COVID-19’s impact on media businesses has deepened quickly — but there could be a glimmer of hope

March 18, 2020
Category: Business & Work

Ten days ago, my quick first take on media business implications of the COVID-19 contagion was that it would hit hard, as any downturn — this one now looming as a recession — tends to quickly translate into devastating advertising losses. That is starting to happen.

I took particular note of an announcement last Wednesday from The Stranger, a relatively robust alternative weekly in Seattle, that it was furloughing 18 employees — more than half its staff — and suspending its print edition.

In a letter to readers, editor Christopher Frizzelle explained that 90% of the free publication’s advertising base is from events, entertainment and nightlife. Those activities and subsequent ads have all but disappeared in Seattle, a month ahead of the rest of the country in buttoning down to combat the coronavirus.

Frizzelle made an urgent plea for contributions to keep The Stranger alive.

And here is the hopeful part: Publisher Laurie Saito emailed me to say that The Stranger has received an amazing 4,500 donations, ranging from $3 to $10,000, in the five days since the appeal. A low-key solicitation in February, by contrast, attracted only 52 responses.

“The incoming contributions are exceedingly helpful and are certainly assisting us during this sudden and dramatic drop in revenue,” Saito wrote, but her optimism remains tempered. “They cannot sustain us solely even though we have moved to lower our expenses in an equally dramatic way.  Our hope is that the contributions continue as we build up our web advertising and keep scaling back costs.”

I see Seattle as the COVID-19 bellwether. A full shutdown of businesses where people get together in groups has now arrived in New York City and the San Francisco Bay Area as well. Similar directives to stay home are sure to spread quickly to other metros, especially those that rely on public transportation.

This will be like a huge snowstorm that lasts for months.

RELATED: Coronavirus shapes up as a double wallop for media businesses’ advertising and events

But could there be a chance that this will also prove to be just the right time for foundations and individuals to step forward and support print and digital media? When better to make the case for their essential role in providing community information?

Early indications are that many news organizations that have dropped their paywalls for coronavirus coverage are seeing good increases in paid digital subscriptions. Alternatively they can harvest email addresses for prospect lists by requiring mandatory registration to access COVID-19 stories or related newsletter products.

Already this week, Facebook and the Lenfest Institute announced they will provide $1 million in grants for COVID-19 coverage. Poynter’s International Fact-Checking Network received a separate $1 million from Facebook to administer grants to widen its early efforts to flag false information about the epidemic and another $1 million from WhatsApp to battle COVID-19 hoaxes on messaging apps.

Sue Cross, executive director and CEO of the Institute for Nonprofit News, a trade organization for more than 200 outlets in that sector, emailed me to say that she detects no slowing of philanthropic support (even though investment portfolios of foundations and individual donors are experiencing their own paper losses).

After years of hesitation about whether journalism merited support, community foundations are beginning to team up with big national outfits like the Knight Foundation and Lenfest with grants to bolster coverage. For-profit papers are among the recipients.

The Seattle Times has been a pioneer in supplementing commercial revenue with foundation support for added public service coverage. The Fresno Bee in the last year added two four-person reporting/editing teams, backed by grants — one for a local “education lab” and a second (in partnership with CalMatters and other outlets) to examine economic inequality in California.

Report for America orchestrated the latter project. The three-year-old program,  expects to place 250 journalists in newsrooms around the country this year. It requires a 40% local match (often from donations) from applicants to host one or more reporters for worthwhile projects or expansions into underserved communities nearby.

Government support for private sector news, typically a non-starter because of First Amendment concerns,is also no longer totally off the table. Late last year Congress awarded a targeted pension-funding break for several independent newspapers. Additionally, the industry is pressing for an antitrust waiver allowing news organizations to negotiate collectively with platform companies like Facebook and Google to license content.

On Tuesday, the News Media Alliance, an industry lobbying group, asked that Vice President Mike Pence’s coronavirus task force designate news publishing as among the essential businesses to be kept open through the course of combating the virus.

I don’t want to get pollyannaish about what is next. Hotels and airlines have already followed the entertainment and restaurant industries in pulling ads. A host of other businesses will feel the pain and cocoon soon.

Events, whether the suspended seasons of sports teams or the more modest offerings of news organizations themselves, will probably not be back nearly as soon as the best-case scenarios now being floated might suggest.

And let’s not linger on how difficult it may be for financially stretched newspapers and other media outlets to pay their loans, rent and employees.

If most or even many come out the other side, though, it will be as organizations that draw greater revenue shares from audiences and community support. They will be less dependent on print, with its declining-anyway ad revenues and punishing production and distribution costs. In short, they will survive by transitioning, by necessity, to more robust digital operations, a goal realized only pokily to date.

Don’t waste a good crisis, as the Obama-age adage goes. For legacy news media, this one is a doozy.

Rick Edmonds is Poynter’s media business analyst. He can be reached at redmonds@poynter.org.