.”3
“[The pay systems are] unlikely to have a big financial impact, positive or negative, right away, but it better positions newspaper organizations eventually to wean themselves away from print.”
Researchers found that new ideas are beginning to blossom at a few small papers but overall their findings are grim:
“Based on data provided by nearly 40 newspapers and interviews with executives at 13 newspaper companies, that study found that in general, the effort to replace losses in print ad revenue with new digital revenue was taking longer and proving more difficult than executives wanted. In the sample, for every $1 newspapers were gaining in digital ad revenue, they were losing $7 in print advertising. (By the end of 2012, the numbers were considerably grimmer for the sector as a whole-$16 in print losses for every digital dollar gained.)”
I have concentrated on newspapers in this talk because the best high quality journalism – with some exceptions – is performed day in and day out by newspapers. They monitor government and the private sector. Newspaper reporters strike fear in the hearts of politicians and power brokers in a way that TV news does not. Television audiences are still huge – around 25 million people still watch the nightly evening news programs, but their staffs have thinned, foreign bureaus have closed and they do little original reporting. Local TV news attracts more news consumers than any other form of journalism but I often shake my head at why they do. In city after city, they look like Miami which is available here in SMA on local cable. Their news diet is thin on substance though heavy on crime, fires and the pathologies of the under class stories that demand little in terms of journalistic enterprise, time and experience.
SLIDE On the web, where many people, especially young people now go for their news, opinion outshouts facts. There are only a few sites that break news. Politico for political news, and sports sites such as ESPN.com, and Yahoo news is very good. But they are the exceptions. Most high quality Internet journalism is aggregated from newspapers, network television or the Associated Press. Hyper local news web sites face an uncertain future. AOL is the biggest investor funding at last count 893 sites called “Patch” but they have been slow to attract advertising and AOL has not been forthcoming about their financial return. Payments to writers have been cut , a symptom perhaps that Patch sites are not prospering.
SLIDE What about the public interest? Is there an appetite for news? Yes, and it is undiminished. People want to know what’s going on. Eight out of ten users of smart phones and tablets say they use their devices to get the news.
Pew Researchers recently wrote.
“People are taking advantage…of having easier access to news throughout the day – in their pocket, on their desks and in their laps.”
But all of that activity depends on a healthy business model and so far that model has not emerged.
SLIDE So what? Why should you care what happens to the news business if you’re not an investor? Because as I noted earlier our form of government depends on privately funded journalists to play a public role, to monitor government and to watch the private sector, especially the many corporations that are publicly held. Nothing strikes fear in the heart of a dishonest government official or executive of a publicly owned business than a call from a news reporter. No one else in our society has the license to snoop that we have granted to journalists.
As we look around the world and see how many countries have now adopted democracy as their form of government, we see the press flourishing in many countries but under siege in nations where democracy is struggling to be born.
SLIDE Let’s consider China, our biggest economic rival. China is not about to become a democracy but sometimes journalists there behave as if it is. A strike at a weekly magazine last month embarrassed the central Beijing government, which did compromise in order to end the strike, but first it issued a statement reasserting the Communist Party’s absolute control over all media.
At last count there were at least 32 journalists known to be in jail in China.
In general, journalism can be a dangerous line of work. In 2012 70 journalists died doing their jobs, 28 of them in Syria, a 43% increase from the previous year. Mexico has also been a killing ground for journalists.
According to the Committee to Protect Journalists, Twenty eight have been murdered since 1992, slightly more than the number of children and adults shot in Newtown Connecticut. Perhaps you’re skeptical because only one journalist was murdered last year, but isn’t it plausible to believe that it’s simply too dangerous here to tell the truth? That journalists have been threatened into silence?
SLIDE The one reporter killed in 2012 was Regina Martinez Perez, a political reporter for Proceso magazine. She was strangled in her bathroom. Her killing and 90 per cent of the other 27 have gone unsolved.
In countries around the world the Committee to Protect Journalists reports 232 journalists are in prison, 45 in Iran, 32 as I said before in China and 14 in Viet Nam..
SLIDE So I end this little talk the same way I started – with a question. If high quality journalism cannot find its economic footing in a world of rapid change can democracy as we define it survive? This is the time when I’m supposed to offer a solution so that you leave here in an upbeat mood, but it would not be honest of me to say that I see a solution. I have looked in the corners of the media world and seen people hard at wok to find one but I’ve seen no one who has discovered the answer. There are signs of improvement if you look far enough, Pew found four cities where things were getting better, Santa Rosa, California; Naples, Florida, Salt Lake City Utah and Columbia, Tennessee, all small cities but that’s where innovation sometimes starts. But the larger picture is of an industry that is struggling to survive . And no one at this point can say if it will.
I look forward to your questions.