The Decline in Media Credibility and Profitability

Last August the Pew research Center released the results of its latest study on how much the American public trusts the media. This has been part of an ongoing study since at least 2002, and ever since the first report, the amount of trust in media has fallen. This has been a hot topic of discussion online ever since, and the source of much hand-wringing at each new release.

Perhaps the mounting number of scandals in journalism has soured an audience accustomed to believing the media is honorable, trustworthy and upright. Perhaps it’s the growing politicization of (some) media that polarizes rather than informs public opinion. I don’t know.

Admittedly the study is based on American media, and the scandals have been mostly American made. I have not found a comparable study on Canadian media, but there are clues one can follow, and similar polls that tell us much.

The Pew study asked respondents to rate various types of media for credibility. Local TV news rated highest, but other types of local media don’t seem to have been rated.

Not surprisingly, the uber-right-wing Fox News continues to lose trust among the American public. And I would suspect that similarly the uber-right Sun/QMI networks in Canada would fare the same. But if that’s so, then media that depend heavily on, say, QMI, as a source of material, the decline of trust in QMI must surely reflect on the subscribing media as well.

Why are these American media losing credibility faster than other sources? Probably because they are so blatantly, overtly ideological and people tire of the relentless mudslinging, attacks, innuendo and lies. These media cry wolf far too often.

However, as the Pew People-Press site points out, what level of trust you assign to a media source depends on your own political leanings:

Republicans have long held a more negative view of the credibility of the news media than Democrats and this continues to be reflected in current assessments of news outlets. Republicans rate the believability of nine of 13 news organizations less positively than do Democrats. Fox News is the only news organization that is rated higher for believability by Republicans (67% of Republicans vs. 37% of Democrats). However, the percentage of Republicans giving Fox a believability rating of 3 or 4 has fallen 10 points, from 77%, since 2010.

Partisan differences in believability ratings are more pronounced for broadcast and cable TV news organizations, with more modest gaps for most newspapers.

Which again one assumes has similar resonance among Conservatives and Liberals in Canada: Conservatives may see QMI or Sun as more credible than other political followers do. Liberals may see the Star as more credible.

A 2012 Gallup Poll showed American trust in the media has declined steadily since Watergate:

Americans’ distrust in the media hit a new high this year, with 60% saying they have little or no trust in the mass media to report the news fully, accurately, and fairly. Distrust is up from the past few years, when Americans were already more negative about the media than they had been in years prior to 2004.

At Pressthink.org, Jay Rosen asks why this inexorable decline is happening. Rosen offers numerous, thoughtful suggestions, but no definite answer. I believe it is in part because people have turned to other media – like the internet – and prefer content that supports their own preconceptions more than content that challenges or informs them. Even when it’s not true.

(Read Robert Levine’s “The Power of Persuasion” – especially chapter six: The Hot Button – for more insight into how we tend to select those things that reinforce our existing beliefs).

Brent Baker of Newsbusters.org notes that, in the Pew study, most respondents perceive a bias in the media:

Currently, 37 percent of Americans say there is a great deal of bias in news coverage and 30 percent say there is a fair amount of bias. Far fewer see not too much bias (21 percent) or none at all (10 percent). The percentage saying there is a great deal of bias has increased six points, from 31 percent to 37 percent, since 2008.

A perception of bias directly equates with a loss of trust and credibility. Americans don’t, in general, trust their media because most of it is seen as biased, and some media in particular is seen as blatantly so.

The consequence can be seen in declining audiences and revenues. Who wants to advertise in media they don’t trust?

According to the Edelman Trust Barometer (slide 14), Canadians still trust traditional media most as sources of news and information, but this does not break down the results by the type or source. One has to assume that, since Canadian television watching is similar to Americans’, TV plays the larger role in our media consumption.

An Ipsos Reid poll in 2012, showed 40% of Canadians daily watch a regular newscast on TV but only 23% get their news from a daily newspaper. Sixty percent say they read community newspapers and magazines, but not regularly (19% always/41% sometimes). But that means less than 20% read them regularly, and 40% don’t read them at all.

