The bad news is that local TV news staffs already hard pressed to do their jobs are being cut as never before and broadcast network news revenues are falling, even for the 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," says the Pew Research Center's Project for Excellence in Journalism in its sixth annual report on the state of journalism.
News audiences are moving to the Web, but the media have not figured out how to monetize that move. PEJ suggests a cable like-subscription model may have to be built into ISP fees to help compensate journalists, saying display advertising isn't going to cut it given that per-click charges to advertisers have been halved due to the proliferation of capacity. That audience migration and the economic free-fall have combined to "shorten the time left on the clock" for traditional media.
But the news isn't all bad. "CNN, Fox News 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 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," says 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." He says the fact that cable is not as sensitive to ad fluctuations helps its news operations.
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," says 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 problem for the news media long-term 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, says Rosenstiel, a tall order when the economy is tanking and media outlets are pulling in their sails to weather the storm. Ironically, though, he says the bad economy may eventually force their hands. He says the TV business isn't that bad yet. "When things get really bad is when reluctant industries are most likely to innovate. These were not industries that innovated when they could have, but maybe they will begin to innovate when they have to."
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 their Washington bureaus. Helping precipitate that situation was the crash of the auto industry sector, a TV station's largest advertiser, plus the diversion of campaign funds from local to network and cable by the Obama campaign, with the McCain campaign following suit.
It is the first year for revenues to go down in an election year, which PEJ called a very bad omen for local TV.
On the network news front, PEJ says it is likely that only one of the three network news divisions made a "significant" profit. That was NBC, thanks to its multiplatform approach with NBC, CNBC, MSNBC, the Weather Channel, Telemundo and web sites that have put them in a much stronger financial position.
"It has reached the point, insiders say, where some stories are skipped because they are simply too expensive to cover," the report asserted about network news in general.
Ratings began to rebound in early 2009, with coverage of the economy. PEJ said that trend was encouraging for fans of traditional news. "The programs faring best on the networks, among them NBC's Nightly News and CBS' 60 Minutes, share something in approach, a seriousness of purpose, a sense of responsibility and a confidence that the significant can be made interesting," said the report.
Rosenstiel also said that one of the network winners was Katie Couric. "She has actually seen ratings growth. It is hard to know cause and effect, but there probably has been some residual Palin effect. We see her numbers pick up a little bit in November and then continuing to pick up in December, January and February.... I think there is a change in perception about her."
But PEJ says network news divisions are at a disadvantage for a number of reasons, including that their economic model puts them at a competitive disadvantage to cable because they do not have a dual revenue stream. "If networks did receive a subscription fee, their economic profile would look vastly different," says the report.
PEJ also suggests broadcast network news' best years may be behind it, saying "there is an air to it of greatness that is past rather than ahead....[D]espite their efforts, the three network news divisions remain, financially and culturally, at their core broadcast television operations. They offer their news at prescribed hours on programs of defined duration in an age when consumers increasingly want news on demand."
PEJ's report indentified six major trends:
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 fees 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.