The end of big bundles? Going "a la carte" via OTT

OK, first let me take care of clarifying the terminology.

Assembling big (often 50+ channels) bundles of cable networks has been the primary strategy of multichannel video service providers (cable, DBS, telco cable, etc.) for the last couple of decades. Keeping bundles big helps minimize transaction costs for the bundler, while offering maximal potential audience reach for advertisers, and maximizing the viewer's ability to browse and discover the value of channels and their content.  On the other hand, critics complain that it "forces consumers to purchase channels they aren't interested in."  That's not necessarily true, as purchase decisions are based on the aggregate perceived value of the bundle, not the "costs" of undesired channels (see here for more detailed analysis).

Still, as the networks and local stations seek to increase licensing fees from multichannel providers, those costs are passed on to the consumer in the form of higher bundle prices.  Bundle subscription costs are rising rapidly, and may be nearing a threshold point for many subscribers - the point where their perceived value of the bundle is less than the subscription price.  We're seeing the beginning of this in the rise of cord-cutters - those replacing paid multichannel access with a combination of online and free over-the-air TV sources.

However irrelevant, the claim of paying for unwanted channels is a major theme for those who would prefer to force multichannel services to unbundle channels and offer them to consumers in small focused bundles (like the various Discovery channels), or individually (i.e. "a la carte").  This may seem to be a good deal for consumers - until you realize that going a la carte will, in most cases, reduce audience reach numbers significantly.  One study (discussed here) forecast that forced unbundling could result in a loss of 60% of advertising revenues for cable networks, and result in more than 100 channels going out of business.  And since cable networks would need to significantly increase their a la carte prices to recapture some of those losses, going a la carte would also likely result in higher total costs for cable network access for most consumers.

Meanwhile, some multichannel video providers are finding that the increased licensing demands made by some networks are crossing that value threshold, and are dropping channels, or in one case offering to provide the channel - but only as an a la carte service.  The networks have so far been smart enough to realize that either option is a net loss for them, but the gleam of a licensing El Dorado of unlimited wealth keeps them trying to push licensing fees ever higher.  Viacom, and its package of networks, is the latest battleground, with their channels being dropped by a number of mid-range and smaller cable systems unwilling to cave into their licensing demands.  As one analyst noted,

“The stage is set... As consumers are less interested in large bundles, somebody is going to get hurt in the process by asking for too much.”

If multichannel service providers remained the only option for access, the impact on the industry would be bad enough.  However, they're facing rapid growth in the ability of broadband internet connections to provide access to high-quality TV streams to mobile devices and wired connected devices.  The term OTT (over-the-top) refers to these alternative sources of video and TV content. Both the diffusion and use of these technologies for TV viewing are growing rapidly (see here and here).  Combined with increased time-shifting of programs and place-shifting, audience TV viewing habits are clearly changing.  For cable networks, going online for their content distribution - either as single channels or as a part of a more limited (and much less expensive) bundle offered online - is an increasingly viable supplement, and potential substitute, for traditional delivery media.

The viability of online TV delivery has been a significant component of the "TV Everywhere" marketing push.  The initial conceptualization, though, saw "TV Everywhere" as a way of achieving multichannel services beyond the household's TV sets - and not as a substitute or replacement for those services.  That was one reason for the rapid reaction to the Aereo service.  One would think that local stations and networks would be eager to extend their range of service via mobile as a way of enhancing (or at least maintaining) audience reach.  However, it seemed that the industry hated the notion of a video service that paid no licensing fees; and the courts bought that argument.

More recently, the industry has seen several TV networks pursue the option of offering their programs and content online. The WWE initiated a very successful online subscription service last year, and many of the Pay TV networks have announced plans for providing online access channels separate from multichannel provider subscriptions.  HBO, in particular, is scheduled to provide a separate online channel called HBO Now starting April 12, 2015.  A research report released in January by Park Associates suggested that HBO Now could generate an additional 15 million subscribers.  More critically for multichannel providers, half of those interested in HBO Now said they'd not only be likely to drop HBO pay channels, they'd drop the whole multichannel pay service (about 7 million subscribers).  That's still a big win for HBO, who not only would likely net an added 8 million subscribers, but would not have to split the subscription fee with the multichannel provider.