The percentages don’t change a lot whether you’re a hyper, moderate or casual “newsie.”*

The poll also has a category for “A free newspaper that people hand out or make available around town.” Since this might include both local community newspapers, it should be noted that the readership for these free papers is much lower: 51% (14% always/37% sometimes).

Local radio stations, local (cable) TV are not really covered in the poll. But clearly most Canadians get their news from national TV, then turn to local print sources for community news. Thus local/community papers are very important, particularly for local advertising.

As a former reporter, and former editor of both local papers, with four decades experience in various media, I have a keen interest in the local media. Its survival – regardless of any personal thoughts on its content – is crucial to the community’s overall well-being. And I believe credibility is a key factor in its survival, just as it is with national media.

Small community media has to be different from national or urban media. Urban media can often find a large enough market segment to print or broadcast almost anything no matter how arcane or specialized; to exalt in and thrive with an overt political, cultural or social bias. Community media have to be all things to all people and cannot exhibit continual bias of any sort without alienating a part of the community. Alienation means lower readership.

After all, community media by definition serves the whole community, not just a select segment of political or social cronies. Once it does that, it ceases to become “community” media and devolves into specialty media. Or ideological media like the much-disliked Sun or Fox.

Credibility in community media builds (and the lack of it diminishes) the audience. A smaller audience is a smaller base for advertising. People who stop reading or listening to local media, stop responding to the advertising they carry. Sales drop. Customer counts drop. Advertisers notice.

When advertisers don’t feel a media has a suitable or large enough audience, don’t believe it is a profitable place to advertise, they will look for a better place. When advertisers leave, the media shrinks; they lay off staff. Coverage suffers. It’s tough to regain their confidence and win them back once they have moved.**

When the media shrinks, there’s less local news: less reason for the audience to pay attention. More filler gets used (like those acerbic, politically-motivated, irritating QMI columnists). Radio might use filler pieces from Broadcast News or corporate sources. Radio might just rip-and-read articles from the local press rather than cover it themselves.

The flavour of the media changes with filler, becomes less community-oriented and more generic. The corporate bias becomes the flavour.***

For the audience, that is another reason to change sources. If the local source is just parroting what the national source has, why not just turn to the national source? Or to another national source that better represents your own views?

Advertisers understand that they have to be seen or heard where their audiences are largest. They follow the trend, follow their audience. As the HuffPost noted:

“Advertisers follow the crowds,” says Richard Ivey, senior-vice president of customer service at Media Experts, a media communications firm whose clients include Bell, WestJet and BMW. “At the end of the day, most of our clients want to reach as many people as possible, and there’s a lot of those people now in other places, not necessarily newspapers.”

Most newspapers and small radio stations today are like franchises: the corporate owners expect a certain amount of money, expect a certain percentage of return. And if credibility affects the bottom line by reducing revenue, the shareholders start getting uneasy. Credibility is the fulcrum for the survival of the paper or radio station.

Across Canada the same story is being played out. George Gawisky quotes Glen Mazza, publisher of The Mountaineer, saying one-paper communities will be the future norm:

“Smaller communities aren’t able to support two newspapers. Advertisers are downsizing or cutting budgets because of the recession. Newsprint prices have gone up. You want to give your employees cost of living increases. The cost is a bit of a challenge. Revenue isn’t growing at the rate costs are.”

Like so many other things in life and politics, it’s all about the money. Quebecor’s chief executive Pierre Karl Peladeau, said about Sun Media’s massive job cuts in 2012,

“Although our circulation revenue has stabilized due to strategic pricing increases, the advertising sector continues to experience declines through the news and media industry.”

2013 didn’t open well for Quebecor. The HuffPost reported profits fell sharply in the first quarter:

On the same day, Quebecor Inc. said operating income at its Sun Media chain of papers fell 64 per cent to $5.7 million during the quarter. Both companies said they have not been able to cut costs fast enough to offset plummeting ad sales.

