Read all about it: Newspapers feel the strain of Covid-19
Newspaper editors will have been no doubt heartened to see Oliver Dowden, the culture secretary, chivvying Brits to “buy a paper” this weekend.
Dowden called newspapers the “fourth emergency service.” Like the others, they are under strain.
For weeks on end British newspapers have reported on the coronavirus crisis, covering the spread of the pandemic, its deadly impact and the devastating economic fallout.
And yet these organisations are themselves not immune from the crisis. In fact, even while more and more people flock to trusted news sources for information about Covid-19, many newspapers are now facing a fight for survival.
The headlines: An existential threat
While no sector has been unaffected by the coronavirus outbreak, for newspapers the pandemic represents an attack on all fronts.
Perhaps the largest and most immediate impact has been on advertising, which has all but collapsed as brands cut spend amid a wider economic downturn.
Research carried out by Econsultancy last month found 90 per cent of marketing budgets have been delayed or put under review, while Enders Analysis has forecast that the impact on advertising revenue for newspapers will be roughly £330m.
At the same time, the pandemic has put a squeeze on print. Lockdown measures have hit printing and distribution, while retail closures such as WH Smith have made it harder for readers to get their hands on a newspaper. Free titles that distribute to commuters have been particularly hurt by the decline in footfall.
Even conferences and events — a line of business previously touted as a key area for revenue diversification — has ground to a halt.
In a note to staff seen by City PM Financial Times chief executive John Ridding said the pandemic “constitutes the most serious shock to the FT’s business in modern history”.
The cruel paradox of the crisis for news organisations is that demand for journalism has surged. Most titles have reported soaring website hits, while the Guardian yesterday said it has hit record levels of digital subscriptions over the last six weeks.
But without advertising to fund it, the rise in readership is of limited commercial value. Moreover, industry leaders have raised concerns about so-called advertising blacklists, which automatically block online ad campaigns from appearing next to certain keywords.
Industry body Newsworks has warned that the use of blacklisting on terms related to coronavirus could cost news sites £50m in lost revenue. Dowden has written to the country’s hundred biggest advertisers asking them not to ban appearing next to stories about Covid-19.
And even when subscriptions rise, media firms face a squeeze on cashflow. In an email to staff, seen by City PM, Telegraph Media Group chief executive Nick Hugh said subscription revenue “tends to lag… whereas when you lose ad revenue it all hits in the moment”.
In reality, many of the issues arising from the pandemic are structural problems that news organisations have been battling for years, such as a shift in reader behaviour from print to digital. Yet the sudden and catastrophic impact of the virus means these challenges have been brought into the here and now, and newspapers have been forced to respond.
Cuttings: How are newspapers responding?
For most news organisations, cost-cutting has been the name of the game. Largely this has come through the furloughing of staff — which allows companies to take advantage of government support — as well as executive pay cuts.
The Financial Times, Telegraph and Guardian this week all announced plans to put dozens of non-editorial employees on paid leave and reduce salaries for top editors, managers and board members. City PM has also taken its own steps to ride out the storm, temporarily suspending the print operation.
The Evening Standard has also furloughed staff and cut circulation, while Mirror and Express publisher Reach, which also owns a stable of regional titles, has said it will furlough roughly a fifth of its employees.
News UK, the publisher of the Times and Sun titles, is not planning on furloughing staff but will reconsider planned bonuses and have asked for volunteers for paid leave. Nonetheless, one member of staff told City PM: “Never have I been so glad about Rupert Murdoch’s deep pockets.”
But perhaps the most distinctive response has been from Daily Mail and General Trust (DGMT), the publishing behemoth behind the Mail titles, Metro and — following its recent £50m takeover — the i newspaper.
The company has announced that all members of staff earning over £40,000 will take a pay cut, ranging from one per cent for the lowest earners to 26 per cent for the very highest.
However, employees will each month be handed shares equal in value to their pay sacrifice. At the end of the year, staff will have the choice of selling these shares or keeping them as an investment. If the share price falls below the grant price, DMGT will compensate the difference.
“It is my sincere hope that most of you will hang on to at least some of your shares in the long term and share in the continued success of our company,” chairman Lord Rothermere wrote in a letter to staff.
DMGT has been able to leverage its position as a listed company in a way not available to most other news organisations, and the move appears to have softened the blow of the cuts.
“I wouldn’t say anything like this could really be considered ‘popular’, but there’s certainly a recognition that management has handled it in a decent way,” one employee told City PM
Facing the future
Across the sombre emails sent out to employees in recent weeks, one theme has remained constant: newspapers are vowing to double down on their editorial output.
With a once-in-a-lifetime crisis comes a renewed sense of purpose for journalists, as keeping the public informed — and entertained — has perhaps never felt so important. It also offers the opportunity for news brands to reestablish their value to readers.
However, no amount of editorial excellence will resolve the commercial issues that have been laid bare by Covid-19.
Instead, companies have been forced to fast track their plans for adapting the business model of news as media consumption habits change.
At the heart of this is a rapidly accelerating shift to digital. In February, just weeks before the crisis engulfed the UK, Reach unveiled plans to hit 7m registered customers by the end of 2022 — up from fewer than 1m at the end of last year.
Other newspapers have also been ramping up their digital efforts, such as the recent launches of Mail Plus and a US version of the Sun’s website.
But these strategies will now be put into overdrive. So, too, will the need to generate revenue directly from these readers, rather than purely from advertising.
For outlets across the sector, drastic moves such as furloughing staff and cutting circulation will, it is hoped, be merely a short-term necessity. But one thing is clear: the immediacy of the coronavirus crisis means newspapers no longer have time on their side, and must face the future now.