The newspaper industry is in a long decline as measured by multi-decade declining circulation (down 7% in 2015) and less paid advert revenues (down 8% in 2015), often attributed to competition from TV programming, as well as the Internet’s distribution of news and information from apps to websites to streaming video. That’s bad news, and for some newspapers it has been terminal.
Recently some cable TV stations and broadcast TV stations are also faltering. Cable subscriptions are down by 10% in the 2011 to 2015 period. In contrast, the streaming service Netflix had 35% of households as subscribers in 2015, up from 18% of households in 2011. Some broadcast TV stations and newspapers added an Internet platform that defrays their news collection costs and expands their subscriptions and advert revenues, but only by about 5%.
Ownership of both a TV channel and a newspaper has saved some traditional news organizations from perishing. Such diversity in news and entertainment distribution has prolonged the survival of well-known publishers such as The New York Times, The Wall Street Journal and Gannet. The bogeyman of a concentration in partisan viewpoint has not poisoned the news available to consumers. Despite the clear advantages of defraying news collection costs and adding marginal revenues, without suppressing diverse viewpoints, the Federal Communications Commission has decided to prolong the archaic ban on TV channel-newspaper cross ownership.
The evolution of technology has encouraged the routing of some program types into the separate delivery networks of media competitors. Starting in the late 1990s Internet quickly became popular with consumers. In the early years when its scant bandwidth (and consumer patience) supported just text and grainy images, consumers welcomed its news and community issue coverage. In later years with multi-megabit bandwidth from cable, DSL and fiber optic home connections, the Internet was able to support text, video, TV programs, movie, and sound. When similar bandwidth (e.g., 3G and 4G) became available to mobile wireless consumers, broadcast TV stations and newspapers lost the exclusive advantage of distributing popular TV programs. On the other hand, they retained the advantage of covering local news and sports, popular with some households.
Today cable channels hold an advantage in first run appointment TV programs (e.g., sitcoms or talk shows) due to arrangements with program producers. Streaming providers have an advantage in big budget dramas and movies. High capability smart phones, laptops and tablets bring public and private news, personal communications and entertainment to American workers and families. Today, all Internet devices compete with TV stations and newspapers. Technology has played a strong role in shaping a competitive landscape for information services.
Survival of the print publishing, cable, satellite and broadcast businesses has been bolstered by straddling multiple technological channels to earn subscriptions, program creation economies and advertising revenues. For example, the New York Times (NYT) is a respected thought leader for left of center viewpoints nationally. The NYT still owns 13 daily newspapers but it sold 8 TV stations in cities other than New York. In the last two decades, NYT has divested its interest in TV stations, sports teams and other media groups, seemingly to bolster the viability of its print newspapers. The unfortunate choice to divest TV stations explains some of its recurring financial fragility. With TV stations to feed with news, news collection costs could be shared by the two delivery channels.
Likewise, the Wall Street Journal (WSJ) newspaper and the Fox News Channel (FNC) (both are based in New York) have a national reach and share a common owner, News Corp. In this instance of cross ownership, the publishers’ political leanings are similar, although the WSJ is more focused on news than on partisan politics. Here cross-ownership has not caused problematic partisanship. News Corp’s reliance on cross-ownership is vast and effective. News collection costs are shared among News Corp’s massive list of newspapers and cable channel properties on several continents. The diversity of geographic coverage and shared news collection costs helps the News Corp newspapers remain viable.
Gannet used to own both newspapers and TV stations but it chose to split in two so it could focus on the more profitable broadcast operations. Tegna Inc. (an anagram but formally a company separate from Gannet) was chosen as the new name for its 46 TV stations and Gannet was retained as the name associated with its large holdings of newspapers. Similar to the NYT example, Gannet was able to operate TV and publish newspapers without major blunders, but to protect shareowners from recurrent print-publishing losses it spun off the TV assets.
Comcast is able to operate the CNBC and MSNBC sister channels without suffering schizophrenic shock at the corporate level. CNBC conducts discussions about economic and financial news with billionaire investors, hedge fund managers, and new entrepreneurs who would meet openly hostile treatment on MSNBC. Both channels have a long track record of providing a platform for opinions and perspectives that would be anathema on the sister channel. This demonstrates that is it possible to own multiple TV properties without smothering the diversity of views.
Newspapers have faced dwindling circulation for decades and there are indications that TV channel viewership may have peaked as a result of Internet-based competition. It seems perverse for the FCC to enforce a cross-ownership ban that hobbles TV stations from owning a newspaper. The ownership of diverse media properties can lead to more efficient news gathering and administrative costs, enabling newspapers to remain viable.
The Internet has muddied the newspaper-broadcast channel cross-ownership issue, even though in practice an Internet site adds an average of just 5% in new revenues. Newspaper ownership by a TV channel is often the most viable way to reach subscribers or readers, acquire advertising revenues, and present the newsprint publisher’s views on the public stage. Any regulation that suppresses that bid for survival thwarts the public’s interest and is not required to support vigorous competition.