The recent closure of the 134-year-old Midland Free Press was a warning shot for all Quebecor’s community newspapers to watch their bottom line: corporate auditors are not tolerant of loss.

Midland’s closure is apparently a matter of finances. But you cannot help but ask why a 134-year-old paper, with deep roots in the community, would lose so much local advertising that it could not survive. Could it be that the community had lost its confidence, its trust in the paper some time back? Was it really a question of credibility  – in the editorial content, the coverage and the perceived bias – that caused the failure, and the revenue was just the domino effect from the loss of trust? (Metroland still operates a community newspaper in Midland.)

The local Quebecor group publisher, Rob Leuschner, said of the closure of the award-winning newspaper:

“Decisions such as these are never easy and occur only after considerable review. The Free Press in Midland has existed for 134 years and during that time has been an important media choice for many readers and advertisers within the community. In recent years the paper has had financial challenges. The team at The Free Press has worked diligently to improve the financial position of the newspaper but at the end of the day, it has not been enough to justify the investment required to continue publishing.”

The Wikipedia entry for the paper notes, “Each owner stripped assets from the paper and cut staff. Its printing plant and downtown office were sold and its editorial staff was cut from six full-time reporters and editors to one part-time editor and one reporter.” While the the local Quebecor paper, the Enterprise-Bulletin, does not have its own Wikipedia entry, much of that sentence could be copied and pasted into it.**

In the interim, the EB saw the loss of flyers from its last major retailer, Sears.

It’s all about the money.

The Lindsay Post was also closed this year, as well as six other Sun Media weeklies in Ontario. Several GTA weeklies, including the Town Crier and Toronto Today closed in May. Two community papers in Manitoba and one in Saskatchewan were shut down in June.

They all closed for lack of profitability. Not enough advertising – in particular for print media, the diminishing flyer trade (which has gone predominantly to the Metroland papers in Ontario) has caused the corporate owners to give up on them. But others have seen a steady trickle of advertising loss turn turn into a torrent as businesses and individuals flock to Kijiji, eBay, Craigslist, Facebook and similar online services.****

For chain-owned community papers, this is a serious threat. The shareholders don’t care about the community, about its age or number of awards it won. All they care about is their own personal ROI.

Ad Age ran a story in June predicting US print media revenue would continue to decline through 2017, and paywalls would not halt it. Combined revenue will drop 2% per year, but ad revenue itself will fall by 4.2% annually. And, the story says, “a lot of that lost revenue won’t necessarily come back.”

The shifting landscape of the newspaper industry is giving circulation revenues a greater piece of the overall pie. “As advertising revenue has declined, this shift toward greater share of income from circulation has been imperative,” the report said. “Securing the future loyalty of readers, while avoiding large discounts on subscriptions, is more of a priority than ever.”

The Guardian reported on a similar, but gloomier story about Canadian newspaper revenue, predicting a 20% drop over the next few years:

Canada’s newspaper industry will see advertising and circulation revenue decline by almost 20% over the next four years, according to PwC’s global entertainment and media outlook for 2013 to 2017.

The outlook report says advertisers will find non-newspaper places to spend their money, causing a drop in ad revenue in Canada from $2.7bn (£1.7bn) in 2008 to $1.7bn (£1.06bn) by 2017.

Online advertising seems to be rising for Canadian media, but that raises the question of the business model: is the ad revenue credited wholly to the local media source, only partially, or totally to the corporate office? I don’t know. But I do know that online advertising cannot replace print on on air advertising. Nor is the profit margin as large with online ads. Besides, the largest area of growth is in Google-style ads that appear on search engines, which would not affect local revenues.

In a report to the Ontario Community Newspaper Association (OCNA), research company Borrell Associates wrote:

Ontario independent community newspapers report median online advertising revenue of zero. There are a few exceptions. A few papers, typically larger-circulation and with a topical focus (religion, politics), generate significant online income. But while 75% of non-chain papers have a website, they have not yet found a way to monetize their online presence. In addition, 25% of the papers do not even have a website. The pattern is similar across the country.

