News Industry Takes “Hopeful” Direction, Still Heavily Reliant on Advertising

March 28, 2014

Pew-News-Indus-Revenue-Sources-Mar2014The Pew Journalism Project’s latest annual “State of the News Media” report strikes a more optimistic tone than last year’s “somber” perspective, as the industry is buoyed by the influx, energy and momentum of digital organizations, new entrepreneurs, and an expansion of ways to access news. But the rapid changes in news consumption habits and the emergence of a new set of players haven’t changed the revenue landscape for the time being, as the sector remains heavily reliant on advertising dollars.

The Pew study is a wide-reaching, comprehensive one; following are a few key points to emerge from the study.

Advertising: More Than Two-Thirds of Industry Revenues

The US news industry generates somewhere between $63 and $65 billion in annual revenues, according to Pew’s rough estimate. By comparison Pew cites data showing that Google generated $58 billion in revenues last year.

Much as the newspaper revenue has diversified, there are new sources of revenues for the news industry as a whole, although they have yet to challenge traditional revenue models for the time being.

Much-publicized venture capital investments comprise just 1% of revenues for the time being, while the sector sees about 7% of its revenue coming from non-traditional sources such as event hosting, marketing services and web consulting. The dominant paradigm remains advertising, which comprises some 69% of total revenues. Ad revenue remains mostly the realm of daily newspaper (print and digital combined) advertising (58% share), while TV accounts for close to one-third of sector ad revenues.

Audience revenue – through subscriptions, cable fees and individual giving – is growing and now represents close to one-quarter of revenues. But growth appears to be the result of “more revenue… being squeezed out of a shrinking – or at least flat – base of paying consumers.”

Overall, newspapers account for the largest portion of news revenue, at $38.6 of the estimated $63.2 billion. Trailing distantly are local TV news ($8.9 billion) and cable news ($5.2 billion).

Digital News Consumption

More than one-third – 36% – of US adults watch news videos, per Pew Research Center survey results included in the report. Not surprisingly, youth are heavy consumers, with 48% of 18-29-year-olds watching online news video, although Americans aged 30-49 are equally as likely (49%) to watch online news video. Smartphone owners are about 3 times more likely than those who don’t own smartphones to watch online news video (53% vs. 18%), per the study.

Interestingly, survey results suggest that 7% of US adults post their own news videos to social media and 7% submit content to news sites.

Separately, Pew notes that of the 64% of US adults who use Facebook, close to half (30% of US adults overall) get news from the site. Only 1 in 5 adults who consume news on Facebook think of the platform as a useful way to get news, though.

Meanwhile, half of Twitter users (who represent 16% of US adults) get news on the site.

News audiences for various major social sites differ on a demographic basis. For example, LinkedIn news consumers tend to be high-earners with a college education, while Twitter news consumers are much younger.

Trends: Audience and Economics

The Pew study breaks down some key audience and economic indicators by news medium. The following list excludes alternative weeklies, digital, digital natives, and non-profits, for which aggregate figures were not included.

  • Cable TV

The cable TV audience declined last year as combined median prime-time viewership of the 3 major news channels (CNN, Fox News and MSNBC) fell by 11% to roughly 3 million, the lowest figure since 2007.

The major channels moved in opposite directions in terms of revenue, with Fox News projected to increase its already-leading revenue by 5% to $1.89 billion, while CNN’s increase was limited to 2% (to $1.11 billion) and MSNBC fell by 2% to $475 million.

  • Local TV

Local news viewership increased in each time slot. Morning news audiences grew most rapidly (6.3%), but early evening news also saw a solid increase (3.3%) while late night news was mostly flat (0.1%).

  • Network Evening News

An average of 22.6 million viewers watched one of the 3 commercial broadcast evening news programs on ABC, CBS or NBC last year, representing a 2.3% increase from 2012. It was also the highest average audience since 2008.

Citing Kantar Media data, Pew notes that network TV evening news programs enjoyed a 2% increase in ad revenue during the first three quarters of 2013.

  • Newspapers and News Magazines

Referencing third-party data it says is “influenced by liberalized reporting rules,” Pew reports that total newspaper circulation was up by 3% daily and by 1.6% Sunday.

A majority 55% of newspaper’s audience remains print-only, while 15% read on the print and web and 10% across 3 channels (print, web and mobile). 1 in 10 newspaper readers are digital-only, whether web-only (7%) or mobile-only (3%).

Meanwhile, newsstand sales of news magazines dropped by 2% last year, which was a better result than seen for the newsstand as a whole (-10%). Combined ad pages for the 5 magazines included in the Pew report fell by 13% last year after a 12.5% decline the year before.

Other topics covered in the report include:

About the Data: Full methodological details can be found here.

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