Pew: TV-News Biz Stinks

3/16/2009 12:01 AM Eastern

Viewer migration to the Web and the economic freefall have combined to “shorten the time left on the clock” for traditional media, says the Pew Research Center's Project for Excellence in Journalism in its sixth annual report on the state of journalism.

Local TV news staffs are being cut as never before and broadcast-network news revenues are falling, even for shows that have been able to record audience gains. “Imagine someone about to begin physical therapy following a stroke, suddenly contracting a debilitating secondary illness.”

Perhaps most troubling, traditional media have not figured out how to monetize the move to the Web. PEJ suggests a cable-like subscription model may have to be built into Internet-service provider fees to help compensate journalists. Display advertising isn't going to cut it, he said, given that per-click charges to advertisers have been halved due to the proliferation of capacity.

But the news isn't all bad. Cable was one bright spot.

“CNN, Fox News [Channel] and MSNBC all gained viewers [in 2008], were projected to see record profits, and expected to increase spending on newsgathering and bureaus around the world,” said PEJ, even if the gains were due to an “Ahab-like focus” on election coverage, as the report dubbed it.

“The big winner in the last year, by any measure, was cable,” said Tom Rosenstiel, director of the Pew Research Center's Project for Excellence in Journalism, “at a year when everybody else was having a terrible time.” Ratings were up 38%, and profit was up 33%, Rosenstiel pointed out. He concedes some of the viewers went away after the election, “but not all of them.”

Cable gets points for its economic model, too. “The other advantage that cable has,” says Rosenstiel, “is that their subscription rates are kind of locked in.” The fact that cable is not as sensitive to ad fluctuations helps its news operations, he said.

But given what has happened to the economy since most of this information was collected for 2008, just how old has it become?

“I think cable will continue to do better than others,” said Rosenstiel. “Do we expect cable to have the kind of year it had last year? No, but we expect that it will do better in 2009 than other sectors because it is cushioned by subscription and because it is still showing ratings growth. And it is an efficient way to target advertising.”

There was also some good news for network news. So-called old media have benefitted from the migration of news consumers online, with legacy news sites making bigger gains than new media. PEJ says the big long-term problem for the news media is not audience, or credibility, but money: “the decoupling of advertising from news” and the need to come up with a new model.

Rosenstiel says that one conclusion among the industry folks PEJ talked to for the report is that “there is going to be no one magic bullet for online revenue. It will be a multiplicity of sources.”

That will take innovation, said Rosenstiel, a tall order when the economy is tanking and media outlets are pulling in their sails to weather the storm. The bad economy may eventually force their hands, though, he said, adding that the TV business isn't that bad yet.

Local TV-station viewership was flat or down across the board and cost-cutting by the fourth quarter had “touched nearly everything and everyone,” says PEJ, including deep cuts in stations' Washington bureaus. Helping that along was the crash of the auto sector, a TV station's largest advertiser, plus the shift of campaign funds from local to network and cable by the Obama campaign, with the McCain campaign following suit.

It is the first year revenue fell in an election year, which PEJ called a very bad omen for local TV.

On the network front, PEJ said it is likely that only one of the three news divisions — NBC's — made a “significant” profit. That was because its multiplatform approach with NBC, CNBC, MSNBC, The Weather Channel, Telemundo and its Web sites has put it in a much stronger financial position.

Six Major Media Trends
According to the Pew Research Center's Project for Excellence in Journalism:

SOURCE: Pew Research Center
1: The debate over how to finance the news business may be focusing on the wrong remedies — micropayments from users, nonprofit financing — while other ideas like cable's dual model or “online retail malls” within sites with news organizations getting a point-of-purchase fee go largely unexplored.
2: Power is shifting to the individual journalist.
3: There is an increasing focus on pushing content out onto the Web via serious multiplatform initiatives that have developed beyond simply a few podcasts, RSS feeds and e-mail alerts.
4: Partnerships, by necessity, are an increasing part of the news landscape and may be a route out of the financial wilderness.
5: The rise of cable news has been matched by the rise in “minute-by-minute” judgment in political journalism.
6: Campaign coverage has become more passive and reactive.
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