Coronavirus-Driven Downturn Hits Newspapers Hard as TV News Thrives

The coronavirus outbreak has had a major impact on the U.S. economy, and while loans through the federal Paycheck Protection Program may have provided some relief, the news media industry has responded to these financial pressures with closings and layoffs. According to a new Pew Research Center analysis of change in revenue between the second quarters of 2019 and 2020, not all sectors of the news media have been affected by the coronavirus downturn equally.

Newspaper companies have been hit especially hard. Among the six publicly traded newspaper companies studied – major chains that together own over 300 daily papers – advertising revenue fell by a median of 42% between the second quarters of 2019 and 2020.  By contrast, total ad revenue across the three major cable news networks (CNN, Fox News and MSNBC) was steady overall, though there were sharp differences among the networks. While ad revenue for MSNBC and CNN declined by double digits, Fox News Channel’s revenue rose by 41%.

For the five local TV news companies studied (which together own or operate at least 600 individual stations), ad revenue was down in the second quarter of this year, but increases in retransmission fees more than made up for this. Meanwhile, ad revenue for nightly network TV news at the three major broadcast networks (ABC, CBS and NBC) increased over the same period, as audiences have been turning to TV in record numbers for news about the outbreak.

Among the report’s other key findings:

• Digital ads, a newer source of revenue for the newspaper industry, offered little relief in the early days of the pandemic. Digital ad revenue fell by a median of 32% between the second quarters of 2019 and 2020 – even though digital ads reach not only digital subscribers, but visitors to the free offerings on a newspaper’s website as well.
• Newspaper circulation revenue, which had been steady in recent years, also declined in the second quarter of 2020, by a median of 8%. As a result, three of the six newspaper companies studied now have more revenue coming from circulation than from ads.
• In percentage terms, newspaper companies that reported revenue in both periods seemed to fare worse financially in the second quarter of 2020 than they did during the Great Recession of 2007–2009. Ad revenue for newspaper companies also dipped sharply during the Great Recession, with median declines of 11% and 30%, respectively, in the second quarters of 2008 and 2009 among these companies. Still, this does not match the dramatic year-over-year median fall of 42% in 2020. And circulation revenue was roughly steady in 2008 and 2009, compared with the 8% median year-over-year decline in the second quarter of 2020.
• As revenue fell, newspaper companies cut labor expenses. Of the four newspaper companies that reported compensation expenses in the second quarter of 2020, all showed a double-digit percentage decline year over year, with a median decline across the four of 20 percentage points. For most of these companies, labor expenses have been falling steadily over the past decade or more, reflecting the 51% decline in newspaper newsroom jobs between 2008 and 2019.
• Turning to cable news, total ad revenue across the three major networks was roughly steady, up 2% year over year at $422 million. But the story was different depending on the network. Fox News Channel, driven by surging ratings, experienced its sharpest year-over-year second-quarter ad revenue increase going back to 2007, rising 41%. CNN and MSNBC both saw their ad revenue decline, with CNN’s falling 14% and MSNBC’s falling 27% – despite the fact that both networks grew their audiences as well, with CNN more than doubling its total prime-time audience over 2019.
• Political ad revenue – which is predictably cyclical, with even-numbered election years seeing a surge in political ad dollars – was up dramatically from 2019 for all five local TV companies in the second quarter of 2020. But when comparing this year with the midterm election year of 2018, political ad revenue was down for most of these companies – including by margins of more than 30% between the second quarter of 2018 and the second quarter of 2020 for Nexstar, Sinclair and Tegna. Looking further back, however, the data shows that political ad revenue for local TV companies is up across the board when compared with the 2016 presidential election year.
• Retransmission fees, revenue paid by cable providers for the right to carry local TV stations in their home markets, were up sharply in the second quarter of 2020. In fact, retransmission fee revenue at publicly traded local TV companies saw a median year-over-year increase of 37%, possibly driven by spikes in viewership. In real dollars, this equates to a jump of $87.3 million in median revenue, more than making up for the fall in median advertising revenue among these companies ($67.9 million).
• For nightly news programs at the three major networks, ABC, CBS and NBC, total ad revenue rose 11% year over year this spring, outpacing its performance in the comparable presidential election years of 2016 (up 5% year over year) and 2012 (up 5%). This was largely driven by ABC’s 21% rise, though CBS (3%) and NBC (7%) also rose.
• In contrast, total ad revenue fell 4% year over year for these three networks’ morning news shows, which is somewhat unusual compared with the presidential election years of 2016 (up 2% year over year) and 2012 (up 4%). ABC’s morning news ad revenue was roughly unchanged, while CBS and NBC experienced modest declines in the second quarter of 2020.

This report is based on an analysis of financial data from Securities and Exchange Commission filings of publicly traded media companies as well as data obtained from Kantar under contract.