By: Dolph Tillotson
The economic realities for newspaper companies before the coronavirus pandemic were, at the least, difficult. Now, America’s newspapers face steep advertising revenue declines, vanishing cashflow, missing employees and wary home-delivery customers.
Most publishers don’t agree with the direst assessments – BuzzFeed has called the pandemic a “media extinction event” – but every publisher interviewed agreed the situation is serious and could be life-threatening for some titles.
Publisher response has been aggressive and fast. That response shows signs of successfully cutting costs, increasing efficiency and creating new sources of revenue. While making changes they see as essential, publishers are working to provide readers with needed information at a time of grave concern over COVID-19.
Their efforts are aimed at preserving a platform for responsible journalism and building a business model that still works. Some of their steps include:
• Development of new products, especially online products, designed to respond to and help offset losses from the pandemic.
• Personnel cuts, furloughs and, for a few companies, across-the-board pay cuts.
• Cutting back or eliminating publication days and unprofitable products.
• Developing and relying more heavily on online products to perform the basic functions of news and information.
• Strategic cuts to print circulation numbers, cutting page counts and cutting press runs, all in an effort to conserve newsprint.
• Extra efforts to accumulate and stockpile cash in anticipation of collection problems in coming months, beginning in April.
How difficult is the situation for newspapers?
Steven A. Shelton of the Tuscaloosa, Ala.-based CPA firm Way, Ray, Shelton, handles financial analysis for newspapers across the country.
“I expect the effect of the pandemic will be pretty devastating in the short term,” Shelton said.
“Many businesses will cut advertising dramatically and those that do advertise may struggle to pay for that advertising. The long-term effect is anybody’s guess, but I am concerned that there are some newspapers that will not survive this.”
“The cruel irony of the pandemic … is that while journalists may be performing an essential business, the business of journalism is facing an extinction-level threat,” according to Craig Silverman, writing for BuzzFeed News.
So, newspaper leaders and consultants are considering their options.
Shelton has alerted newspaper clients of the availability of low-interest loans available through the Small Business Administration that “can potentially help as we all deal with the terrible effects of the COVID-19 pandemic on our businesses.”
The loans, up to $2 million, are available to businesses with fewer than 500 employees at an interest rate of 3.75 percent. There are no application fees, Shelton told his clients.
Companies can apply for SBA loans online at https://disasterloan.sba.gov/ela. Shelton said his company also would answer clients’ questions and help with the application process.
“I would consider the profitability and need for TMC products at this time,” said John Mathew, president of Namekagon Newspaper Services LLC.
“I’d also hoard all the cash I could. I understand that the real crunch will probably come in early April when customers are unwilling or unable to pay bills owed to us, and that low March revenue will have an impact on cash as well,” Mathew said.
Tim Prince, a senior vice president and group manager for Boone Newspapers, Inc., of Tuscaloosa, Ala., said, “Flexibility is vital in our employees and their leaders, now more than ever.”
Prince said his company is eliminating or suspending “developmental” projects.
“Anything not expected to produce positive cash flow is extraneous,” Prince said.
Prince also said the company may eliminate some unprofitable circulation, scale back some sales people to 30 hours or fewer and eliminate some unprofitable products or publication days.
“Many dailies should transition to daily online and print once per week,” Prince said. “The current national crisis will create a broader understanding of making such difficult but needed changes.”
Like other publishers, Prince is concerned about what he sees as a looming cash problem.
“Working collections in April forward will be perhaps our greatest challenge,” he said.
David Dunn-Rankin, CEO of the Florida community newspaper company D-R Media, has taken a number of steps to reduce operating costs and build revenue.
“We are going dark with the daily two days a week,” Dunn-Rankin said. “We are keeping everyone employed but cutting compensation about 50 percent, depending on individual cases and employment law.
“We are cutting our free weeklies in half for printing and distribution.”
Dunn-Rankin’s company also is taking the unusual step of giving away a free two-column by five-inch ad to any business, advertiser or not, “to tell the public what the business is doing.”
The Daily News of Galveston, Texas, cited “a good deal of purposeful engagement with the public via emails and editorials,” according to Leonard Woolsey, publisher of that paper and president of Houston-based Southern Newspapers, Inc.
For an example of that communication with readers, check this link: https://www.galvnews.com/opinion/columns/leonard_woolsey/free/video_6d60c92c-d8cf-5e39-a52d-c03e97acf36e.html?utm_source=email-ss&utm_medium=video&utm_campaign=MessageFromThePublisher-03252020-subscriber
Woolsey said all the company’s 12 papers will make changes in their print publication schedules, and “by the end of April we won’t be publishing seven-day papers anywhere.” Formerly seven-day papers will move to a Tuesday-weekend publication cycle. Most of the smaller papers will move to twice-weekly.
Woolsey also reported the newspapers’ managers are meeting daily by phone to discuss open, in-process and closed projects.
“We’re examining reducing redundant activities, looking for ways to eliminate positions and spread workload over remaining staff,” Woolsey said. “We’re challenging everything we were doing ‘because we’ve always done it that way.’”
On a bright note, Woolsey also reported that online and print subscriptions at The Daily News actually were up in March as the pandemic became a larger and larger issue in the lives of readers. Surprisingly, he said, print orders have outpaced online-only order for new subscriptions.
“Each day consists of purposeful outreach by email, print and video (from circulation),” Woolsey said. “We’ve landed on a campaign of ‘now more than ever, be in the know’ with great success.
“Also, to keep our NIE money flowing, we diverted our NIE draws to bulk draws to the locations where schools are offering free lunches. That allows us to keep about $5,000 monthly in NIE revenue.”
Dunn-Rankin said D-R Media has come up with several new ideas to boost revenues and support the paper’s advertisers during the pandemic. These include:
• A double truck of fun activities like puzzles, coloring, word search and so on. The content is aimed at family readership, and businesses are using it to promote gift cards, delivery services or other ideas tied into the pandemic.
• A “Thank-A-Nurse” page to honor health care professionals.
• “Good News Stories” with advertising sponsors.
• Restaurant specials for takeout or delivery with discounted rates.
Woolsey reports that Southern’s papers are concentrating on maintaining regular contact with advertisers, even though many may not place orders for ads now.
“We have our ad reps working remotely, but they are more accountable than ever before,” Woolsey said. “They probably wish they were still in the office. This is a highly structured arrangement with morning and afternoon conference calls, daily project assignments and a digital call sheet due no later than 6 p.m. daily.”
Newspapers, like the businesses that support them with advertising, are scrambling to respond to a nearly-unprecedented circumstance – the COVID-19 pandemic. All are certain that “business as usual” is not the right approach, and all are developing strategies on the fly.
We believe the industry is made stronger through communication and cooperation. We invite you to tell us what your newspaper is doing to respond to the crisis. Please send ideas and suggestions to Dolph Tillotson at dtillotson@cribb.com.
New Post Coming Soon.