In addition, CBS has been offering an online video service since last fall, and it is thought that ABC, NBC, and ESPN are considering taking their online video channels public (currently access is limited to subscribers of some of the largest multichannel providers).  Most cable networks provide some access to their content, but not to live streams of the channel.

Still, it's likely that the new DishTV service, Sling-TV, may unleash the deluge.  Sling-TV is an OTT service that bundles a number of the most popular cable networks as a minibundle at a very low subscription price ($20/mo. for about 20 channels), and supplements that with targeted minibundles (sports, movies, children, etc.) at $5 a pop.  The service combines live streams of the network, as well as on-demand access to the previous week's programs. Sling-TV has managed to sign up some 100,000 subscribers in its first month, despite being initially limited to those with a Roku OTT box.

The Sling-TV service could well force the big multichannel services to start unbundling.  It offers an intriguing alternative for those who would be satisfied with a lesser selection of channels.  And even for those viewers who place high value on channels not included in the Sling TV packages, the price contrast between the "big bundle" options ($50-$150+ on new subscriber deals) and Sling-TV will prompt consumers to reconsider if their demand for favorite channels will justify the price differential (and to wonder how the costs of channels they don't want inflate bundle prices).

The big multichannel providers have been shedding TV subscribers slowly, but consistently, for years.  Now that viable and less costly OTT and online video options are coming available, expect the decline in pay TV subscribers to increase, particularly for major MSOs and multichannel providers.

Sources - Updating: HBO Now The Big Test for Cord Cutters?, Online Video Daily VidBlog
Sling TV notches 100,000 users in a month, TechHive
Seventeen percent of U.S. broadband households are likely to subscribe to an OTT HBO service, Parks Associates report.
Provider's Dispute with Viacom Highlights Skirmish Over the Cable Bundle, New York Times

Signs of the Print Holocaust

Over the last year, the newspaper industry has seen a lot of departures - with major newspaper companies getting rid of a lot of their major properties.  The Washington Post Company sold the Washington Post to media newcomer Jeff Bezos, founder of Amazon.com.  The New York Times Company sold the Boston Globe to John W. Henry, owner of the Boston Red Sox.  And Time Warner basically gave away what had been its' premier product, Time magazine (whose new owner also found itself burdened by an additional $1.3 billion in debt).  The Tribune Company has been trying to sell major papers, like the Los Angeles Times and Chicago Tribune for years (and finding limited interest).  Even Murdoch's News Corp took action last year, splitting its print operations from its broadcast, digital, and entertainment operations.

The notion of spinning off print newspapers from broadcast and digital seems to have caught the interest of other media conglomerates -, particularly those with poorly performing print operations.  Over the last few weeks more splits were announced.  The Tribune Company split off most of its newspapers into a separate company (along with $350 million in debt).  E.W. Scripps Co. announced a merger with Journal Communications, and then quickly followed that by spinning off the combined print newspaper assets into a separate company.  And most recently, Gannett announced it would spin off its broadcast and digital operations from its struggling print newspapers next year.

While these announcements tout the prospects for the new print companies, most analysts see the moves as cynical efforts to dump assets with declining value and limited futures.  The lack of serious potential purchasers for major urban dailies in recent years hasn't helped - leaving conglomerates with few alternatives for dealing with newspaper properties in decline.  Spinning print off may be their best financial option at this point - particularly if they see no profitable future for their print dailies.
  

And if companies whose beginnings were in urban print dailies, whose traditional self-image was as newspaper moguls, are at the point where they see no future in that segment anymore, it's hard to be optimistic about the industry.

“I’m very skeptical that in the long term you are going to have a hard copy daily newspaper in each market,” Mr. Huber, an analyst with Huber Research Partners, said.

Sources -   Print is Down, and Now Out,  New York Times
Gannett, Owner of USA Today, to Split Its Print and Broadcast Businesses, New York Times
Now Scripps Is Splitting, Too,  The Wall Street Journal

New Report on Hyperlocal News in UK

Collaboration between AHRC-funded projects in the UK has led to a report on the status and viability of hyperlocal community news.  Some key findings:

• UK community news sector is well-established, with nearly three-quarters of players producing news for 3 years or longer (one-third doing so for more than 5 years)
• 70% see what they do as a form of active community participation; half identify their activities as local journalism, half as an expression of active citizenship
• More than half have formal journalistic training or mainstream media experience
• Most hyperlocal news sites have modest reach, even in their local communities

• Most community news producers classify their activities as part-time (only 11% report spending 40 hrs/wk or more on producing community news).  Also, most producers fund their projects themselves - only a quarter raise enough money to cover their costs.

