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July 21 2011

15:30

The newsonomics of U.S. media concentration

The rise and potential fall of Rupert Murdoch is a hell of a story. It is, though, closer to the Guardian’s Simon Jenkins’ description Tuesday, “not a Berlin Wall moment, just daft hysteria.” Facing only the meager competition of the slow-as-molasses debt-ceiling story, the Murdoch story managed to hit during the summer doldrums. Plus it’s great theater.

Is it just imported theater, though? We have to wonder how much the cries of “media monopoly” will cross the Atlantic. Is there much resonance here in the States for the outrage about media power in the U.K.? Will the sins (its newspaper unit now being called to account by a Parliamentary committee for deliberately blocking the hacking investigation) of News International impact its cousin, Fox Television, the one part of its U.S. holdings regulated directly by government — or can it build a firewall between the different parts of News Corp.? (See “New News Corp. Strategy: Become Even More of an American Company.”)

Certainly, the tales of News International’s ability to strike fear in the London political class are chilling. Our issues in the U.S., though, are largely different. Both come down to who owns the media, and what we need in the diversity of news voices.

The question of media concentration here is tricky, complex, and a profoundly local question. Yes, there are national issues — but the forces of cheaper, digital publishing and promise of national and global markets easily reached by the Internet have spawned much more competition on a national level.

As to what kind of local reporting we get, we see powerful forces at work, shaping who owns what and how much. Likely, we’ll see some News Corp. fallout in FCC debates now re-igniting in and around Washington, D.C. — as the fire of regulating media burns more brightly here, even as Ofcom, the British regulator, grapples with similar issues.

That said, the question of media concentration, or what I will call the newsonomics of U.S. media concentration, will be fought out on two battlegrounds in the U.S. One is at the regulatory level, as the FCC looks at cross-ownership and the cap on local broadcast news holdings by a single national company, like News Corp., and may take into account its U.K. misdeeds. (Especially if the 9/11 victim wiretapping claims are borne out.) Second, and probably more important, sheer economic change is rapidly re-shaping who owns the news media on which we depend. The fast-eroding economics of the traditional print newspaper business are changing the face both of competition and of journalistic practice faster than any government policy can affect.

So this is how our time may play out. Smart, digital-first roll-ups align with massive consolidation.

First, let’s look at the print trade, at mid-year. The numbers are awful, and getting no better. We’ve seen the 22nd consecutive quarter of no-ad-growth for U.S. dailies, the last positive sign registered back in 2006. Further staff reductions, albeit with less public announcement, continue at most major news companies. This week, Gannett — still the largest U.S. news company — reported a 7-percent ad revenue decline for the second quarter, typical among its peers. Its digital ad revenues were up 13 percent, a slowing of digital ad growth also being seen around the industry.

We see a strategy of continuing cost-cutting across the board, with a new phenomenon — roll-up (“The newsonomics of roll-up“) — trying to play out.

Hedge funds — which bought into the industry through and after 14 newspaper company bankruptcies — are having their presence felt. Most recently, Alden Global Capital, the quietest major player in the American news industry, bought out its partners and now owns 100 percent of Journal Register Company. Alden, with interests in as many as 10 U.S. newspaper chains, apparently liked the moves of CEO John Paton. Paton’s digital-first strategies have more rapidly cut legacy costs than other publishers’ moves, and moved the needle more quickly in upping digital revenues.

No terms were announced, but Paton says “all its lenders were paid in full.” That would be a qualified success, given the bath everyone involved in the newspaper industry has taken in the last half-decade.

In JRC’s case, we’d have to say the push of hedge funds for faster change has been more positive than negative. Pre-bankruptcy, it was derided for its poor journalism and soul-crushing budgeting. Under Paton, who has brought in innovators like Arturo Duran, Jim Brady, and Steve Buttry, the company is trying to reinvent new, digital-first local, preserving local journalism jobs as much as possible. A work very much in early progress.

You can bet that Alden’s move is just one of its first. Sure, as a hedge fund, it may just be getting JRC ready to sell; hedge funds don’t want to be long-term operators. Before that happens, though, expect the next shoe to drop: consolidation.

JRC owns numerous properties around Philly, and a roll-up with Greg Osberg-led (and Alden part-owned) Philadelphia Media Network, has been talked about. Meld the same kind of synergies, and faster-moving print-to-digital strategies of Paton with Osberg’s new multi-point, Project Liberty plan, and you have a combined strategy. Further combine the operations into a single company — removing more overhead, more administration, more cost — and you have a better business to hold, or sell, or still further combine with still more regional entities.

It’s not just a Philly scenario.

In southern California, the question is how the three once-bankrupt operations — Freedom Communications, MediaNews’ Los Angeles News Group and Tribune’s L.A. Times (still not quite post-bankrupt, but acting like it is) — will mate. Over price, talks broke down about merging Freedom and MediaNews (both substantially owned by Alden; see Rick Edmonds’ Poynter piece for detail). Yet, everyone in the market believes consolidation will come. Now with Platinum Equity, another private equity owner, putting its San Diego Union-Tribune back on the market just two years after buying it for a song, we could see massive consolidation of newspaper companies in southern California.

