Forecast sees more challenges for newspapers

Despite some success growing its business online, overall US newspaper sales will continue to decline, according to a new forecast.

The bleak outlook highlights the urgent need for federal intervention to help save an industry that is essential to self-governance and civic engagement.

News publishers are having some success with digital business models, but overall circulation will continue to drop through 2026, according to the US Entertainment & Media Outlook released this week by PricewaterhouseCoopers.

The forecast shows big trends reshaping the news industry as it adjusts to the bulk of the loss of advertising sales across some of the major tech platforms.

“Despite increasing signs of digital success for some publishers, changing readership and advertiser habits will continue to have a significant impact on the US newspaper market during the forecast period,” the report said.

This is in stark contrast to media and entertainment overall. it’s a broad industry PwC. forecast by To see a 4.6% compound annual growth rate from 2021 to 2026.

The recession of the pandemic is resuming advertising sales. PwC expects ad sales to grow an average of 6.6% by 2026, with Internet ad sales growing 9.1%.

Yet newspapers in the US, by far the largest newspaper market, will see an average revenue decline of 2% per year through 2026, the forecast said.

It said a critical point would come in 2022 when newspaper circulation revenue, both print and digital, would for the first time surpass total advertising revenue.

The forecast said newspaper owners are “increasingly successful in building a digital subscription base and implementing paywalls” to balance print circulation declines over the long term.

Co-author CJ Bangah, a principal at PwC, said via email that “it is very important for newspapers looking for continued relevance and consumer engagement to change and innovate the engagement model with consumers in a more digital world.” There’s a real opportunity.”

Overall circulation is still projected to decline an average of 3.3% annually between 2021 and 2026.

“I would characterize the market as one with a decline in overall net readership, where there is still optimism around the power of innovation to help unlock the long-term potential of digital news,” Bangah said.

It will take a few more years for digital ad sales to overtake print ad sales, with PwC predicting a “historic moment” will occur in 2026. The pandemic hastened that change, it said.

“The flow of marketing money away from print newspapers will continue at a rapid rate during the forecast period, with US publishers losing $2.4 billion in advertiser investment between 2021 and 2026,” it said.

Digital advertising sales of newspapers will increase over that period, but will not compensate for the loss of print advertising. PwC expects their digital advertising sales to grow at a 1% compound annual growth rate by 2026, “adding just $251 million”.

“But with most of the digital advertising spend taken by technology giants like Google, Meta, Amazon and TikTok, newspaper owners are failing to make up for the loss of income through their digital offerings,” it said.

This does not bode well for the newsrooms of thousands of newspapers that have lost nearly 60% of their workforce in the past 15 years. Especially not when most of the industry’s digital growth goes to a few East Coast newspapers.

PwC noted that the industry is cutting costs and consolidating, and facing other adverse conditions such as a steep rise in newsprint prices.

“As these challenges and trends continue, the impact will be felt by readers at the municipal or local level,” it said. “Readers may find that stories about a city council meeting or school board incident are no longer published because newspapers focus on stories at a higher level, including state and federal, to appeal to a larger audience. “

Not to mention the resulting erosion in democracy, as voters lose local news coverage and leave papers with little investment in journalism. It is already making Americans less informed and less engaged in their communities, as established by academic research.

Members of Congress should pay attention to whether it is worth helping local newspapers survive.

Despite the bleak outlook, the PwC report shows that this essential industry is making progress where it has to grow. But newspapers face heavy and unfair competition from some companies, notably Google and Facebook, that the government is suing for anti-competitive conduct.

A proposal for temporary tax credits for hiring journalists, the Local Journalistic Sustainability Act, would stop the bleeding, especially on smaller papers as they develop and antitrust enforcement proceeds. Another bipartisan bill, enabling news outlets to collectively negotiate fair compensation from tech giants profiting from their content, would help ensure long-term survival.

If nothing is done, and the local newspapers providing most of the local reporting continue to disappear, the prognosis for democracy is worse.

This is an excerpt from the free, weekly Voice for the Free Press newsletter, Sign up to receive it at the Save the Free Press website Here,

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