Source :  UK Hyperlocal Community News: Findings from a survey of practitioners. Research report

Mileposts: Two notable print closures

It's been a week of bad news for print media.  Newspaper revenues continue to slide, despite some upticks in digital subscriptions and advertising (see earlier post), and print's share of time spent with media has dropped more than 50% in the last four years, now accounting for a mere 3.5% of U.S. adult time spent with media (see previous post).  Now comes news that two notable print institutions are ceasing print operations.

Officials with publishing conglomerate Meredith Corp. announced today that the venerable Ladies Home Journal will no longer be published as a monthly magazine.  The title will transition to a special-interest quarterly publication sold exclusively at newsstands.  The Ladies Home Journal began publishing 131 years ago, and was the first U.S. magazine to reach a circulation of 1 million (111 years ago).  The company announced that the magazine's 3.2 million current subscribers will be shifted to other Meredith-owned publications.  Meredith indicated that its magazine division saw advertising revenue drop about 15% in the last year, while overall operating expenses rose about 8%, contributing to a 37% drop in profit levels.

The problem with the magazine was not its readers, but with advertising.  The number of ad pages had fallen 23% this year; but the problem was that that was only the latest of several years of double-digit declines.  Another of the pioneering "Seven Sisters" of women's service magazines, McCall's, closed in 2002 after years of losses that were also blamed on declining ad pages and aging audiences.  The last issue will bear a July 2014 publication date.

The announcement comes on the heels of the news that the Columbia University student newspaper, the Columbia Daily Spectator will drop its daily print edition.  Starting with the upcoming Fall term, the paper will be shifting its efforts to its online edition combined with a weekly print edition.  In fact, the new weekly edition will be folded into the Spectator's current weekly, called The Eye.  The Spectator began publishing as a student newspaper in 1877, and was the second-oldest continuously operating college newspaper in the U.S.  It began operating as a daily newspaper in 1902.

With this move, Columbia becomes the first (and so far only) Ivy League school without a daily student-run newspaper.  While stressing that it wasn't an economic decision, the paper's current Publisher did admit that the print edition was losing money this year, and hoped that the move would help free up funding to supplement a work-study program used to support staffers.

One alumnus, former managing editor Robert Hardt, Jr., commented that he had mixed feelings about the move:

“It’s the end of an era—but it probably means that Spec reporters will miss fewer classes and get better grades...”

Sources -  Ladies Home Journal to cease monthly publication, The Des Moines Register
 Ladies Home Journal to Fold After 131 Years in Print, Ad Age
Columbia student paper plans to drop daily print edition, Capital New York

US Newspapers Revenues Still Falling

The Newspaper Association of America (NAA) has released its report on the state of newspapers in 2013.  The report trumpets "the best performance since 2006" - but that's because the overall revenue decline of -2.6% is the smallest annual percentage decline over that period.  Overall, the industry lost more than a billion dollars of revenue in 2013.  The fall in revenues was again led by a 8.6% drop in print advertising revenues.  According to the report, print advertising revenues account for less than half of total revenue.  Classified ad revenues continue to lead the decline (down 10.5%), but both national and retail advertising revenues fell by 8%.  Advertising revenues were also down (-5.8%) for weekly and niche publications.

Offsetting this was a modest 1.5% growth in digital advertising (overall, digital advertising is growing at a double-digit pace).  If there's good news in the report, it's the fact that the rapid adoption of paywalls for the online versions of print newspapers contributed to a modest gain in overall circulation revenues.  That, and the fact that the NAA managed to add $5.5 billion in additional revenues by including revenues from side ventures such as contract printing, weeklies, and a range of niche publications and services.  That really helped to slow the decline in the "total industry" numbers.  Still, revenues from all digital sources amounts to only 12% of total industry revenue, and newspapers' digital revenues continue to grow much more slowly than other forms of digital advertising.

Newspapers aren't out of the woods yet.

