PEW RESEARCH CENTEROCTOBER 29, 2020
Coronavirus-Driven Downturn Hits Newspapers Hard as TV News Thrives
The financial state of the U.S. news media in the second quarter of 2020
How we did this
The coronavirus outbreak has had a major impact on the U.S. economy, wiping out five years of growth
in the second quarter of 2020.2
The news media have responded to these financial pressures with new closings and layoffs, adding to those that have already occurred over the last several years
– though the government’s paycheck protection loans program may have provided some relief
. But not all sectors, or organizations, have been affected equally.
Newspaper companies have been hit especially hard. Among the six publicly traded newspaper companies studied – major chains that own over 300 daily papers – advertising revenue fell by a median of 42% year over year (i.e., comparing the second quarter of 2020 with the second quarter of 2019).3
By contrast, total ad revenue across the three major cable news networks was steady overall, but there were sharp differences between the networks: While ad revenue for MSNBC and CNN declined by double digits, Fox News Channel’s revenue rose
What is a median, and why is it used to measure change here?
Ad revenue for the five local TV news companies studied (which together own or operate at least 600 individual stations) was also down in the second quarter of this year, but increases in retransmission fees more than made up for this.4
Meanwhile, ad revenue for nightly network TV news at the three broadcast networks (ABC, CBS and NBC) increased over the same period, as audiences have been turning to TV in record numbers
for news about the outbreak.5
The rest of this report looks at each of these four sectors of the news industry in more detail.
Early in pandemic, U.S. newspapers saw sharp declines in ad revenue
U.S. newspapers have been in a long economic downturn
. While some national newspaper brands
have reported audience growth in recent years, the industry overall (which extends to hundreds of local papers throughout the country) experienced a sharp decline in ad revenue amid the Great Recession and has yet to recover.
Ad revenue historically has been the industry’s biggest single revenue stream, although many newspapers have made efforts in recent years to orient their business models more around revenue directly from readers
– such as through online or print subscriptions. Despite this, overall circulation and subscription revenue
has barely budged over the past 10 years.
Now, with the coronavirus-driven downturn, the six publicly traded newspaper companies analyzed here (which collectively own over 300 newspapers) have seen a year-over-year fall in both types of revenue.6
The median ad revenue among these publicly traded newspaper companies fell by 42% in the second quarter of 2020 when compared with the second quarter of 2019. This pattern was similar for all six newspaper companies analyzed here, with even the least-affected company, Gannett, showing a 35% decline in ad revenue year over year.
Digital ads represent a newer source of revenue for newspapers as their overall circulation declines. Such ads can reach not only subscribers, but visitors to the free offerings on newspapers’ websites. But digital ad revenue offered little relief in the early days of the pandemic. Digital ad revenue fell by a median of 32% year over year in the second quarter. (See Appendix for detailed tables
with full data.)
Circulation revenue, which has been steady in recent years, declined in Q2 2020, though by a median of only 8%. Even at the worst-hit companies (Gannett and Lee), circulation revenue declined by a relatively low 14%. As a result, three of these six companies now have more revenue coming in from circulation than from ads – an unthinkable state of affairs a decade ago, when overall ad revenue was two-and-a-half times higher
than overall circulation revenue.
For example, Belo brought in similar amounts from subscriptions and circulation and from ads (about $16 million for each) in the second quarter of 2020. By comparison, in the second quarter of 2010, Belo brought in $77 million in ad revenue and $35.5 million from subscriptions and circulation.
In percentage terms, newspaper companies that reported revenue in both periods seemed to fare worse financially this spring than they did during the Great Recession of December 2007 through June 2009. Ad revenue for newspaper companies also dipped sharply during the Great Recession, with median declines of 11% and 30%, respectively, in the second quarters of 2008 and 2009 among these companies (see Appendix for detailed tables
Still, this does not match the dramatic year-over-year median fall of 42% in the second quarter of 2020. And circulation revenue was roughly steady in 2008 and 2009, compared with the 8% median year-over-year decline in the second quarter of 2020.
Some newspaper companies have turned to other sources of revenue to fill the gap left by falling ad revenue. This includes revenue from events, marketing services, commercial printing, affiliate fees from product recommendations, and – for The New York Times, at least
– television shows. But these sources did not offer much help in the second quarter of 2020, as most companies saw their “other” revenue decline by double digits
. This was especially notable for the Times, which experienced substantial year-over-year increases in this “other” revenue in the second quarters of 2018 and 2019 (40% and 30%, respectively) before a 5% drop in that period in 2020.8
In a time of falling revenue, companies may be moved to cut expenses – such as payroll. Of the four companies that reported compensation expenses in the second quarter of 2020, all showed a double-digit percentage decline year over year, with a median decline across the four of 20 percentage points.9
For most of these companies, this figure has been falling steadily over the past decade or more, reflecting the 51% decline in newspaper newsroom jobs
between 2008 and 2019.
Sharp differences in revenue across cable news networks
In contrast with newspapers, the three major cable news networks have seen their ad revenue grow steadily
over the past decade. In many ways, the second quarter of 2020 was not extraordinarily unusual for the cable news networks: Total ad revenue across the three networks was roughly steady, up 2% year over year, at $422 million.
But the story was very different depending on the network. Fox News Channel, driven by surging ratings, experienced its sharpest year-over-year second-quarter ad revenue increase going back to 2007, rising 41%.10 But CNN and MSNBC both saw their ad revenue decline, with CNN’s falling 14% and MSNBC’s falling 27% – despite the fact that both networks grew their audiences as well, with CNN more than doubling its total primetime audience over the year prior. In other words, with many people subject to stay-at-home orders in the spring, Americans were watching cable TV news in greater numbers. But this did not lead to greater revenues across the board – which could be due to a number of factors.11
Local TV news companies grow their retransmission fees even as ad dollars wane
Among five publicly traded local TV companies that reported detailed revenue in the second quarter of this year, ad revenue fell by a median of 24%. Together, these companies own or operate over 600 stations across the U.S.
