As the United States continues to experience difficult economic times, many businesses including the media have been forced to make adjustments to survive. As the general public has decreased its’ overall spending, newspaper and other media forms’ sales and advertising have also dropped, causing financial losses for their owners. Media owners are strategically working to stay afloat in the midst of this global crisis as well as continue to compete for the business and loyalty of their customers. In this paper, we will take a closer look at several media competitors, including newspaper, television, radio, and website-based news, and how they are managing to sustain themselves during this challenging recession.
In the U.S., news is often provided to the public in the form of newspaper, radio and television. Due to technological advances, most newspaper, radio, and television news stations also own a website and post their daily news on their site as well as offering it through the newspaper, radio or TV. The media competitors, which include Media General, Gannett, Young Broadcasting, E. W. Scripps, Gray Television Inc., and Citadel Broadcasting, all provide news in both newspaper/TV/radio and website formats.
Media General and WJHL-TV
Media General (2009) publishes 22 daily newspapers, 250 weekly newspapers, and operated 19 network-affiliated TV stations nationwide. The company’s history dates back to 1950 when a man named James A. Cowardin founded the Richmond Dispatch newspaper. Within 11 years, the newspaper was circulating 18,000 papers and was the only Richmond paper to survive the Civil War. Over the years other newspapers and TV stations that are now a part of the agency were created, but it wasn’t until 1969 when Media General came into existence. From that point on, Media General began to purchase and acquire the various publications and stations that are currently within their media empire (Media General, 2009).
Media General, Inc. is a diversified media company with interests in daily and weekly newspapers, broadcast television, and newsprint production, mostly in the southern and eastern United States. In December 2000 the Richmond, Virginia-based company purchased Spartan Communications for $605 million, underscoring its long-term goal of remaining a top media player in the Southeast. Investor ‘Super’ Mario Gabelli owns approximately 27 percent of the company. An additional 11 percent of the company is owned by the founding Bryan family, which controls the board of directors (FundingUniverse, 2009).
Media General (2009) publishes almost 300 newspapers including The Richmond Times-Dispatch, The Tampa Tribune, and The Winston-Salem Journal. The company also owns and operates 18 network-affiliated TV stations, reaching over eight percent of households in the United States. Additionally, Media General has over 75 online enterprises including DealTaker.com, Boxerjam, and Blockdot (Media General, 2009).
Media General (2009) has suffered great financial loss with the current state of the economy. On April 17, 2009, Media General posted a press release discussing their first quarter losses. According to the release, the company reposts a net loss of $21.3 million during the first quarter of 2009 comparing to a net loss of $20.3 in 2008. In response to the losses they have experienced, Media General has suspended its 401K plan matching and unpaid furlough days, as well as its’ Board of Directors suspending the dividend. In addition, the company laid off almost 300 workers on March 31, 2009, and announced that effective May 31, 2009, it will freeze its pension plan (Media General, 2009).
Media General (2009) reports that profits from their Publishing Division are down 78% from last year. Advertising decreased 25.2% and total revenues declined 20.1%. Despite its losses, there are a couple positive reports. Their circulation revenues increase $990,000 which was a reflection of price increases for singe copy and home delivery in several of their markets. Revenues for their Interactive Media Division have also increased 24.5% compared to last year (Media General, 2009).
Gannett & WBIR
Gannett (2009) is another leading media company, publishing 85 daily newspapers in the US, their most popular being USA Today. In addition to the daily papers, the company publishes 850 non-daily papers nationally. Internationally, Gannett is also very popular and active. The company publishes 17 daily newspapers and 200 weekly newspapers, magazines, and trade publications in the United Kingdom. Gannett operates 23 television stations nationally including Knoxville’s WBIR, with a total market over 20 million household. Like Media General, Gannett owns internet businesses including CareerBuilder and ShopLocal that have earned them a large online audience (Gannett, 2009).
Referring to itself as a diversified news and information company, Gannett Company, Inc. owns 101 daily newspapers, including the best-selling daily newspaper in the United States, USA Today, which is also available in 60 countries worldwide. Gannett also owns more than 20 television stations covering roughly 17 percent of the United States. Although the company’s focus is primarily in its newspaper and broadcasting properties, it operates a news service and is also involved in commercial printing, telemarketing, data services, and news programming. The company also owns and operates over 130 web sites in the United States and another 80 in the United Kingdom. Headquartered in Arlington, Virginia, Gannett maintains offices in 43 states, the District of Columbia, Guam, the United Kingdom, Belgium, Germany, Italy, and Hong Kong (FundingUniverse, 2009).
