Lenin had it about right when he said: “There are decades where nothing happens; and there are weeks when decades happen.”
In recent weeks, several decades’ worth of disruption and, frankly, obliteration has come to the UK’s newspapers and magazines. Indeed, it’s hard to overstate the impact of coronavirus on the sector.
Many titles were beleaguered already, propped up by generous owners or operating under commercial models that simply can’t withstand 21st Century reality. Some are going bust as you read this.
Much of what was going to happen in any case will now happen suddenly: publishing history is suddenly accelerated. The shift from print to digital at virtually all publications will be radically sped up. A lot of publishers are simply going to run out of cash. One regional publisher has being ringing up contractors asking if it can delay payments by three months at least.
This is the grim story that was only partially told by the publication on 16 April, of the latest figures from the Audit Bureau of Circulation (ABC). They only covered the period of 2 March to 22 March – and therefore do not show the full, devastating impact of the lockdown.
Print publications are dependent on printers being able to print; distributors being able to drive copies around the country; and shops and stalls being open for people to buy or pick up the publication. A national lockdown obliterates every part of that chain.
Moreover, much of the media is heavily reliant on advertising. In any economic downturn, advertising is one of the first things to go, being seen as a discretionary spend. The sharper the downturn, the sharper the drop in advertising spend. This looks a sharp downturn.
With distribution systems obliterated, and a major source of revenue not just jeopardised but frozen, while fixed costs such as rents and staffing still have to be paid, inevitably many publications will go bust because of this pandemic. Some have already.
City AM has stopped printing through the crisis. Playboy’s Spring 2020 magazine will be its last as a regular print product. JPI Media, a regional publisher, stopped printing 12 titles, including the MK Citizen in Milton Keynes and the News Guardian in North Tyneside. The company has put 350 staff on furlough and cut the pay of remaining staff by up to 15%.
Kerrang!, the music magazine, announced that it will stop printing for three months. DIY magazine is not printing this month, but instead asking readers for support. Other publications, such as Loud and Quiet, are trying to innovate their way through, collaborating with other publishers and labels to generate support.
This week, The Jewish Chronicle collapsed. It will now be part of a merged operation with Jewish News.
My old local paper, the 150 year-old South London Press, has furloughed half its staff and is asking for reader donations to help get through this crisis. That’s understandable but obviously won’t build a sustainable business.
That Google, through its Google News Initiative, should have launched a global emergency relief fund for local news publishers just confirms the extraordinary state of affairs in news today: whether my parents and their neighbours in Tooting find out about, say, parking charges around their local common might depend on the benefaction of a Californian data company whose executives probably couldn’t find Tooting on a map (unless they Googled it).
In horrible times like these, always think first of the staff: generally creative people who have lived with uncertainty for many years, providing a valuable public service, and often could have chosen a better-paid career.
Reach, the regional publisher that also prints the Express and Mirror titles, announced that 20% of its 4,700 staff – that’s 940 – will be furloughed. Senior management will take a 20% pay cut; other staff will take a 10% pay cut.
While all publications have been hit, those that are most resilient, and least vulnerable to this carnage, are those that are part of a big group, have strong digital properties, and have successfully switched their business model to generate income directly from readers rather than through advertising.
It follows that those who are most vulnerable are those that are not part of major empires, are heavily reliant on advertising and print distribution, and don’t have really powerful digital operations yet.
Despite its editorial strengths, City AM sadly ticks all of these boxes.
And to take the next two most glaring examples, for Metro and the Evening Standard, this has been a financial horror-show. The former has some security in being part of DMGT, at least. Both titles depend heavily on footfall: commuters rushing through busy stations and picking copies up for their journey to or from work.
Under its free-to-consumer model, the Evening Standard distributed tens of thousands of copies at major commuter hubs. Those are now desolate. Officially, the Standard has furloughed many staff, cut distribution to 500,000 copies, stopped producing ES magazine, and tried a home delivery service. Talk there, and among several senior executives across the industry that I have spoken to, is of “being nimble”.
But nimbleness is what you need in a tight spot. It’s no good if the ground beneath your feet disappears. When that happens, you need to find firmer or higher ground.
Metro has also been hammered. Remember: it’s Britain’s biggest newspaper. Or was.
I am told that circulation, which is usually around 1.5 million, has been cut to between 400,000 and 500,000 copies. That’s perhaps two-thirds of its daily audience vanished in an instant. The vast majority of its copies had, historically, been distributed in London and the south-east. Now, London and the south-east account for about half of its distribution; and the rest of the country accounts for the remainder.
The rate charged to ad agencies varies according to market conditions and the relations with different groups; but at one stage in recent weeks, it was down by 70%. As an unforeseen hit to a business, that’s horrific. For titles funded predominantly by advertising, a big cut to those rates has a direct and immediate impact on the bottom line.
In the present circumstances, retaining even 30% of advertising revenue is a heroic performance. But such is the hit on revenues that urgent cost-cutting will have to be looked at.