Media concentration, perhaps in the works: Southern California, between L.A. and San Diego, contains at least 21 million people — or a third of the total population of the U.K. Philly and Southern California may among the first to consolidate, but the trends are the same everywhere.

So this is how our time may play out. Smart, digital-first roll-ups align with massive consolidation. It’s time to get our heads around that. That won’t necessarily mean that Alden, or other hyper-private owners, keep the new franchises. Their goal probably is to sell. But to whom, with what sense of public interest?

Which brings us back to broadcast, to which newspaper people give much too little shrift.

Both those in the old declining newspaper trade and those in the mature and largely flat broadcast trade (as an indication, Gannett’s broadcast division revenues grew to $184.4 million from $184 million in the second quarter) are beginning to figure the future this way: there may only be enough ad revenue in mid-metro markets (and smaller) to maintain one substantial journalistic operation. Not one newspaper and one local broadcaster. But, one, presumably combined text and video, paper and air, increasingly digital operation.

So, finally, let’s turn back to the FCC. The Third Circuit Court of Appeals just returned cross-ownership regulations back to the FCC, largely on procedural (“hey, you forgot the public input part”) grounds. In addition, it will likely soon take up the national cap on local broadcast ownership. (Good sum-up of FCC-related action by Josh Smith at the National Journal.)

Which brings us back to the News Corp story. The national cap — how much of the U.S. any one national company can serve with local broadcast — is 39 percent. Fox News does that with 27 stations, and, of course, has lobbied for more reach. So, the media concentration issue may play out as the cap is further debated, and as cross-ownership — a News Corp. issue in and around New York/New Jersey — returns as well. Will Hackgate’s winds blow westward, as local broadcast news concentration comes up again?

Though it may be shocking to many newspaper people, though, local TV news is a major source of how people get the news. Some 25 to 28 million viewers watch local early-evening or late-evening TV news, according to the Project for Excellence in Journalism. That compares to about a 42-million weekday newspaper circulation, so those numbers aren’t quite apples to apples. In my research for Outsell, I noted that local survey data indicated that reliance on TV news equaled that of newspapers.

As Steve Waldman’s strong report for the FCC pointed out, local TV news is “more important than ever” — but thin on accountability reporting.

So while much of the media concentration questions centers on print, local broadcast ownership, and direction of news coverage, matters a lot.

Combine that local concentration — 39 percent or more — with the sense that the market may only support single journalistic entitities and we’re back to the theme of media concentration, perhaps on a scale hitherto unseen.

A declining local press, with signs of impending roll-up. Stronger local TV news, weaker in accountability reporting, and pushing for more roll-up. Winds of outrage wafting over the Atlantic. Regulatory breezes gaining strength.

These are powerful forces colliding, and in the balance, the news of the day won’t be quite the same.

March 15 2010

13:27

Must-read: PEJ’s annual State of the News Media report goes live

Each year the US Project for Excellence in Journalism (PEJ) produces a report on the State of the News Media, aggregating other reports on what has happened to news organisations during the previous 12 months and providing its own research into what lies ahead.

The 2010 report weighs in on paywalls, and why there’s still a “hill to climb”; the increasingly niche-focus of both traditional news organisations and new online-only players; and features a special report on the state of community media or citizen journalism projects.

It’s an incredibly thorough survey – featuring figures on changes in advertising spend across all sectors and analysis of news sites’ traffic figures – and is best read in full at this link.

Some highlight quotes:

Advertising:

  • 79 per cent of those surveyed said they had never or rarely clicked on an online ad.

News content:

  • “When it comes to audience numbers online, traditional media content still prevails, which means the cutbacks in old media heavily impact what the public is learning through the new.”
  • Online news coverage is still geared towards breaking news. New technologies for live reporting can provide a less vetted version of releases/press conferences;
  • BUT: “While technology makes it easier for citizens to participate, it is also giving newsmakers more influence over the first impression the public receives.”
  • News organisations are becoming disseminators rather than gatherers of news, and becoming more reactive than proactive.

Social media:

  • Eventually, the news operations that develop social networking strategies and distribution mechanisms well might be able to convince advertisers that they have special access to attractive news consumers – especially those who influence the tastes of others;
  • Blogging, amongst news consumers, is declining in frequency;
  • 80 per cent of links from blogs and social media sites studied are to US legacy media.

Niche news:

  • “Old media are trying to imagine the new smaller newsroom of the future in the relic of their old ones. New media are imagining the new newsroom from a blank slate.”
  • “Online, it is becoming increasingly clear, consumers are not seeking out news organisations for their full news agenda.”

More on the report’s take on niche news at this link…

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February 25 2010

15:30

“Burbling blips” & “pyramiding”: What does the Google-China story tell us about how news spreads?

Posts like yesterday’s by my Nieman Lab colleague Jonathan Stray make my academic heart flutter. Stray’s analysis looked at coverage of the latest Google-China developments and found that only 11 percent of the 100-plus news sources did “original reporting” on the issue.

