Talks Surface of a Newspaper Industry Bailout

“You gotta be freakin’ kidding me!”

That was my reaction to a Reuters article that I came across. I am still a little taken aback, as they say, about the even the threat of the US government looking into ways to bailout the struggling newspaper / old school media industry. Right now it’s more talk than anything else but if someone said it in a public forum then you know there are greater rumblings going through Washington with a similar stink on them. I guess you can guess where I stand on this one, huh?

The Reuters article starts off

A top Democratic lawmaker predicted on Wednesday that the government will be involved in shaping the future for struggling U.S. media organizations.

House Energy and Commerce Committee Chairman Henry Waxman, saying quality journalism was essential to U.S. democracy, said eventually government would have to help resolve the problems caused by a failing business model.

Waxman, other U.S. lawmakers and regulators are looking into various options to help a newspaper industry hurt by the shift in advertising revenues to online platforms.

Can you see me shaking my head now? Did the government bailout the horse and buggy industry when the automobile was invented? Did the government bailout the radio industry when TV came along? Did anyone bailout the transcribers of the world when the Gutenberg press started producing the printed word?

If journalism is essential to the US democracy then let the free market system that has built this democracy into one of the greatest powers of the modern age (at least until recently that is) take care of how this plays out! The last thing we need is the government handing tax benefits and even worse, more deficit funded handouts to the likes of the Washington Post, New York Times and anything that Rupert Murdoch is whining about these days.

So who will profit from this concept more: our democracy or the likes of Rupert Murdoch? Hey let’s just go out and figure out which failing business model victim looks the most like AIG, Bank of America or Government General Motors and throw money at their executives business and see just how much better it gets. WTF!

This is not a government issue for goodness sake. This is a paradigm shift issue. The world is changing and not everything survives change. Why are we so obsessed with keeping something alive that may not have a place in the new world media order? And if it does have a place let the free market principles that allowed it to thrive for so long determine what piece or pieces will move forward as we boldly go further in the digital age.

Of course there is some press constituency that thinks this a great idea. Wonder who pays their bills?

Free Press, a public interest group, said the search for solutions to the crisis in journalism should be premised on the idea that news-gathering is a public service, not a commodity.

Waxman’s “indication that government has a role to play is both bold and soberly sensible,” said Free Press Policy Director Ben Scott on the sidelines of the FTC conference.

I call BS on this one. Honestly, if the newspapers were truly a public service shouldn’t they have acted more responsibly to the change that very public is undergoing in how it consumes news? Business change is not always about failure; it’s usually more about progress and smarts or lack thereof. If the newspapers have ignored the myriad tell tale signs that have been written on the wall for years now why should MY TAX dollars save them from their own arrogance and stupidity? What have they done for me and my business?

Geesh, just the rumor of this happening really ticks me off! Hey, Senator Waxman and anyone else who thinks this is a good idea! Shut up and go read your Washington Post while it’s still here!

Phew! That felt great because I am part of the new free press and I plan on being around in the digital age as long as I can identify what people really want. Will it last forever? Probably not but if I am not smart enough to get on board the next train that is heading for the future don’t bail me out. That’ll be my problem not yours.

UPDATE: Google CEO Eric Schmidt gives the WSJ his ideas for fixing the “crisis” in the newspaper industry.

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Online Ad Revenues On the Rise

The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers released their latest Internet advertising numbers for the third quarter. According to the organizations, Internet advertising revenues reached nearly $5.5 billion for the quarter. That is an increase of 1.7% from the second quarter.

The numbers are still significantly down from the same period last year, but any increase is a good sign of things to come. There has been a 5.4% decline from last year.

"The Internet has transformed the consumer experience of media, providing marketers with unprecedented opportunities to engage with their customers," said Randall Rothenberg, President and CEO of the IAB. "The advertising sector overall has been hard hit by the economy, but digital media has been a bright spot within the larger economic downturn as it is capturing an ever-increasing piece of marketers’ advertising spend."

"While all segments of the media industry have experienced declines, online advertising remains resilient and is once again showing signs of growth," said David Silverman, a partner at PricewaterhouseCoopers LLP.

The information from the IAB/PWC is considered the most accurate measurement of interactive ad revenue, the IAB says, because its compiled directly from info supplied by companies selling advertising on the web. The IAB releases a full report twice a year to reflect half-year periods. It will be interesting to see how the second half of the year plays out in its entirety.

Have You Read This?

> Online Advertising is Having a Big Year

> Online Ad Revenue Tops $10 Billion

> IAB Releases Ad Unit Guidelines Update

Expectations Improve for Media Advertising Revenue

MAGNA released its US Media Advertising Revenue Forecast today, and reports that although the economy continues to face challenges, expectations for the future have improved significantly during the past two quarters.

"Among major economic measures, Industrial Production (IP) and Personal Consumption Expenditures (PCE) have the highest correlations with advertising, and forecasts of these variables inform our predictions of advertising revenue growth and decline," says MAGNA. "While consensus forecasts for PCE have not changed meaningfully, expectations for IP have improved.  As a result, we are moderating our 2010 advertising forecast and now expect normalized advertising revenues (excluding local TV political and national TV Olympic revenues) to decline 1.3% next year."

The firm previously published expectations for a decline of 2.1% in 2010. In total, they expect suppliers to generate $159 billion of normalized advertising revenue next year.

For the fourth quarter of this year, MAGNA forecasts that U.S. media suppliers will collectively generate 9% less ad revenue than the year before. They also expect industry revenues to fall from $47.5 billion in the fourth quarter of 2008 to $43.2 billion.

"These figures reflect a moderating pace of decline compared to estimated revenue reductions of 13% during the third quarter and 18% declines during each of the first two quarters of this year," says MAGNA. "As we previously forecast, the first half of 2009 marked the bottom of the ad-supported media economy’s decline."

Year-over-year changes in PCE fell for three consecutive quarters between October 2008 and June 2009.No period since quarterly records were first published back in 1947 has recorded any decline in PCE before the current downturn, according to MAGNA. In addition, IP fell at a quicker pace than any time since 1975 in the last several quarters.

Online Ad Revenue Tops $10 Billion

Internet advertising revenues reached $10.9 billion in the first half of 2009, a 5 percent decline from the same time in 2008, according to a new report from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers.

Search and display advertising continue to account for the largest percentages of overall advertising spend.  Search revenues amounted to more than $5.1 billion for the first six months of 2009, up three percent from the same period in 2008.

"While the overall advertising market has continued to be impacted by current economic conditions, marketers are allocating more of their dollars to digital media for its accountability and because consumers are spending more of their leisure time online," said David Silverman, PwC Assurance partner.

Display-related advertising which includes rich media, digital video and sponsorship totaled nearly $3.8 billion in the first six months of 2009 showing a slight decline from the same time in 2008. Digital video continues to see solid growth with a 38 percent increase from the first half of 2008.

"We are in one of the most difficult economic slumps in decades. Interactive is one of the advertising sectors that has been least affected," said Randall Rothenberg, President and CEO of the IAB.

"In recent years the digital revolution has driven a transformation of how consumers experience advertising and media. As the economy improves, we're confident that brands will devote an even greater share of their budgets to reaching consumers as they make interactive media a larger part of their lives."