Community newspaper print advertising has not dipped as low as that of dailies – and in some cases is doing better – but it is still vulnerable to the accelerating shift to digital media. As the Borrell report notes, community papers have to be more proactive to avoid loss of revenue to alternative providers:

If they fail to seize those opportunities, though, they will lose business, perhaps permanently, to new and more nimble online businesses unencumbered by  the costs of running a newspaper.

One of the opportunities community media has, that national media lacks, is to secure the hearts and minds of its local readers or listeners. And that means retaining its audience’s trust, and its own credibility.

Writing in Niagara This Week, Scott Rosts opined about local paper closures:

…one thing is for sure — there is a place for community newspapers. Whether it’s hunting for your sports scores, looking up the events that are happening this weekend, or just catching up on some of the news that the dailies in the area ignore, community newspapers play an integral role in our communities. We become a voice. A place to turn to, whether you’re looking to get the word out about something, or you’re just trying to find hyper-local content about where you live.

Community newspapers are able to target their readership like no other medium. In fact, Canadian Community Newspaper Association statistics show a real picture of the strength of community papers. Here are just a few of the facts: 74 per cent of adults read a community newspaper; and about one third of Canadians only read a community newspaper (not other newspapers) and are light TV and light radio users.

Simply put, community newspapers deliver.

But that delivery is based on an implicit trust that the papers will provide credible local content. Not rehashed syndicate material.

In his research paper about community media, George Sawisky wrote:

What defines a community newspaper is its strict focus on local news as compared to most daily newspapers, which focus on local content in addition to national and international stories. The community newspaper reports on anniversaries, Cub Scout jamborees, dances, high school awards, sports teams and Legion fundraisers. It recognizes money raised and donated, church bake sales and local scandal. It is where people write letters about their crops and cattle and talk about the implications of new provincial or federal laws at the local level.

Local news and local content, he asserts, is what gives credibility to community papers. Not syndicated filler from national sources or such polarizing, political jeremiads as provided by QMI. Sawisky further quotes Eileen Barak, government relations representative of the Canadian Community Newspaper Association (CCNA), saying,

Often times the community newspaper is one of the backbones of the community and is part of the fabric that weaves the community together. Often times the community newspaper is the only place to find local information and local events. And it’s often, if not the oldest, than one of the oldest institutions in the community. We’ve seen when a community newspaper closes shop or becomes a more regionalized entity that part of that community spirit disappears.

As a member of council, I have a concern any time any business closes. The upcoming closure of the local Rona and Benix stores, so soon after the closure of the Zellers will be another blow to our local economy. But the closure of any local media outlet would be a deeper cut because it would reach into the spirit of the community. I care, even if the faceless shareholders don’t.

Gawisky quotes John Hinds of the CCNA about how readers expect credibility in their local papers (not merely gossip and innuendo, and certainly not the opinion of friends thinly disguised as front-page news):

“It’s about context. One of the things about a newspaper in its form is the curatorial or editorial aspect of a newspaper. Pooled ignorance of the crowd is very different one would hope from a researched article with real facts. It’s the difference between what you can find out on the Internet and actually in a newspaper. There’s a lot of information out there but the strength of the newspaper and its benefit to the community is the idea that someone has curated and thought about and present and provided some context to facts. It’s the difference between gossip and news.”

Community Media Canada’s webite says:

Community newspapers have a strong emotional connection with our readers. We have credibility. People trust community newspapers to deliver information that matters to them and they eagerly anticipate each issue. It’s no wonder so many of our readers keep their community paper for more than a week. And not only do our readers consistently read all or most of their paper, many specifically turn to their community newspaper to read the advertising.

Credibility in local media matters to its survival because it is linked to profitability. As it falls, so falls revenue.

It’s all about the money. In the end all that matters to the head office is retaining enough advertising, being just profitable enough to stay in the shareholders’ graces. And to do that you need to stay in your audience’s graces first.

To to the audience, your profit is irrelevant: what matters to them is that they trust their local media. Trust and profitability are irrevocably linked.