The company was founded in 1906 by Frank E. Gannett and his associates. In Elmira, NY, the founders merged two local newspapers, creating the Star-Gazette. The paper gained quick success and by 1912, they purchased the Ithaca Journal. In 1918, they moved to Rochester, NY, and purchased two more papers, merging them into The Rochester Times-Union. The company’s holdings were under the name Empire State group until in 1923, when Gannett bought the holdings of his associates and formed the Gannett Co. Inc. Mr. Gannett aggressively expanded his company, continuing to acquire newspapers as well as radio and television stations. In 1986 the company relocated its’ headquarters to Arlington, VA and then again in 2001 to McLean, VA, where it is currently located. Gannett’s success has continued over the years, reaching international borders, despite Frank Gannett no longer being the man in charge. The torch of leadership has been passed several times during the last 100 years with the current President and CEO being Craig Dubow. It is reported that Gannett employs approximately 41,500 workers (Gannett, 2009).
On April 16, 2009, Gannett (2009) released to the public its’ first quarter results. Like Media General, Gannett also has experienced loss during their first quarter in comparison to last years’ first quarter. Gannet reports shares being down to $0.34 a share currently as compared to shares being at $0.84 a share in the first quarter of 2008. Publishing revenues were down 26.9% from last year and advertisement revenues declined 34.1%. Circulation revenues were down 3.1% overall, however, domestic circulation was up 1.0% due to the price increase in several markets (Gannett, 2009).
Gannett (2009) has responded to its losses in a similar fashion as Media General, reducing staff and ceasing furloughs and pensions. Gannett attributes their financial losses to the economic status of advertising in both the US and UK. Also parallel to Media General, Gannett is hopeful for the future of their company, placing emphasis on their online businesses. They report increases in digital segment revenues from CareerBuilder and ShopLocal (Gannet, 2009).
Young Broadcasting & WATE
Young Broadcasting Inc. is described by FundingUniverse.com (2009) as follows:
Young Broadcasting Inc. owns and operates 13 television stations and a television advertising sales firm, Adam Young Inc. Young Broadcasting’s station properties include six affiliates of American Broadcasting Companies, Inc. (ABC), four affiliates of CBS Inc., and two affiliates of the National Broadcasting Company, Inc. (NBC). One of the company’s stations, KCAL in Los Angeles, operates as an independent station. With the exception of KCAL and San Francisco’s KRON, Young Broadcasting’s television properties are located in smaller markets. The company’s stations include: WTEN in Albany, New York; WRIC in Richmond, Virginia; WATE in Knoxville, Tennessee; WBAY in Green Bay, Wisconsin; KWQC in Davenport, Iowa; WLNS in Lansing, Michigan; KELO in Sioux Falls, South Dakota; KLFY in Lafayette, Louisiana; WKBT in La Crosse, Wisconsin; and WTVO in Rockford, Illinois (FundingUniverse.com, 2009).
Young Broadcasting was founded by the father-son team of Adam and Vincent Young. In 1944, Adam started his own company, Adam Young Inc., selling airtime to advertisers for broadcasters. In 1971, his son Vincent joined his business and in 1986 he convinced his father to stat as second company that owned TV stations, Young Broadcasting. In September of 1986 the Young’s acquired their first two stations, WNLS and WKBT, and by the end of the 80’s they had acquired a total of six stations (FundingUniverse.com, 2009).
WATE (2009) is Knoxville’s first television station and has been operating for over 50 years. It began as WORL-TV in 1953. It quickly grew and in 1962, purchased Greystone, a historical building, to expand its operations. It currently employs over 100 people and is owned by Young Broadcasting of Knoxville Incorporated (WATE, 2009).
In February of 2009, Young Broadcasting filed Chapter 11 Bankruptcy. The company’s Chairman, Vincent Young, reported that the company had over $20 million in cash and had no plans of laying off workers or shutting down operations. He claimed that this was a voluntary action taken by the company to become more financially secure and reduce debit (WATE, 2009).
