Miserable newspaper sales figures

November 25th, 2009

Last week’s newspaper circulation figures indicate that we may have joined the many countries seeing a rapid decline of the industry.

Only one daily and one Sunday newspaper were the exception as sales plunged. Usually there are some that go up and some down, but this time it plummeted across the board.

This came as one newspaper, the Weekender, closed and its parent company, media group Avusa, announced dismal results. Another, Independent News and Media, has to watch as its parent company in Ireland goes through massive corporate restructuring to survive a crippling debt load and huge losses in some of its papers.

Until now, we have been sheltered by the rise of the new tabloids, notably the Daily Sun. The extraordinary success of this paper meant that, as in India and China, it appeared that there was still growth potential in our industry. This has been bolstered by the expense of internet bandwidth.
But the “traditional” newspaper industry – the established papers – were either in decline or stagnant. Some, by virtue of their dominant positions and a policy of harvesting profits – rather than investing in the future – still made large profits.

Now the Daily Sun’s growth spurt has stopped, and it even lost a few percent in this round of circulation counting. The only papers that grew were its sister Afrikaans tabloid, Die Son, and Isolezwe ngeSonto, the Sunday edition of the thriving isiZulu paper.

And recession has trimmed everyone’s profit.

One would expect a circulation decline in a recession, but there are serious questions as to whether the sales and the lost revenue will come back. Avusa is hugely dependent on employment advertising and Independent News and Media on classified advertising, two sectors which work better on the Internet than in print. Will these adverts come back to print after the recession? Even if they do, how long will they stay in print?

It is too soon and simplistic to talk about the death of print, but you can expect upheavals in this business over the next few years, and probably massive consolidation.

Can the Sunday Times, the only bit of Avusa which makes substantial profit, continue to carry the whole group, as it has for many years? Can its free-to-subscribers daily edition, The Times, survive the drop in employment advertising? An attempt to sell the paper to consumers has fallen flat, with paid sales hitting a pathetic 2 399 copies. It must be costing a fortune to give away 137 000 copies five days a week, though CEO Prakash Desai predicts that the daily will break even in a year. Let’s hope so, as it has been a lively addition to our daily diet.

Already, there has been significant behind-the-scenes changes in many of the newspaper operations. The two biggest owners, Media24 and Independent, have been consolidating their editorial operations, so that the Afrikaans newspapers and Independent’s titles across the country are now largely local editions of the same national paper.

Cost-cutting might help for a few years, but in fact what is going to be required is investment in the generation of essential news and information which people are prepared to pay for. The big change is that people can get more information for free, and news sources that don’t invest in adding value – in other words, in good journalism – are not going to last long.

If internet bandwidth costs drop, as expected, then you can expect further drama among newspapers. It has long made sense for Caxton, the fourth big player in newspapers, to merge with Avusa. The former has print capacity, the latter needs it, but personalities and outsize egos have kept them apart. In the end, the economics of the media business will probably force it.

There are some who believe that within a few years we will have only two major groups in the country, and these would likely be Caxton-Avusa and Media24/Naspers.

Ironic, isn’t it, that the newspaper market should be less diverse than it was under apartheid censorship, when there were a number of smaller, “alternative” voices of the right and left in the market. We still have the feisty Mail & Guardian, and it has successfully seen off a challenge from the Weekender, so let’s hope it can continue to stand on its own as a beacon of independence.

But the truth is that if we want true diversity, it is going to have to come from the electronic media.

*Business Day 25 November 2009

Entry Filed under: Anton Harber, Journalism, Print