Sources -  Newspaper industry narrowed revenue loss in 2013 as paywall plans increased, Poynter
Business Model Evolving, Circulation Revenue Rising, NAA report\

(I made a number of edits for style and clarity after initial posting - BJB)

Pew: The State of American Journalism Revenues

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way...Charles Dickens, A Tale of Two Cities

 The State of News Media 2014 report estimates that the news industry in the U.S. generated around $65 billion in 2013.  That figure combines advertising and subscription/sales revenues.  To put that in context, global video game revenues are $93 billion, and Google had revenues of $53 billion.  But is that good?  Print's future looks increasingly dismal; broadcast's holding its own; but the online news world is generating more usage and revenues - and their revenues are growing rapidly.  While online revenues are currently small compared to traditional revenue streams for news media.  However, they are growing rapidly, even as digital opens myriad opportunities to develop new revenue streams.

Key findings in the 2014 report:

• Advertising remains the dominant source for news revenues, accounting for roughly two-thirds of the total,
• Audience revenues is the other major source, generating about 25% of news revenues
• Alternative revenue sources and streams account for a growing share of news revenues. However, there contribution is small, with all other sources contributing just 8% of the total.

There are, however, significant variations across media.   Print media revenues are declining (particularly print ad revenues), while radio and TV advertising remains fairly stable.  The boom is in online and mobile advertising revenues, but those remain a small piece of the pie.

On the audience side, there are signs that traditional subscription payments are starting to decline.  Traditional print circulation and subscription numbers are starting to fall, despite (or as a response to) increasing subscription costs.  And while the newspaper industry is hoping that paywalls and digital subscriptions to online versions may recoup losses, a recent NAA study found that virtually all of the digital subscription gains in recent years come from 5 major newspapers.  There are signs, on the other hand, that various media are finding revenues through content licensing, and repurposing content for distribution through alternative channels. 

Viva Las Vegas & CES

This week, I’ll be at the Consumer Electronics Show in Law Vegas, participating in the IRTS/CES Faculty/Industry Seminar and the Connections session track sponsored by Park Associates.  The theme of the Seminar is Audiences Across Devices, which reflects several of the major themes in CES – the Internet of Things, connected Cars, connected Homes, adjusting Policy to accommodate myriad new content delivery systems and devices (wearables looks big) - plus the new 4K TVs and other toys.

Anyway, thanks for bearing with the scarcity of postings over the holidays – the next bunch will likely focus on CES, then I’ll try to catch up.

Also see

IRTS Faculty/Industry Seminars 

CES2014

Media Businesses on the Plus Side

Courtesy of SNL Data Dispatch comes a report of the top earners of media companies for the third quarter of 2013.  Some highlights:

• Disney continued its reign of top earner, reporting revenues of $11.57 billion for the quarter, up 7% from the previous year, with a net income of $1.54 billion (up 11%)
• 21st Century Fox moved into second on the revenues list as revenues rose nearly 18%, even though its net income dropped by 44%.  (The 2012 numbers had included Newscorp, which has since split off into a separate company
• Completing the top 5 in revenues and income were TimeWarner, Viacom, and CBS (in that order)
• Newscorp  retained a top 10 spot in revenues, despite nearly a 3% revenue decline
• Discovery Communications saw revenues gain over 27%

Source -  Disney still No. 1 among media earners but 21st Century Fox making gains,   SNL Data Dispatch report.

Tribune reorganizing publishing, will cut 700 jobs

The Tribune Company announce in a memo to employees that it will be restructuring its publishing division to focus on digital operations and "streamlining" operations (which usually means centralizing jobs that had been done independently at its 8 daily newspapers).

"The new operational plan is going to change the company into one company with eight locations, as opposed to how we operate now which is eight individual and separate businesses," (Tribune Co. President and CEO Peter) Liguori said. 

The company hopes the move will trim costs to match the publishing division's declining revenues as it seeks to spin the publishing division into a separate company.  While remaining profitable, the publishing division's ad revenues fell by $84 million last year, and are already down another $62 million in the first nine months of this year.

The publishing division has already cut its expenses by 13% so far this year, primarily by reducing compensation costs through job cuts.  About 340 positions have already been eliminated in the division,  and the memo anticipates job cuts will double to around 700 by the end of the year.  Last year, the Tribune Co. eliminated about 800 jobs in its publishing division.

The strategy of using job eliminations to offset declining revenues, however, can only be effective if the revenue shortfalls don't continue.  In the face of continuing, industry-wide, long-term print advertising revenue declines (that aren't being replaced in full by digital revenue growth), cutting positions can only be seen as a stopgap measure.  And a risky one if the job cuts impact news content production and quality.

