In March 2020 the news media appeared to be facing a downturn on a scale not seen since 2008, when the global credit crunch coincided with the arrival of sweeping changes in digital technology with devastating effect. The three traditional pillars of newspaper profitability (advertising for jobs, property and cars) disappeared for ever. Over the past decade the audited circulation of the Times has dropped by 27 per cent, the Sun by 58 per cent and the Financial Times by 60 per cent. The Sunday People, which had 1.6m readers at the turn of the millennium, now has fewer than 150,000.
As advertising sales were significantly reduced during the first wave of the pandemic, many speculated that the Covid-19 crisis would subject the media to a similarly permanent reduction in size.
But Press Gazette‘s analysis of share-price movements since that time indicates investors do not agree, and that the pressure on news media companies during the first wave of the pandemic was hardly more than a blip.
Press Gazette: New Corp doubles its value in nine months Part of New Statesman Media Group
The long-term trend suggests that quality news media is, like groceries, one aspect of the economy that is surprisingly resilient to a virus that has devastated almost every other sector.
We looked at the 16 biggest publicly listed news media companies in the US and UK, and found that by the end of last year their collective market capitalisations had bounced back by $71bn since March. As a group, they were worth more at the end of 2020 than they were at the start.
This is a remarkable performance in a year in which the FTSE 100 fell by 14.3 per cent. Some companies, particularly in the tech sector, enjoyed explosive investment in 2020, but there are signs that investors could see the media as a safe bet in the long term.
The future looks rosy for companies from News Corp and the New York Times to Thomson Reuters and S&P Global for a number of reasons.
The first is that much of the growth in revenue for these companies has come from subscriptions, which more than doubled across news and media between March and May according to one analysis. For many publishers, subscriptions not only balance the losses from advertising but replace them with a revenue stream that may be more sustainable.
And the move to remote working has not been as disruptive for media companies as it has for many other industries. Social distancing has affected the ability of reporters to interview or observe events in person, but this is a minor cost for most news organisations. A much more significant cost is office space, which media companies have reduced or consolidated, often with little or no loss of productivity.
The pandemic has also raised doubts about the reliability of much of the free social media content that competes for attention with quality news media. Quality information is always worth paying for, but in tough times it becomes essential.
The final reason why the news media can look forward to a more prosperous 2021 than might have seemed likely last March is a shifting in the tectonic plates when it comes to the relationship between the producers of professional content and the tech giants (Facebook and Google), which collect most of the money spent globally on digital advertising.
The Online Harms Bill proposes to make social media platforms responsible for harmful content – such as the coronavirus conspiracy theories that have been spread on Facebook, Twitter and YouTube – in the UK.
Backed by fines of up to £18m or 10 per cent of the concerned company’s annual global turnover, the new regime would mean that tech giants can no longer play the role of being a neutral platform when it comes to content, while aggressively increasing their dominance of the advertising market.
This follows the proposed creation of a new Digital Markets Unit by the UK government, which aims to govern the way tech platforms deal with publishers and ensure fair usage of their content.
Perhaps in anticipation of this, Google and Facebook have already begun paying publishers with the launch of the Google News Showcase and Facebook News. Similar moves to level the playing field between publishers and platforms are planned in the US and the EU.
It’s often been said that data is the new oil. If by data, you mean quality information, this phrase – however trite – may yet come true.