Citadel Broadcasting & WIVK
Citadel Broadcasting Corporation (2009) is the United States’ third largest radio group. It operates 165 FM stations and 58 AM stations, as well as ABC Radio Networks which includes nearly 4,400 radio affiliate stations. The company employs approximately 4,500 people and its headquarters are in Las Vegas. Farid Suleman has been the company’s CEO and Chairman since 2002.
As stated on FundingUniverse.com (2009), Citadel Communications Corporation ranks among the top six owners of U.S. radio stations in terms of both revenue and number of stations owned. The company specializes in mid-size markets and has an ownership presence in nearly every region of the country. Following the passage of the Telecommunications Act of 1996, which raised ownership limits in single markets and eliminated the national ownership limit on radio stations, Citadel spent more than $1 billion to acquire more than 170 radio stations from 1997 through the end of 1999.
Citadel’s history begins with founder Lawrence Ray Wilson in 1984. He began Citadel Associates Limited Partnership (CALP) with the acquisition of two radio stations in Tucson, Arizona. In 1990, Wilson became a partner in Citadel Associates Montana Limited Partners (CAMLP) that was created to operate and own stations previously owned by CALP. In 1991 Citadel Broadcasting Company became incorporated as a Nevada Corporation and in 1992 Wilson purchased all of the radio stations owned by CALP and CAMLP (FundingUniverse.com, 2009).
On the local front and one of its’ many acquisitions, Citadel owns Knoxville’s WIVK. The station was originally founded and owned by James A. Dick of Dick Broadcasting in 1952 (WIVK, 2009). After almost 50 years of ownership, Dick Broadcasting sold 11 of their stations including WIVK to Citadel (Business Wire, 2000).
Financially, Citadel is experiencing hardships like their competitors. In reviewing their fourth quarter reports for 2008, their revenue had decreased 12.7% from the year prior. Citadel also faults the radio industry decline in advertising as the reason for the loss. Despite significant loss in the fourth quarter, Citadel reports senior credit facility debts are in compliance. However, in expectation of first quarter losses for 2009, they are currently working with their lenders to receive a wavier or amendment to its senior credit facility (Citadel, 2009).
Gray Television & WVLT
As reported by FundingUniverse.com (2009):
Gray Communications Systems, Inc. owns and operates businesses in three media segments: broadcasting, publishing and paging. Gray’s broadcasting division includes seven network-affiliated television stations in medium size markets in the southeastern United States, of which six are ranked number one in their respective markets. The broadcasting division also owns and operates two satellite uplink businesses. Gray’s publishing division consists of three daily newspapers and two weekly, advertising only publications (FundingUniverse.com, 2009).
Gray Television Inc. owns and operates 36 television stations in 30 market, including WVLT, and maintains its headquarters in Atlanta, GA. Grey Communications was founded in 1946 by James H. Grey with the purchase of the Albany Herald. In 1954, he began the only TV station in Albany, GA and for a while he was the owner of the city’s only newspaper and radio. Gray died in 1993 and his family was unable to maintain the company due to controversy over his will. In 1993 a major investor helped get the company moving again and began media acquisitions across the US southeast. Currently Gray Communications employs over 1,000 people (FundingUniverse.com, 2009).
Gray Television (2009) reported first quarter 2009 results on May 8, 2009. The company’s total net revenue has decline by 14% compared to 2008. The company attributes financial declines to the recession and expects to see second quarter local and national revenue losses as well. In response to losses, the company is being proactive by reducing staff and operational costs, as well as amending their senior credit facility (Grey Television, 2009).
E. W. Scripps & Knoxville News Sentinel
The E. W. Scripps Company or Scripps (2009) owns and operates newspapers in 14 markets, as well as 10 TV stations and other media including Scripps Howard news Service and Howard Media. In the Tennessee market, Scripps owns Knoxville News Sentinel, known as Knoxnews.com, which operates both govolsxtra.com and Knoxville.com.