Source -  Tribune Co. reorganizes publishing unit, cutting nearly 700 jobs,  Chicago Tribune

What's up at NYTimes? Staffers continue to jump ship.

Yesterday, three more high-profile editors and writers quit the New York Times.  Sunday Magazine Editor-in-Chief Hugo Lindgren, Chief Political Correspondent Matt Bai, and media columnist Brian Stelter joined the procession of senior staff leaving the New York Times in recent months.
In the words of one former Times journalist, the paper doesn't have the cachet or perks it once did -

“Nearly everyone who gets a lucrative offer will leave,” (a former Times) journalist said. “The era of the lifelong Timesman -- or lifelong Timeswoman -- is over.” 

Times executive editor Jill Abramson tried to put a positive spin on things while acknowledging the large number of departures -

"Retention is becoming a challenge," Abramson told New York magazine. "The economy has improved, whether it's Bloomberg or The Huffington Post, I can feel on any given week that I'm playing whack-a-mole keeping our most talented people."

Perhaps referring to your top talent as "whack-a-moles" is not the best phrasing for a news organization that still likes to think of itself as elite (joining the Times' recently offered replacements for "repeatedly and consistently lying" - "misspoke" & "factually incorrect statement").  It should be no surprise that staffers in the newsroom are growing concerned about managements ability to retain and nurture talent.

It should be noted that the departure frenzy was initially bolstered by the Times' multiple offers over the last five years of buy-outs to dozens senior news staffers as cost-savings measures, and continued concerns over newsroom costs.

Source -  New York Times Departures Heighten Concerns About Staff Retention,  Huffington Post

Tribune TV sees revenue decline despite adding stations

To be fair, the acquisitions are too recent to really show up on the quarterly financial reports - but filings for the second quarter of 2013 showed TV station revenues were down 20% from the second quarter of 2012.  While political advertising in 2012 may have boosted quarterly revenues in 2012, the report attributes much of this year's decline to poor ratings and weak ad sales at WPIX-TV in New York (ad revenues for that station dropped by $17 million).  Overall, operating profit from the broadcasting division dropped by more than half, falling to $51 million in 2Q 2013, from $124 million in 2Q 2012.  In contrast, publishing revenues fell by just 4%, while operating profit soared from $15 million in 2Q 2012 to $60 million in 2Q 2013.  (Within the publishing unit, revenues and profits have significantly declined for the big, "elite", papers, but are countered by better performance among smaller dailies and other publishing units).

In the meantime, Tribune has indicated plans to spin off the publishing division (and selling off the loss-leading big dailies like the Chicago Tribune and Los Angeles Times) and building up its broadcasting division.  In July, they announced the planned acquisition of Local TV LLC and its 19 stations.  The deal would make Tribune the country's biggest commercial TV station owner (at least along one metric).  As with many such big deals, there is some overlap of stations and markets, and Tribune proposed selling 2-3 stations in order to come into compliance with FCC duopoly rules.

Source -  Tribune TV Revs Sink 20%, Ad Revs Down 7%,  MediaDailyNews
Tribune looks to sell TV stations in Pennsylvania, Virginia,  Crain's Chicago Business

Study Confirms: Growth of Online Classifieds Cost U.S. Newspapers $5 billion

A new academic study indicates that major US newspapers lost more than $5 billion of classified advertising to Craigslist.  The study looked at the impact of the entry of Craigslist into newspaper markets from 2000-2007, and the resulting changes in classified advertising revenues.

  The study found that those papers that relied heavily on classified advertising revenues experienced a 20% drop in classified advertising rates in response to online competition.  One consequence of the loss of classified advertising was the decline of the value of the paper to its consumers, which would impact both single copy sales and subscription levels. It also suggests that the advent of competition from online classifieds caused many newspapers to raise subscription rates to replace lost earnings, and that led to a further decline in circulation, that lead to declines in display ad rates (which are based on readership levels).  The study suggests that classified losses encouraged many newspapers to try to differentiate their content from its competitors, and less likely to make their content freely available online.
  In sum, the failure of newspapers to effectively compete with a more efficient and high-value competitor entering the market in this one sector triggered a downward spiral in both revenues and circulation.