More specifically, revenue from political ads for local TV news is predictably cyclical
, with even-numbered election years seeing a surge in political ad dollars. Indeed, political advertising revenue was up dramatically for all five companies in the second quarter of 2020 compared with 2019. But when comparing this year with the midterm election year of 2018, political ad revenue was down for most of these companies – including by margins of more than 30% between the second quarter of 2018 and the second quarter of 2020 for Nexstar, Sinclair and Tegna. Looking further back, however, the data shows that political ad revenue for local TV companies is up across the board compared with the last presidential election year of 2016.
For some time now, local TV stations have had a second source of revenue: retransmission fees paid by cable providers for the right to carry the local stations in their home markets. And these were up sharply in the second quarter of 2020: Retransmission fee revenue at publicly traded local TV companies saw a median year-over-year increase of 37%, possibly driven by spikes in viewership. In real dollars, this equates to a jump of $87.3 million in median revenue, more than making up for the fall in median advertising revenue among these companies ($67.9 million). Sinclair had the biggest jump in retransmission revenue of any company – up 175% year over year, from $367 million in the second quarter of 2019 to more than $1 billion in the second quarter of this year. In the second quarter of 2020, median retransmission fees were 46% higher than median advertising revenue among these local TV companies.
Nightly network TV revenues increase as ratings soar
Audiences have been turning to the network nightly news in record numbers
during the coronavirus outbreak, outpacing even cable’s gains, so it is not surprising that network TV news advertising revenue has increased as well.
Total network nightly news ad revenue rose 11% year over year as of the second quarter this year, outpacing its performance in the comparable presidential election years of 2016 (up 5% year over year) and 2012 (up 5%).12
This is driven by ABC’s 21% rise, though CBS (3%) and NBC (7%) also rose.
The story has been different for network morning news shows. Total ad revenue across the three networks fell 4% year over year in the second quarter, which is somewhat unusual compared with the presidential election years of 2016 (up 2% year over year) and 2012 (up 4%). ABC’s ad revenue was roughly unchanged, while CBS and NBC experienced modest declines in the second quarter of 2020.13
Next: Appendix: Detailed tables
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In the third quarter of 2020, the U.S. economy recovered a sizable portion
of what it lost during the pandemic.” ↩
For newspapers and local TV, only publicly traded company that reported detailed quarterly revenue in Q2 2020 are analyzed. Data is recorded at the individual company level, and when summarizing across companies, the median (the midpoint when ordering all companies from highest to lowest) is reported. See the box titled “What is a median, and why is it used to measure change here?” for more on medians. ↩ Retransmission fees are paid by cable companies for the right to carry local TV stations in their home market. In the past
, retransmission fee revenue was considerably lower than ad revenue, but in Q2 2020, median retransmission revenue was 46% higher than median ad revenue among the local TV company analyzed. ↩
A detailed breakdown of revenue by type is not available for cable and network TV. ↩ Note that this group includes McClatchy, which declared bankruptcy in February 2020
but continued normal operations. Their performance in Q2 was not notably different than the other five companies analyzed here. They were sold to hedge fund Chatham Asset Management in August 2020
It should be noted that the second quarter of 2020 was, so far, the worst single quarter of the current recession. To avoid issues arising from seasonality, these comparisons are to Q2 2008 and Q2 2009. However, Q2 2008 was a relatively positive one for the last recession
, though Q2 2009 saw negative gross domestic product growth. The worst quarter in the previous recession was the first quarter of 2009. ↩
Tribune reported a 24% year-over-year decline in other revenue in Q2 2020 based on restated 2019 data. The data shown here does not incorporate restated data for previous years and so show a 20% increase. ↩ In 2020, The New York Times began rolling compensation expenses into an overall “cost of revenue” measure that includes infrastructure and other costs of producing the paper, so no standalone labor expense figure is available. They do note that “journalism costs” of $1.9 million were higher in Q2 2020, “largely driven by an increase in the number of newsroom employees.” Prior to 2020, the Times was unique in seeing their compensation expenses rise since 2017. ↩ Though raw dollar figures should not be compared between 2018-2020 and any previous year, year-over-year percentage changes can be compared across these periods (aside from 2017-2018, when the methodology changed). As long as a methodology is consistent over a given two-year period, year-over-year percentage changes are comparable between this period and another two-year period even if the methodology changes in between. ↩ According to Kantar, “Contributing to the softness seen in CNN and MSNBC’s revenue has been a heavy preemptive news cycle, featuring live coverage of presidential and local government coronavirus briefings, Black Lives Matter events, and election related content, resulting in extended ad-free air time and overall reductions in commercial loads. These factors had less effect on Fox’s revenue.” ↩ Though raw dollar figures should not be compared between 2018-2020 and any previous year, year-over-year percentage changes can be compared across these periods (aside from 2017-2018, when the methodology changed). As long as a methodology is consistent over a given two-year period, year-over-year percentage changes are comparable between this period and another two-year period even if the methodology changes in between. ↩ Though raw dollar figures should not be compared between 2018-2020 and any previous year, year-over-year percentage changes can be compared across these periods (aside from 2017-2018, when the methodology changed). As long as a methodology is consistent over a given two-year period, year-over-year percentage changes are comparable between this period and another two-year period even if the methodology changes in between. ↩
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