Journalists get misty-eyed when they discuss the ‘good old days of Fleet Street’. This was a time of lengthy investigative work and hard interviews over alcohol-fuelled lunches. Arguably some of this is still present, but today’s publishing budgets don’t always allow for quite the same luxuries. The British newspaper industry has suffered since the dawn of social media turned everyone into a news reporter, thus cutting subscription demand and sending advertisers elsewhere.
According to data gathered by media regulator Ofcom, the proportion of adults who obtain their news from printed papers fell to 29 per cent from 40 per cent during the three years to 2016. This change in demand sent national daily paper circulation down more than a third to 6m.
By contrast, the popularity of internet news has soared, with 48 per cent of adults now reading stories on computers, mobiles or tablets, up from 32 per cent four years ago. Publishers – keen for a slice of the online action – have invested huge amounts in their news websites and now all but The Times and the Metro have more online readers than print.
But monetising digital news is not simple. Trinity Mirror (TNI) has been ruthlessly slashing costs in a bid to stop its profits collapsing. But broker Numis still expects pre-tax profit to fall 10 per cent to £120m in the year to December 2017, as a slight uptick in digital revenues has failed to offset dwindling Daily Mirror subscription numbers.
News Corp’s news and information services business – which includes The Times and the Sun – recently reported a 14 per cent decline in underlying cash profits after subscription and advertising revenues plummeted. Meanwhile, the Guardian and the Observer continue to be loss making.
Even the owners of the MailOnline – the UK’s most popular news website – are struggling to make money. In its latest trading update, management at Daily Mail & General Trust (DMGT) said it expects profits to fall to the lower end of already gloomy expectations in the year to September 2017. The group reported a 22 per cent increase in online advertising revenue, but continues to be overly reliant on its core print business.
So, as challenges have mounted, publishers have been taking more drastic action to claw back profits. The Financial Times, Times and Wall Street Journal are a handful of publishers to have put up paywalls on their digital content. In contrast, the Daily Mail removed its paywall in 2015 and its owners have instead been trimming the portfolio. The Guardian is also cutting costs wherever possible which includes ditching its printing business and unique Berliner format. From 2018, Trinity Mirror’s printers will produce tabloid sized Guardians and Observers.
Meanwhile, the potential merger of Trinity Mirror and Northern and Shell is ruffling the feathers of old-school political reporters. The latter’s charismatic owner Richard Desmond seems to have squeezed all the profits he can from the right-wing, anti-EU Express and Star titles and is now happy to leave his papers in the hands of the pro-Labour Mirror owners. The success of this merger is likely to rely on the support of both publishers’ shareholders and Ofcom (which is averse to one owner having too much control of the British media space).
Facebook, Google and Twitter have not made the publishing environment any easier. Aside from being far more attractive advertising platforms, these internet giants have become crucial portals for reading digital news. It is therefore very important to publishers that their stories appear high up a Google or Facebook search list.
However, social media has been accused of incentivising cheap, click-bait journalism, which has unleashed a flood of dubious content. Google has responded by removing its decade old ‘first click free’ policy – which pushes free online news further up its search list – while Facebook has offered to start promoting subscriptions.