E. W. Scripps (2009) was founded in 1878 by Edward W. Scripps. His first newspaper was started in Cleveland and called the Penny Press for its’ affordable price. In addition to TV and newspaper, Scripps is involved in other media including TV networks, the Scripps Spelling Bee and comic characters including Peanuts and Dilbert. In the past 20 years, Scripps has launched or acquired TV networks including HGTV, The Food Network, DIY Network, Fine Living Network, and Great American Country. Currently, Scripps has approximately 7,200 employees (E. W. Scripps, 2009)
The Scripps owned newspaper that services the Knoxville area is the Knoxville News Sentinel. In 1886, John Trevis established an evening paper called The Sentinel. The Knoxville News was created 35 years later in 1921 as a competitor to The Sentinel by Roy Howard and Robert Scripps. In 1926, The Knoxville News took over The Sentinel and merged the two papers, becoming The Knoxville News-Sentinel. The Knoxville New Sentinel currently circulates 118,500 daily newspapers and 148,000 Sunday newspapers (E. W. Scripps, 2009).
In May of 2009, Scripps announced first quarter consolidated revenue losses of 20% compared to the first quarter of 2008. The company has been attempting to leave the Denver market and was unsuccessful in finding a buy for the Rocky Mountain News, resulting in shutting down the operation. The company also closed down its’ Albuquerque newspaper for the same reason. In their segments, Scripps television revenues decreased by 20.5%, newspaper fell 21.7%, and other media revenue decreased by 2.1% as compare with the previous year’s first quarter (E.W. Scripps).
In response to the economic downturn, Scripps (2009) has attempted to cut costs by closing down certain operations (such as the Rocky Mountain News), ceasing 401K matching, reducing salaries, freezing the pension plan, and eliminating bonuses. Despite these cuts, the company expects further losses going into the second quarter. However, the company reports having lower debts than many of their competitors and views this as a competitive advantage (E.W. Scripts, 2009).
Newspaper Circulation & the Future of Newspapers
The newspaper industry is in a state of crisis. Although circulating newspapers are still profitable, analysts are unable to decipher the fate of the newspaper industry. Since 2003, newspaper circulation has been falling at a rapid rate. In September of 2008 it was reported that overall newspaper circulation had dropped 4.6% for daily papers and 4.8% for Sunday papers over a six month period (Journalism.org, 2009).
According to Journalism.org (2009), several metropolitan newspapers and newspaper companies are closing or at risk for shutting down. As stated previously, The Rock Mountain News, which in 2006 was rated #9 in the 100 Top Newspapers in the US, circulating 704,806 papers, shut down in February (Journalism. Org, 2006; Person Education, 2006). One March 17, 2009, The Seattle Post-Intelligencer closed its doors, now the 146 year old operation is only available online (Richman & James, 2009). The San Francisco Chronicle and the New Haven Register are also at serious risk. At the company level, the Tribune Company, GateHouse Media, Journal Register, Philadelphia Newspapers, and the Minneapolis Star-Tribune have all either filed bankruptcy or are drowning in debt (Journalism.org, 2009).
Journalism.org (2009) credits the struggling economy along with two bad industry decisions for the decline in newspaper sales. First, although newspaper rates have increased, experts believe that US papers are relatively cheap in comparison to prices internationally. However, raising the prices now may not work with our current economy and cautious consumer spending. Second, newspapers are criticized for offering news content online for free. This availability has caused reductions in purchasing even though the information still generates from costly operations (Journalism.org, 2009).
Industry experts believe that circulation rates will continue to drop over the next three years. Despite the numbers, newspaper publications continue to be a viable business and experts believe that it could survive for many years if it is able to control its costs. Newspaper companies are working hard to cut back on operational costs, as well as trying new strategies like partnering with others in the industry (such as Yahoo! and Amazon’s Kindle) (Journalism.org, 2009).
In response to changing times and a challenging economy, newspaper competitors are attempting to redefine themselves. Journalism.org (2009) reports:
For a start, many newspapers have ditched the traditional circulation department in favor of a broader audience development and marketing department. Some of the traditional functions, including delivery and customer service calls, are prime candidates for outsourcing to save money. What remains crucial for the newspaper is to identify groups of audiences to be served within its market and a suite of products that will deliver those audiences to advertisers. (Audience section, ¶ 19)
Analysis & Review
As like many businesses in the US, media competitors are feeling the pressure of this recession. Customers, fearing job loss or experiencing financial strain are spending less resulting in decreased revenues for companies. Many companies are scaling back in efforts to survive the current crisis; some are closing down, unable to continue amidst all of the losses.