What the study, and news report, don't bring up is that there was no reason that newspapers couldn't have entered the online classified market themselves, and captured a large share of that market.  In fact, several major newspapers had successful online classified trials in the late 1990s.  But most publishers felt that entering the online classified business might impact print circulation and sales - which it clearly did.  The problem is that rather than capturing that impact for their organization, they let somebody else grab it - and the resulting revenues and audience attention.

Sources -  Craigslist Costs Local Newspapers $5 Billion in Lost Ad Revs,  Media Daily News
"Response to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers," research study by R. Seamans & F. Zhu

Old techs DO Die - Farewell, Telegraph

Large scale telegraph systems will end next month, as India terminates its state-run telegraph system. The actual use of the telegraph as a technology has been minimal for decades, replaced by more efficient telecommunications technologies, but the provision of "telegraph service" lingered for cultural/legal reasons; but at a large cost.  As nations privatized telecommunication providers, cost began to trump tradition.  Telegraph service ended in 2006 in the US, and only lasted 2 years after British Telecom was privatized in 1980.

Source -  Telegram system ends. Stop. Replaced by text messages.  Stop.,  the Telegraph

Internet Week's take on the Future of Media

The recent Internet Week conference hosted (and recorded) four sessions where various industry folks talked about the future of media.  From one of the keynotes to panels on "Tomorrow's Media Landscape", "Convincing People to Pay for Content", and "Is Twitter Live TV's Newest Follower?".

AdAge embeds the four videos in its story, and the Internet Week folks have those and other recorded sessions available at the Internet Week NY site on Livestream.

Source -  The Future of Media, as seen at Internet Week,  Advertising Age

UK's Trader Media moves from print to digital

UK's Trader Media Group, publisher of Auto Trader and related titles, has announced that it will shutter all print editions next month and focus on digital editions.

  The company's top title, Auto Trader, has scene its print edition lose more than 90% of its circulation over the last 13 years.  In contrast, the Autotrader.co.uk website has become the go-to online marketplace in the UK for buying and selling new and used vehicles, with website traffic growing 13% a year, pulling in 11 million unique visitors - 3.5 million from mobile users..
  The company's interim CEO praised the role that their print magazines played in developing the brand, but noted that

"With a marked shift by consumers and dealers to online platforms as a means of accessing information and buying and selling vehicles, we continue to innovate to ensure that we offer them the products and services they require through their channels of choice.”

Source - Auto Trader owner Trader Media Group to close print portfolio next month, The Drum

Fading at the Washigton Post

On Friday. the Washington Post Co. reported its First Quarter, 2013 net earnings of $4.7 million.  That's a drop of 85% from the first quarter of 2012.
  The newspaper division was a major contributor to the decline.  Newspaper operations generated $127.3 million in revenues for the last quarter - off 4% from the previous year.  More problematic was the net operating loss of $34.5 million.  The newspaper losses were 67% higher than for the same period in 2012  Daily circulation at the Washington Post declined 7.2%, and average circulation of the Sunday edition fell 7.7%.  Print advertising revenues were down 8%.  Print expenses declined 12%, but was attributed "to a decline in newsprint consumption.”
  On the other hand, the electronic media divisions continued to counterbalance newspaper losses.  Online publishing revenues were up 8%, and online display advertising revenues gained 16%.  Revenues and operating results improved for both the TV broadcasting and cable TV divisions.
  Revenues were also down at the company's education division, although operating results improved.

The company blamed much of the big spike in newspaper losses on pension, early retirement, and severance expenses - although still noting that operating results for the newspaper division - even after shedding staff - continued to decline.

Source -  Washington Post suffers 85% earnings drop,  Politico

The State of (US) Newspapers

When speaking of newspapers, the focus generally is on major metro dailies - and they've been in trouble recently.  Advertising revenues have fallen dramatically, readership is on the decline, and more than a few have folded or ceased print operations and gone online.  So the recent Pew Research Center State of the News Media 2013 report tried finding some good news.  

