Traditional media struggles to find profit model

The newspaper industry’s proactive message that it’s reaching more readers than ever before belies the fact that the ink and pulp medium continues to suffer major setbacks.

For the PR world seeking earned media opportunities, the latest struggles means traditional media just got that much harder to work with. More beats will go uncovered, already overworked reporters will have more to do, and news holes—the space saved for editorial content—will become even more anemic.

The Wall Street Journal reported this week that several large newspaper companies reset their advertising revenue expectations downward, following a dismal first half of the year, and an even worse start of the third quarter.

For the last two years, media companies have touted that while circulation figures for actual newspapers have declined, an increasing number of people are reading papers’ online versions. The problem is that the industry hasn’t figured out how to offset the decline in circulation and advertising with online ad dollars.

With weakening advertising, companies are once again reverting to layoffs, reminiscent of the 2008 and 2009 industry downturn. In fact, earlier this year, Gannett, publisher of USA Today, announced job cuts. And on Wednesday, the Bay Area Newspaper Group announced that it’s consolidating several of its California publications and laying off 120 people in the process.

The company, owned by Denver-based Media News, attributed the changes to “rebranding.” In an interview with KQED, Carl Hall of the Pacific Media Workers Guild put it rather bluntly:

The newspaper industry as a whole has not been able to figure out what kind of business plan will work in the environment we’re in. You don’t see a lot of creative vision out of the newspaper business (and) we the workers are paying the price.

We were hoping maybe by now we’d be in a recovery, but it doesn’t look like that’s happening.

Newspaper deals have all but dried up. The only pending deal, for MediaNews Group Inc. to buy papers owned by Freedom Communications Inc., was abandoned due to financing issues.

Adding insult to injury, the American Society of News Editors eliminated a handful of positions and is looking for partnerships with journalism schools for office space and “operational synergies.” The group is known for its support of First Amendment rights and leadership.

There is a bit of a silver lining as some newspapers seem to have realized the back-to-basics notion of staying in touch with the local communities they serve.

This renewed focus on hyper-local news means that many newspaper companies are redoubling their efforts to expand their community news coverage. The Dallas Morning News this week announced the launch of an expanded local section, designed to increase the community-specific coverage. It includes bread and butter features such as good kid news, the police blotter, school briefs, and community voices.

As companies seek to continually engage with their key constituents, these hyper-local news outlets—both on and off-line—provide a growth area for the industry.