Metro has the enormous advantage of being part of a cash-rich company – DMGT – which is big enough and resilient enough to spread costs around for a while. Moreover, the paper has been profitable for several years. It has an underlying business model which, when normality returns, should allow it to move the bottom line from red to black.
Staff at the i newspaper can count themselves very lucky that their paper was bought by DMGT, from JPI Media, before this pandemic struck.
No title in Fleet Street will be unaffected. At News UK, where new editors were installed at The Sunday Times and The Sun, there were plans to create a seven-day operation across the Times titles, and also launch a radio station. National social distancing measures are not ideal preparation.
At the Telegraph titles, perennial questions about whether the daily and Sunday paper are for sale, amid a bizarre legal battle in the Barclay family, get no easier to answer. To date, one obstacle to any sale has been the price demanded by the Barclay twins, even as, in recent years, headline profits have tumbled.
Telegraph Media Group this week announced 90 workers would be furloughed until the end of May, remaining staff would work a four-day week from 1 May, and their salaries would be cut by 20%.
What of The Guardian? A painful, effective turnaround strategy, executed in three years, has been undone in about three weeks. Revenues over the next six months will be £20m down. Plans were already afoot to cut £10m of spending. A hundred non-editorial staff will be furloughed. Guardian staff are of course in the hugely privileged position of being part of a charitable trust that has reserves in the bank, and exists to fund their journalism.
Meanwhile at the Financial Times, 20 non-editorial staff are on paid leave, top editors and managers are taking a 10% pay cut for 2020, the board is taking a 20% cut, and CEO John Ridding is taking a 30% cut. Pension contributions are being halved, and an annual bonus scheme suspended.
I have seen one major publisher’s unaudited estimates for the circulation decline of major British newspapers since the lockdown was introduced. It suggests some paid-for papers are down by as much as 20% over the past fortnight. All papers have been seriously affected.
I am not reproducing those figures here because they are not audited. Trying to get an accurate figure for circulation declines in the lockdown is made very much harder by the fact that most of the places that provide information about sales and pick-up are currently shut.
Most papers are trying very hard to use this crisis to accelerate a shift in consumption to the digital sphere and – crucially – to get readers into the habit of paying for journalism online. The success of these efforts varies hugely from group to group.
Many big titles have a subscriber base that is used to home delivery. Through Herculean efforts, home delivery services are still largely working – and home delivery services have been drastically ramped up.
Moreover, all titles, not least the Daily Mail (which just won Newspaper of the Year) and The Sun (which is pushing a digital edition of the paper known as “the classic”), are using their papers to give a massive push to digital sign-ups. That is, they are trying to get readers into the habit of paying for digital – tablet, say – versions of their newspapers. From a commercial point of view, this is a much, much more attractive way of, in the jargon, monetising users.
Think of a single article – a page-lead, for example, on the situation in, say, Italy.
To get that article into a print publication, a sub-editor has to lay it out on a page on their computer. That page is then part of a package sent electronically to the printers. There, by a triumph of engineering that unites hot metal, clanging presses and pungent ink, thousands of copies are printed in bundles called “newspapers”. Stacks of these are lifted by a human being into a van. Another human being drives that van to lots of retailers, which takes time and fuel. If you aren’t living through a global pandemic, you might be inclined to go to a shop and buy this beautiful bundle, whereupon the retailer will take a cut.
Think of that same article being sold on the iPad version of, say, the Mail or Times. The sub-editor still has to lay it out on a page. But this is then sent, by a triumph of digital engineering, to all those subscribers who have signed up for an iPad edition. It’s done instantly. No paper costs, no staffing costs at the presses, or ink costs, or health and safety and insurance costs; no van costs; no fuel costs; no cut going to the retailer. It happens super-fast, it’s very cheap, it’s a direct-to-consumer offer and – crucially – if you’ve logged in with your details, the company can know what you’re up to, what you’re interested in, and how long you dwell on particular pages.
To a publisher, getting the same journalism read on an iPad, say, or smartphone edition is hugely preferable. Over the past few weeks, there has been a huge marketing splurge within newspapers like the Mail and the Sun to shift readers to these navigable digital editions of the newspaper.
In that sense, Covid-19 is accelerating innovation that was long overdue and likely to happen anyway. Just as this health emergency has shone a cruel torchlight on the fault-lines in our society, so it has highlighted the ill-health of the newspaper and magazine business right now.
What’s striking is that, while that business has been in crisis for well over a decade and a half, and in that time been through the global financial crisis and downturn that followed, many titles had still not done enough to prepare for the current emergency.
The fundamentals haven’t changed; they’ve just been exposed. The market in local news is broken; there is no editorial solution to the commercial problems of publishing; the sooner you can make digital pay, the better; and revenue direct from readers will always, always be preferable to that from advertisers.
All that was as true in 2005 as it is in 2020. The difference is, for those who failed to adapt in time, it’s now too late.
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