• There are some buyers for newspaper companies and/or their stock. 
  The big newspaper buyer was Warren Buffet's Berkshire Hathaway, which acquired a sizable number of small- and mid-market newspapers.  But the big urban dailies up for sale aren't finding much buyer interest, and their newspaper operations are dragging down their corporate stock prices.
• Circulation revenues are holding steady, and for some increasing slightly.
  Total circulation revenues are steady in the face of increased subscription prices, and with the supplement of daily sales and digital (paywall) subscriptions.
• The economy is maybe looking up, with the hope of more ad revenues to follow.
  There's been a rise in auto ad revenues, but real estate and recruitment (ads for jobs) ad revenues continue to plummet.
• Newspapers' online efforts are starting to generate revenues.
  Newspapers continue to experiment with a range of online efforts - and seeing gains in local online revenues, and in paywall subscriptions.  Total online advertising revenues now exceeds those of newspapers, but the newspapers' share is small and has been decreasing in recent years.
• Mobile and Tablets are building new news consumption habits and audiences.
  Adoption is growing, and studies of mobile use suggest that strong news consumers are using their devices to keep in touch, and even consuming more news of interest.

On the other hand, there's a number of bad news indicators as well.

• As mentioned, print advertising revenues are still falling - down 7.3% in 2012.
  More critically, newspapers have largely lost whole segments - classifieds are down more than 90%, real estate down 75%, automotive down 80% (even with slight recovery).  National ads are falling most rapidly, with indications that the big national firms are shifting their ad campaigns to other media.
• Digital advertising accounts for only 15% of total ad revenues, and while growing, isn't replacing print losses.  In 2012, newspapers lost, on average, $16 in print ads for every $1 in digital advertising.  And its starting to look like display ads won't be a major revenue source in mobile.
• While most newspapers remain profitable, margins are down, and many will continue to struggle with debt and pension obligations.  For an industry that had become used to 20-30% profit margins, large chains saw margins well below 10% (Scripps, Gannett, A.H. Belo).  Major dailies New York Times, Washington Post, Chicago Tribune, Los Angeles Times  and News Corp. all experienced significant losses in newspaper operations.
• Newspapers continue to trim print news staff, and many are trading the once-grand downtown headquarters for smaller and more spartan offices.  Some are experimenting with publishing print editions only 3-4 times a week.

That's all on the business side - What about the news content?  The Pew report didn't look directly at newspaper content in this report - but noted that newsroom staffing continues to fall, and that is impacting the quality of news being produced.  (They were particularly critical of political news, which too often acted as megaphones rather than investigators - too frequently just repeating favored talking points, even if they were demonstrably false).

For news organizations, distinguishing between high-quality information of public value and agenda-driven news has become an increasingly complicated task, made no easier in an era of economic churn.

The report also notes that news consumers are beginning to notice the decline in the quality and quantity of news coverage.  While the report doesn't break this information by medium, a recent Pew survey found that 31% of news consumers reported that they had "stopped turning to a particular news outlet because ... (news outlets) were no longer providing them with the news and information (they) were accustomed to getting."  In addition, those with the most awareness of the news industry's financial problems were the most likely to drop a particular outlet (43%).  Of those leaving an outlet, two-thirds did so because they felt that coverage was incomplete - and nearly a quarter noted there was less coverage overall (there is some overlap in the two responses). 

Furthermore, the decline in coverage is more widely noticed - and that the quality and thoroughness of coverage was the bigger problem.  In the wider sample of those who had at least some awareness of media's financial problems, two-thirds noted a decline in the completeness of stories, and two-fifths noted a decline in the number of stories.  The study notes that the impression that thoroughness was the bigger problem carried across all demographic groups.

It is clear from these data that much of the country recognizes little if anything about the economic challenges the industry is grappling with—and that much of the knowledge and concern about the economics and the future of the news business may be largely confined to the industry itself. But the news consumers who are more aware of the problems and their impact on news are more likely to act on those concerns by abandoning a news organization. And, based on demographics, they also are likely to be more ardent news consumers who are willing to invest in a product they value. They appear to be making informed choices. The job of news organizations is to come to terms with the fact that, as they search for economic stability, their financial future may well hinge on their ability to provide high quality reporting.

  These perceptions aren't helping with newspapers' long-term problem with declining readership.  The generational drop in readership remains, and even within generations, readership is falling.  And that's even with changes in how readership is measured that was designed to include online and occasional reader (i.e., counts those who read a newspaper of visits a newspaper online site at least once a week).

 For our students, here's the bad news.  The number of newspapers continue to decline, as does the number of editorial staff on the print side.  Total editorial staff employment is at the lowest level since 1978.  There is some growth in employment for newspapers' digital operations, but as with ad revenues, the gains from digital remain far from replacing print losses.

