The Retired Investor: Local News Is Dying. What's the Plan?

Local newspapers are dying. Try as they might, changes in American society, aided and abetted by the internet, have forced many of these institutions to the brink of insolvency. Their demise could impact you in ways that you might never have imagined.

 

The newspaper industry, as most readers are aware, has been in a steady decline for years. A loss of readership and advertising, both traditional sources of revenue for centuries, have migrated to other media, such as the digital arena. The pandemic and the resulting economic impact on the U.S. economy only worsened what was already a bad situation, at least from an economic viewpoint.

 

Penelope Muse Abernathy and Tim Franklin at Northwestern University's Medill School of Journalism, Media and Integrated Marketing Communication recently released a study called The State of Local News 2022. Here is what they found: Since 2005, more than 2,500 newspapers have closed around the nation, on average, 100 newspapers per year or two a week have shut their doors. As a result, the number of newspaper employees have declined by 60 percent and on-staff photographers fell by 80 percent. Today, there are only 7,000-plus newspapers still publishing in the U.S. More than 80 percent are weeklies located in small and rural areas of a nation with a circulation under 15,000.

 

Of the 3,143 counties in the U.S., 200 of them no longer have a newspaper. That may seem small, but the loss impacts 3.2 million people and counting. Two thousand counties no longer have a daily newspaper, and 1,630 counties get by with only one newspaper, usually published weekly. All together that amounts to 70 million people.

 

As a result, "news deserts” have cropped up throughout the country. These are blind spots among local communities, according to research by the University of North Carolina, that no longer have access (or diminished access) to news and information that many consider necessary to the survival of a grassroots democracy.

 

To make matters worse, thanks to mergers and acquisitions, the 25 largest publishers now control about one-third of all newspapers, including two-thirds of all daily newspapers. Today, the 10 largest newspaper owners control half the daily newspapers in the county.

 

The main loser within this trend has been local communities as the focus of these competing media sources concentrates on international and national news. The resources devoted to covering community news and events have shrunk dramatically. This gives rise to a growing number of ghost newspapers.

 

Ghost newspapers is a term used to describe the disappearance of important local coverage that was provided to the community in the past. Since community news has historically been the driver of newspaper readership, less coverage translates into less readership, which generates less revenues and a further decline in local news coverage. This is what one calls a vicious circle.

 

In 2005, newspaper revenues were more than $50 billion, according to The State of Local News 2022 study. Since then, revenues have declined to $20 billion.

 

I wish I could say this circle has been broken but it is getting worse. The decline in local spending in newspapers is predicted to continue to decline. BIA Advisory Services, a firm that tracks ad spending in local media, predicts by 2025, newspaper print ad sales will decline to $5 billion, a massive decline from revenues today.

 

Historically, local newspapers have been the prime, and sometimes only, source of credible and comprehensive news and vital information. It is why the First Amendment was included in the U.S. Constitution. The facts are that newspapers have affected the quality of life in thousands of small and mid-sized communities around the country for centuries.

 

Newspapers have been in the thick of public policy debates in every state, city, town and village in America. The stories, the extended coverage of issues, and their editorials have not only shaped, but have made history time and time again. Today, they are still doing that. From the beginning of the COVID-19 pandemic, if you are like me, the critical information I needed to safeguard and protect my family and friends was supplied by my local newspaper on a daily basis. It was a lifeline that no national news source could hope to furnish.

 

I believe climate change is a mounting danger that communities throughout the country will need to face. Frequent information on local weather conditions, road emergencies, hospitals, shelters and other critical alerts will become increasingly important. We need local newspapers today, now more than ever. Just look at what is happening in Florida today, or eastern Kentucky, or communities that depend on the Colorado River for survival to see where we are heading.

 

Local communities have a choice. The way I see it, unless something is done to save this industry, we are all in trouble. We need to figure out a way to preserve and resuscitate the local newspapers or face an increasingly unknown future without them.

 

The burning question is how? In my next column, I will examine what communities and local newspapers are doing today to not only stem the tide but reverse the direction of the newspaper industry and enhance their communities at the same time.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.