In this paper we have reviewed six US-based media competitors: Media General, E. W. Scripps, Gray Communications, Gannett, Young Broadcasting, and Citadel Broadcasting. Each of these six media giants own and operate many newspapers, radio, and TV stations, along with other media related businesses. Although each of the six continues to operate, they have all experienced revenue loss and are making adjustments to stay afloat during difficult economic times.
In concluding this paper, there are still a few questions that require thought and analysis.
First, it is important to assess what seems to be working for some media companies, but not others. In experiencing financial loss, all of these companies have attempted to manage their costs by downsizing, freezing pension plans, stopping 501K matching and bonuses, amending their senior credit facility, etc. These actions seem to be working to a certain extent by controlling some of the loss. However each company still is experiencing great loss and expects to continue to seeing these losses. All of these companies also have online media forms such as websites and other internet-based businesses. This appears to be helping with some of the loss due to many companies reporting having revenue gains in this area. Some companies such as Scripps also have other media businesses like the Scripps Spelling Bee, and popular characters including Peanuts and Dilbert. Scripps has also diversified their portfolio by including TV networks like HGTV and The Food Network. Success in their other businesses may assist with newspaper losses. Alternatively, Gannett owns and operates websites including CareerBuilder and ShopLocal which are popular sites during hard economic times. Companies are also cutting costs by closing down operations that are draining them such as the closure of the Rocky Mountain News. In addition, all of these companies are utilizing their websites to attract new subscribers and advertisers.
Second, we should provide recommendations based on what is actually working for newspapers companies. A diverse portfolio seems to be essential right now. Media companies that only conduct business utilizing TV, radio, or newspaper media forms are more susceptible to financial struggles as the media industry is being hit hard by the recession. Companies such as Scripps who have various entities within their empire can invest more energy and resources into areas that are more profitable right now. With customers being cost conscious, they may be utilizing HGTV as a source to save them money through do-it-yourself projects. Similarly Gannett can use their ownership of CareerBuilder to enhance their company. With the climbing unemployment rate, people are running to job websites like CareerBuilder to find work. Adverstisers are more likely to run ads on sites like CareerBuilder as well as employers are more willing to use this service. Following the lead of these two companies, media competitors should be willing to build a more diverse business if they want to survive.
Utilizing their websites to attract customers and reducing operational cost also seems to be working for media competitors. With most US households having a computer and internet access, it is vital for every reputable business to operate a website and us it to gain business. Although websites offering free information maybe financially harmful to the industry, now that it has begun, there is no turning back. Competitors must now use this tool to fight for the business of subscribers and advertisers. Companies with the latest news and best sites are more likely to attract viewers, internet traffic, and overall business. In addition, cutting costs can also be an effective tool for business survival. Stopping bonuses and 401K matching may be able to salvage some jobs and is preferred over company closure or layoffs. Unfortunately, some cuts include layoffs and reductions or ceasing of the benefits that employees deserve.
Finally, we have to consider the future direction for newspapers. It appears that many newspapers will eventually discontinue print versions and become online only publications. In the larger metropolitan areas and with some of the bigger newspaper sellers such as USA Today and the New York Times, those publications will continue to exist and sell as always. Some publications might stop daily service and become Sunday only publications in attempts to reduce costs. Website-based news will continue to grow as customers look for affordable and convenient methods to get the news. In addition, newspaper prices will probably increase for to assist companies with debt and operational costs.
Starting and operating media is not an easy task, especially during unstable financial times. Many of the media competitors listed in this paper created their empires during a time when receiving the news through newspaper, TV, and radio was the only media form available. The introduction of the internet and technological advances has reduced the need for printed publications and even TV or radio broadcasting. People are able to retrieve news and other pertinent information by clicking on a website or a button on their cellular phone. Customers do not have to wait until the five o’clock news comes on or the newspaper is delivered in the morning to be updated on the latest happenings worldwide. Instead, the whole world and all of its news is available at customer’s fingertips. Additionally, with the current financial crisis that has hit the US, businesses and individuals are reducing the spending resulting in less advertising dollars, less subscriptions and ultimately, less business. Media companies that want to create and maintain an advantage over their competitors or survival in the current economy will have to be very strategic in their efforts to control costs and offer products and services to customers that will attract spending and increase profit.
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