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An Editors’ Survey Gushes That Newspapers Are Here To Stay Which Is Reassuring, But A More Meaningful Survey Would Have Asked Advertisers How Much Print Figures In Their Future And Newspaper Boardrooms How Little Margin Is Now Acceptable -- Then You Would Know The Future Of Newspapers

Philip M. Stone March 29, 2007

A survey of some 435 global editors-in-chief and senior news executives says they are very optimistic about the future of newspapers. That Newsroom Barometer is swell for telling how journalists see the future of newspapers, but unfortunately, and this is going to bang on some egos, they are not the ones that count. Better that an “Advertisers Barometer” had asked advertisers their future spend allocation plans, and a “Boardroom Barometer” sought out whether executives plan to continue their cuts to maintain current margins or whether they accept that yesterday’s profitability is gone, and are they willing to settle for less?

How advertisers and the boardroom answer those questions will decide the future of print, and not what journalists think. Journalists are basically the “factory workers” and while it’s nice to know they have faith in what they are doing, the industry’s future is not really in their hands. Yes, certainly the quality of the work produced by the factory has its role in determining how much of the product eventually gets sold, but the problems facing the newspaper industry are far deeper than that.

As news editors have to admit, their newsrooms only operate within the budgets their masters, the “suits”, give them. Those budgets are governed by the advertising revenues coming in and the general cost of doing business. High costs and less advertising leads to less budget that usually leads to less journalists and ultimately less quality (unless the franchise the newspapers chooses to own is reduced, too). The factory workers may well give it their “all” and make plans for how they can improve their product on various platforms, but it is the “suits” that rule the roost. It is their decisions that will make or break a newspaper.

An Advertisers Barometer needs to find out whether General Motors, and all the other big spenders, are really going to reduce their newspaper spend again this year and in years to come by sending more and more money to the Internet; whether the likes of Proctor & Gamble are serious about diverting money to where the spend can be best measured; are classifieds in print doomed, and so on.

The Boardroom Barometer needs to enlighten us on economic policy going forward. The 22% plus margins of a just a few years ago are now down to an average of 18%. That’s still very healthy, but to get there newspapers are cutting like crazy, including newsrooms. Since print advertising seems to be continuing its slide then are boardrooms ready to make a fundamental decision of setting new lower margin targets? Or is it going to be cut, cut, cut until the end? What executive decisions are being made to encourage advertisers to stay with print? As money is poured into digital projects is print still getting its fair share? How can newspapers survive if it is going to take, on average another 10 years for digital revenues to be meaningful? Just how important is editorial quality and will it be funded to the level required? The list goes on.

This all leads to the all-important point that is often lost when people talk about newspapers. First and foremost, newspapers are a business. They exist, in the most part, to make handsome profits for their owners. You can talk all you like about civic duty, and how newspapers promote democracy and all of that, but the bottom line is, the bottom line. How a newspaper does financially will determine whether it continues or it folds. Large circulation and low margins are not a healthy newspaper combination. High on any editor’s resume these days should be:”Knack to make every single penny allocated to editorial go further.”

So editors can talk all they like about how the digital revolution will save print, but the “suits” know full well that currently the increased revenues from New Media is less than the revenues being lost by print. Currently digital activities on average make up about 5% of a newspaper’s total revenue. The most optimistic forecasts says it will take at least another 10 years for digital revenues to be meaningful to a newspaper’s bottom line.

Given that background, the questions asked on the Newsroom Barometer should have included:

• How many editors believe they’ll still be in a senior newspaper job in 10 years from now?
• How many of them are willing to do what Dean Baquet did at the Los Angeles Times and tell the owners that enough cutting is enough cutting, and to maintain quality they would be  willing to fall on their sword rather than make more cuts? What shouldn’t be lost here, of course, is that Baquet and his publisher, Jeffrey Johnson, both said “No” to the “suits” in Chicago and both have now been replaced by people who will say “yes”. The “suits” almost always win.

Remember Philadelphia? When the local buyers took over those Knight-Ridder newspapers last year it was “Happy Days Are Here Again”. That lasted all of a couple of months. Then advertising really turned sour and those new local buyers who said they wanted to build up the editorial newsroom ended up savaging it.

The Newsroom Barometer provides interesting information on the hopes and aspirations of editors the world over, but that and about $3 these days buys a Starbucks coffee. Much more important to the newspaper world is knowing what those who really count – on the financial side -- are thinking: will advertising monies flow to newspapers, will boards accept lower margins without destroying the product?

So, with that context, let’s take a look at what the editors said. Some 85% said they are very optimistic or somewhat optimistic about the future of their newspaper. Even among newspapers whose circulation decreased over the past five years, 80% or respondents remain optimistic.

The Newsroom Barometer Survey, sponsored by The World Editors Forum, Reuters and Zogby, said that 40% of editors believe online will be the most common way to read the news 10 years from now; 35% believe print will reign supreme, 67% believe opinion and analysis pages will grow in importance (because hard breaking news is banished to the web pages?); 50% believe journalism quality will improve, and 50% believe that shareholders and advertisers present threats to their editorial independence.

“Editors recognize competition from online sources and free papers, and in turn are making efforts to adapt to 21st century readership,” said Bertrand Pecquerie, director of the World Editor’s Forum. “They know how to effectively make the transition to online journalism without reducing editorial quality. Editors-in-chiefs realize that content matters more than ever and cutting newsroom resources is not at all an effective solution; the reshaping of the news will take place with journalists, rather than at their expense.”

Well, it’s great that journalists believe they can transition to online and provide a great product there, too, but that doesn’t answer the question from the “suits” and that is how do you maintain margins when web and mobile advertising is worth far less than print advertising? So, even if a newspaper provides the necessary editorial product for its various channels to reach most of its possible readership, how are current margins maintained when print is still responsible for so much of the advertising pie?

There are all sorts of ideas out there on how newspapers need to change, that their approach must be multiplatform, that journalists must be able to satisfy each platform by learning new skills – how to shoot video, for instance -- there should be more use of citizen journalists and the like, but the truth is that most of these ideas have been tried already and as far as print is concerned it hasn’t made much difference.

It’s really gung-ho to see that so many news executives have so much journalistic faith in their product. If only advertisers would show that same faith. Reading all of that optimism makes one wonder whether Phil Bronstein, editor of the San Francisco Chronicle, participated. He reportedly told a staff meeting recentlythat the news business “is broken, and no one knows how to fix it and if any other paper says they do, they’re lying.”

That’s a somewhat different newsroom barometer focus.

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