TV Are the networks breaking down?

Internet and the digital technologies have already deeply disrupted the musical world, the press and the publishing industry. The next step, in the US and very soon in Europe is the breaking down of broadcast television. Until recently the networks had to face the challenge of theVOD and the fact that tens of millions of viewers want to watch their favorite programs any time, when they like. The boradcasters have complied and provide services free for a short time and then paying where you can get all the programs already shown in the air.

Now things look a bit different. The digital geants such as Google, Apple, Amazon or Netflix want to be producers and programmers. They are starting to invest in programs of entertainment or fiction, like "The house of cards" from Netflix. They also buy the rights of series and films to the Hoollywood giants, only too willing to get more cash. Youtube, the video branch of Google is building up full channels which you can get on the Web at a bargain price.

The competition can be deadly for the networks in the States or in Europe, now that a majority of the population is starting to use tablets which are cheaper and more user friendly. France which owns the most successful European support of video, Dailymotion should have a second thought before selling it to just anybody. What if Dailymotion is the successor of TF1?

Politico drops local television

 Politico, drops local television. In a nutshell, it is the message sent last week by Mr Allbritton the 44 years old head of the Allbritton group. This powerfull media enterprise based in Washington DC has made a significant move towards the digital age. It is about to sell its 7 local TV's including a very prosperous station in DC for about 300 millions dollars to invest in digital news. And it keeps and intends to develop its flagship activity in Internet, Politico, the very successful web and print publication on the US political life.

Allbriton stated that Politico that started 4 years ago with 2 top journalists from the Washington Post employs now 200 people and is profitable. It is fairly obvious that new websites will be lauched thanks to the big money collected through the sale of the local TV's. Two years ago, at a conference in Paris a Politico executive hinted that a public could be interested by an international affairs site. It would be a costly investment but the financing is there.

At the same time, the Washingon Post is steadily declining. for the first term of 2013, its sales and its advertising income are down and the future looks very dark indeed. In DC it is a tale of two medias.

Aids to the press

The report on the reform of aids to the press was published last week on the website of the ministry of Culture. Its content confirmed what I wrote in my blog of April 17. The government is willing to keep a low VAT on all kinds of publications including electronic news services. Moreover the looming crisis of Presstalis influences strongly the debate and the report. It is obvious that the generous subsidies to the postal service will be drastically reduced in order to finance the huge bill of a large buying out of Presstalis employees. A conservative evaluation puts it at 100 millions euros and nobody is willing to foot the expenses.

Still, there is no long term design for a new organization of the ailing French press.  

french press less subsidies

The ailing French press will get less and less public subsidies. Up to now, government aids amounted to 10% of the budget of newspapers and magazines. However, the French administration is broke and a major upheaval of the cosy system enjoyed by the press since 1945 is about to happen.

It is likely that newspapers and newsmagazines will keep a lower VAT and some help to home delivery but the other publications will have to face a sharp rise in postal rates due to the massive reduction of Post office subsidies. Groups like Mondadori, Prisma or Bayard will suffer more than le Monde or le Figaro.

Still, the government faces drastic choices for the future. The French delivery system is in shambles. According to some experts its reorganization could cost up to 250 millions euros while nobody, neither the publishers or the state is willing or able to pay. A massive transfer from postal service and Presstalis to home delivery managed by the regional newspapers networks implies a costly reorganization. And internet services are thriving on fixed and mobile supports.

A big question looms above everything else: is the media industry too complicated to be managed by the not very competent government?Most European countries say yes.

French regional newspapers. The vanishing ads

The last Pew report stresses the crisis of the American newspapers, devastated by the steady fall of advertising. It is the same story in France. In 2012, the regional press lost 60 millions euros from 2011, i.e. 6%. The global advertising market fared much better, thanks to TV and digital supports that kept growing.

Between 2007 and 2012, the downward trend of the press contrasted with the growth of the global market so that its share of the advertising market fell from 40 to 30% as the share of TV went up by 5 points. so the net loss of the press in 5 years is 1.6 billions euros. It explains why newspapers and magazines never stopped downsizing during that period;

As far as regional dailies are concerned, their main worry is the loss of classified ads moving massively to the web. Between 2007 and 2012, classified ads income went down by 31% as compared to local advertising -17% and national advertising -16%.

What hope is there with advertising on the local press websites? Things improve but very slowly. In 2012, local ads on the web made only, 55 millions euros and 7% of the regional newspapers  advertising income. It is 20% more than the year before but not enough to make for the global loss of revenue. National ads on the web are not so dynamic. Last year, they grew by1.6%.

The global growth of income was then 9 millions euros as compared to a loss of 69 millions in print ads.

In the long term, a balance between the print and the web will be found but it will take many years and don't forget that collecting news is a costly job.

Some news from the American media

The annual reports of the Pew research center on the media is a landmark for all media experts. It gives an exhaustive account of the health of the American media. It is also a useful reminder for the Europeans who are aware that what happens in the US will soon cross the Atlantic;

The Pew states that the American public is still very interested by the news. However, 50% of the population use digital media to get informed. This way, they have access to all media which are delivered in a way or another through the Web. But, and it is a big but, the offer is not so great. Due to economic problems the journalist population is schrincking. In 2013, the newspapers employ 40000 people which is the same level as 1978 and it keeprs going down.

 Local television, an important media in the US is following the same way. It devotes 40% of its space to traffic, weather and sports. Politics and government are limited to 3%. It is obvious that investigative journalism is stalled thanks to a lack of  money and human means. Local reporting suffers as much as national or foreign news.

To face a dramatic financial crisis due to the fall of advertising, the newspapers develop paying services. Out of 1380 American newspapers, 450 have adopted the paying wall and more will do the same this year.

Cable news channels are fairly successfull but they are more and more partisan to reach a public which wishes to be comforted in its opinions. There again, investigative journalism has not a great future.

What can be done to stop this process which is also apparent this side of the Atlantic? I'll go back to it in another blog.

The worth of newspapers

One of the major upheavals in the press industry has been the abysmal fall of the value of newspapers. In the US where the Boston Globe, the Los Angeles Times and the Chicago Tribune are on sale, their value has gone down by 90% in ten years. None of them is worth more than 100 millions dollars as compared to a billion in the late nineties.

It is of course the same in France. If the group Sud Ouest which is badly in need of cash sells the Midi Libre, it can hardly expect more than 30 millions. Not enough to satisfy the banks, CIC and BNP Paribas, who are the main creditors of the fledgling enterprise. And the Lemoine family and its 30 members would have a lot of trouble to sell the whole group Sud Ouest. Not only its value would be very low, probably inferior to 100 millions, but there is no obvious buyer. The French press groups are too much in trouble to move and no foreigner is much interested by the troubled French landscape.

Magazines and notably newsmagazines do not fare any better. If Rick de Nolf wants to sell l'Express or François Pinault tries to get rid of le Point, they cannot expect any bonus. Potential buyers are rare and tight on money. And yet, it is obvious that the newsmagazines are too many to survive the Internet revolution. Wait a bit. More change is coming.