2019 was a transformative year for the U.S. news media industry, but it was also one of the most turbulent points in its history.
The big picture: There were enormous business challenges, which resulted in an unprecedented number of layoffs, desperate product maneuvers and fire-sale deals.
Driving the news: The impeachment of President Trump by the House of Representatives on Thursday was prompted by a whistleblower’s complaint, but the stage was set by the dogged reporting of many journalists across the country.
- But despite those efforts, the economic outlook of the news industry is still grim heading into 2020.
- The impeachment process has proven that voters are starting to tune out political coverage, which for the past few years has been the news industry’s biggest money-maker. That reality, coupled with an anticipated recession, has newsrooms on edge.
Where things stand: 2019 was a particularly brutal year for older news industries, like newspapers, magazines, television and radio. Revenue for television was down nearly 4% this year, and for print it was down nearly 20%.
- Legacy magazine brands that were once considered must-reads, like Sports Illustrated, struggled to find suitors. Magazine titans like Conde Nast are expected to miss their revenue numbers given a bleak advertising forecast.
- Univision, one of the largest media companies that serves America’s fastest-growing population, is looking for a buyer to help it crawl out of a massive debt hole, driven by a private equity investment gone bad.
Be smart: Legacy industries still continue to serve local news markets, which are mostly void of the same investments financially, and in tech and talent, as national outlets.
- The two biggest local newspaper holding groups — New Media (GateHouse and Gannett) and McClatchy, which collectively house over 700 newspapers — had a combined market cap value as of Thursday of less than $800 million. By comparison, Apple, which this year launched its own news product, is worth more than $1.2 trillion.
- Meanwhile, several other papers serving major markets closed, like the 150-year-old Vindicator in Youngstown, Ohio and the beloved OC Weekly in California.
Regulators, aware of the realities that legacy industries and local media face in a digital world, continued efforts to level the playing field this year, mostly by trying to roll back decades-old rules that may be keeping them from growing.
- But their efforts have proven mostly moot, as most consumers have already migrated away from those mediums to a handful of apps owned by Silicon Valley titans.
- Policymakers did begin to more meaningfully consider regulating internet giants in 2019, but a gridlocked Congress and powerful lobbying forces have so far prevented any meaningful internet regulation from getting passed.
In the markets, a string of highly-anticipated IPOs faltered in 2019, which forced investors in private media companies to push for quicker paths to profit.
- Given that news is traditionally a slow-growth business, many desperate efforts to make money quickly, like launching half-baked subscription or video products, fell short.
- For some media upstarts, that pressure proved perilous. Splinter, the left-leaning news and opinion site, shut down this year after its parent company, G/O Media, was purchased by a private equity company for less than half of what it was worth just three years earlier.
- Its sister company, Deadspin, is now essentially defunct.
The big picture: As a result of these realities, investor sentiment in digital media has begun to slip, and investments in the sector are predicted to decline in the next decade.
- That matters because over the past few years, private investment into media companies soared, at all levels.
- Many of the venture-backed media companies that were expected to go public eventually, like Buzzfeed and Vice Media, no longer seem heading in that direction. Disney this year wrote down all of the $400 million it invested in Vice.