Source -  State of the News Media 2013, Pew Research Center's Project for Excellence in Journalism report.

Scary Graphic for Newspapers

From The Atlantic:

Since 2003, print advertising revenues for newspapers has fallen from $45 billion to $19 billion, while online digital advertising has grown from $1.2 billion to $3.3 billion.  In other words, over the last ten years, the average annual decrease in print advertising revenues for newspapers is larger than the total increase over that decade in online advertising revenues.

Source -  This Is the Scariest Statistic About the Newspaper Business Today,  The Atlantic

Apps rule! (among users)

A new study of more than 3500 smartphone and tablet users around the globe has found an overwhelming preference for using dedicated apps, rather than mobile websites, for information.
Some 85% of the survey's respondents preferred using apps, citing their speed, convenience, and ease of use.  The study found that people spend an average of almost 2 hours a daily with apps, twice the time they spent with apps a couple of years ago.  Those factors help explain why global app store revenues are expected to reach $25 million this year (a 62% increase).
  Happiness with apps isn't uniform, however.  Two-thirds of respondents indicated that they had a bad app experience - the app crashed, froze, or returned an error message.  Almost half (47%) had experienced slow launch times, and 40% have tried an app that failed to even open.  Users weren't very tolerant of problematic apps - 79% said they'd try an app that failed initially only one or two times before deleting it.
  Finally, the study found that app ratings were very influential when looking at apps.  84% said user ratings posted in app stores were an important component in their decision whether or not to try the app.

Source -  Speed Wins: Users Favor Apps Over Mobile,  OnlineMediaDaily

Cable Fee Blame Games Begin

If recent news stories are any indication, it's time for The Cable Fee Blame Games to begin.

  It's no surprise that cable (and other multichannel provider) subscription rates are going up.  Programming license fees keep rising, the number of channels increase, and the last round of retransmission consent negotiations didn't go well for the multichannel industry.  And the increases look to be even higher this year - perhaps enough that the industry is looking for others to blame.  Many licensing deals require system-wide carriage of top channels, and are often sold in conjunction with new or less-valuable channels. So now some cable execs are talking about possibly breaking the basic tier into mini-bundles, even as public interest groups raise the prospect of a la carte pricing.
  It's come to the point where Cablevision launched an anti-trust suit against Viacom, accusing it of forcing the cable MSO to carry (and pay for) less popular Viacom cable networks in order to get MTV and Nickelodeon.

"Without the 'take it or leave it' requirements of bundled programming packages at a wholesale level, cable companies could tailor smaller and lower-priced packages that could offer flexibility and have great appeal to specific interests and audiences," said Charlie Schueler, spokesman for Cablevision.

   Other multichannel providers are experimenting with partial unbundling.  Verizon's offering a basic mini-bundle that drops expensive sports channels and knocks $15 off monthly fees.  Mediacomm has been advocating a hybrid model with the most expensive channels offered a la carte on top of a basic bundle.
   And now the broadcast networks are talking about wanting to get big license fees from multichannel distributors, either directly or indirectly, by grabbing a big share of increased retransmission consent fees for affiliates.  Some of the amounts I've been hearing are unreasonably and exorbitantly high - but between what the broadcast nets are talking, and sports channels passing through sky-rocketing coverage rights fees, coming jumps could be as high as $25-$50 a month, as they can't afford not to have high-demand content in an increasingly competitive environment.  Thus, cable needs to try to put the blame for big rates increases elsewhere.


Here's some other recent headlines and highlights.

• Cable One is going public with what it says is AMC's demand for a 520% increase in license fees.  AMC has seen significant gains in viewing due to a number of successful original series.
  Cable One claims AMC is demanding 520% increase in license fees,  FierceCable
• Dish Network gets $4.86 million jury award from ESPN, after alleging it wasn't getting the "best licensing rates" its contract provided.  That's about 3% of the damages Dish claimed.  Don't expect anybody's rates to go down.
  Jury orders ESPN to pay Dish Network $4.86 million, FierceCable
• In 2012, Mediacom Broadband average video subscription revenues up 12%, subscribers down 7%. Mediacom LLC saw average video sub revenues up 10%, subscribers down 7%.
  Mediacom Broadband increases average video subscriber revenue by $14 in 2012, FierceCable

Sources -  Imagining a Post-Bundle TV World, Wall Street Journal