The survival of local media matters to the whole community. If there is a general sense of distrust, of failed credibility, of hidden agenda and overt bias among the public, then the media outlet itself may fail. That will affect us all.

The Gallup report concludes with a message that could be as easily for Canadian media as American:

On a broad level, Americans’ high level of distrust in the media poses a challenge to democracy and to creating a fully engaged citizenry. Media sources must clearly do more to earn the trust of Americans, the majority of whom see the media as biased one way or the other. At the same time, there is an opportunity for others outside the “mass media” to serve as information sources that Americans do trust.

The Borrell Associates report to the OCNA adds this:

Community newspapers have strong relationships with the communities they serve, and more so — at least in smaller population markets — than any other type of local media. They are therefore ideally placed to extend their reach and to capture the migration to online, both news/information and advertising. If they fail to seize those opportunities, though, they will lose business, perhaps permanently, to new and more nimble online businesses unencumbered by the costs of running a newspaper.

Media credibility and advertising revenues are falling in parallel throughout North America. Whether it’s causal or acausal, it would be foolish, even fatal to ignore the association between them.

Credibility and trust, once lost, are hard to recover. Maybe impossible. Since for media they tie in with profitability, they equate with survival. Like reputation, credibility must be guarded assiduously in order to survive in this untrusting, digital age.

~~~~~

* CCNA’s 2010 study (in which only 10 Ontario community papers participated; neither the EB nor the Connection participated) showed 74% of Canadian adults read a community paper, while (based on results from only those 10 papers) 83% of adult Ontarians did. 32% of respondents said they read their community paper for its advertising, 39% for its flyers, 80% for local news, but only 31% for local editorial. In comparison, 2009 study by Opinion Research Corporation, found weekly community newspapers in the USA represent just over 4% of the media consumed by the average American. TV dominates the media usage chart in the USA at 31%.

** Downsizing may be unpopular, but a necessary move to retain that precocious profitability, although it may not avoid Midland’s fate. When I started at the EB in 1991, there were eight in the newsroom, including a full-time editor, plus freelancers. Now there are two. The EB printed its own paper and owned its own building downtown. Now it prints in Barrie and rents part of a renovated house. There’s not much left to downsize.

*** As former newspaper editor who wrestled with limited resources, I understand and appreciate the need for select filler material and newswire copy. Local media simply doesn’t have all the resources to fill everything. Canned copy is expected in special sections like car repair or gardening, where local reporters may not have the expertise or time to do the writing. But it doesn’t belong in the news or editorial sections. Filler in special sections is neutral; on the editorial page and often when presented as “news” it’s blatantly biased or politicized. Continual use of biased content will affect how the paper is perceived by readers: as a mouthpiece of corporate interests.

Back in the 1990s when Conrad Black’s Hollinger Corp. took over papers from Thomson and other chains, there was a concern that he would impose editorial controls on his papers. But aside from a letter from Black himself, that didn’t happen. While I was at the EB, Hollinger kept a hands-off position on local editorial content and did not force its papers to carry any overtly political content from head office. Readers were able to trust that the content and the opinion was – whether agreed with or not – local, not externally generated.

Part of my concern over the viability of local media stems from almost a decade working at a local paper. I know what it feels like to lay out the paper, to write the stories, to edit the letters, develop the photos. I know about the late hours, unpaid overtime and missed dinners to cover events.

**** Community papers may fare marginally better than their daily counterparts: last month, 64 Globe and Mail employees were handed their notice. That followed 80 layoffs announced last year. Last fall, Sun Media cut 500 jobs, roughly 10% of its workforce, and closed two processing plants. The Natpost went through similar downsizing. The Toronto Star saw a 6.4% decrease in advertising revenue in 2011, and this year announced 55 layoffs. Print media appears to be suffering more than most other media, but I suspect radio faces equally dire challenges from online media, not merely the problem of finding a music formula that appeals to an appropriately large and affluent demographic for the community it serves (which I don’t feel has been achieved in this area yet).