It should join the growing list of reports — from the six year old Harvard Business School study of Trent Lott and the bloggers, to my own research on the Francisville Four, to Yochai Benkler’s work in The Wealth of Networks, to “Meme-tracking and the Dynamics of the News Cycle,” to the PEJ study on news diffusion in Baltimore — that help us understand how exactly reporting gets done and news moves in the new digital ecosystem. And Stray’s analysis is data-driven and involves something of a time commitment — but beyond that, it’s the kind of work that could and should be replicated by interested “citizen media scholars” everywhere.

The one sentence take-away from Stray’s analysis was supplied by Howard Weaver in the comments. “Although you seem reluctant to say so,” Weaver wrote, “almost all the genuine journalism here was done by traditional organizations.” This conclusion echoes findings in the recent Baltimore study by the Project for Excellence in Journalism, findings which were roundly criticized by some members of the blogosphere, particularly Steve Buttry.

So what does this latest piece of research mean?

One the one hand, the increasingly-frequent findings that the vast majority of original news reporting is still done by large, (relatively) resource-rich news organizations seems almost unworthy of comment. But it’s still worth documenting how, exactly, this plays out in practice.

Even more importantly, there are a few throw-away lines in Stray’s post that I think are worthy of further discussion. The first one is this:

Out of 121 unique stories, 13 (11 percent) contained some amount of original reporting. I counted a story as containing original reporting if it included at least an original quote. From there, things get fuzzy. Several reports, especially the more technical ones, also brought in information from obscure blogs. In some sense they didn’t publish anything new, but I can’t help feeling that these outlets were doing something worthwhile even so. Meanwhile, many newsrooms diligently called up the Chinese schools to hear exactly the same denial, which may not be adding much value.

This gets to the heart of something really important: Is aggregating the content of “obscure bloggers” not really original reporting? Traditionally, of course, it isn’t; reporting is digging up previously undiscovered “documents, sources, and direct observations,” as the j-school saying goes. But, as Stray notes, these outlets that did this were still doing something worthwhile, something that seemed even more important than the work of journalists calling up the Chinese schools to get the same standardized denial.

But what is this “something worthwhile”? Is linking to a smart-but-obscure website really all that different than calling up a trusted source? What’s the line between “aggregation,” “curation,” and “reporting”? Can we even draw the line anymore? And if more than a hundred reporters are hard at work rewriting New York Times copy without adding anything new, maybe they’d be better off doing something else — like curating, for instance. Or (god help us) even linking!

The second line in the Stray post I wanted to highlight is this:

The punchline is that no English-language outlet picked up the original reporting of Chinese-language Qilu Evening News, which was even helpfully translated by Hong Kong blogger Roland Soong [at ESWN].

To which a commenter added:

Google News tends to exclude non-traditional sources to begin with. Otherwise ESWN would show up all the time on these China-related stories, doing original research and reporting.

This concern — what sources does the Google News database include, and what does it exclude — is remarkably similar to the criticism of the PEJ-Baltimore study launched by Steve Buttry: that in drawing a line around “who actually counts” as a journalist to be included in the research, you are affecting the outcome of the research.

What would we find if we combined both these concerns I discuss above? What if we analyzed aggregation as well as reporting, and if we included sources that aren’t included in the Google News database?

My guess — and it’s still only a guess — is that we’d find something like the “burbling blips” that Zach Seward highlighted months ago when he was posting about the dynamics of the news cycle. We’d basically find a news ecosystem where a cluster of small (but often obscure) news outlets discussed a story to death — discussions that were picked up and amplified by the more traditional, reporting-focused media, which then fed its reporting back into the wider blogosphere for further commentary. In my own comment on this subject, I called this process “iterative news pyramiding,”

the leapfrogging of news from tightly linked clusters strung out along the end of the long tail to more all-purpose, more generally read websites that form the ‘core’ of the internet.

Taking everything we’ve learned so far — from Stray, Benkler, Buttry, the Harvard Business School, me, the PEJ, and others — what might we hypothesize about where news comes from and how it moves? Here are a few bullet points for your consideration:

  • Most “original reporting” (as traditionally defined) is still done by large news institutions.
  • Most traditional news institutions are regurgitating the work of other news institutions, rather than adding anything new.
  • An additional, smaller set of online web-sites are also doing original reporting, but this reporting often gets overlooked in studies of where news comes from, mostly due to boundary-drawing issues. And it also gets overlooked by news organizations themselves
  • Aggregation, curation (or whatever) is something unique and valuable, but it isn’t quite reporting and we don’t quite know what to call it yet. In fact — it might be better for democracy to link to a really smart blogger than it would be to call up a source and get the same meaningless quote that one-thousand other journalists have also gotten.
  • Online, news often originates and moves in a “blippy,” heartbeat-like fashion, but we can only see this if we take aggregation seriously as a journalistic form, and only if we include “obscure bloggers” in our data-set.

What do you all think?

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