B&C Guest Blog: The Existential Crisis Facing Local Journalism

As the coronavirus pandemic continues, the need for high-quality local journalism is greater than ever. Yet the sources of local journalism – local newspapers and television stations – are now challenged as never before in being able to offer their communities the news they need in this time of crisis. Swift and decisive action is now needed to save local journalism.

Blog author William Kolasky is a partner in the Washington, DC office of Hughes Hubbard & Reed LLP.

Blog author William Kolasky is a partner in the Washington, DC office of Hughes Hubbard & Reed LLP. (Image credit: Hughes Hubbard & Reed LLP)

Since the rise of the global internet more than a quarter century ago, readership and advertising revenues of local newspapers have plummeted. Because of that, as The New Yorker reports, “[b]etween 2004 and 2018, nearly one in five American newspapers closed [and] print newsrooms have shed nearly half of their employees.” Newspapers never fully recovered from the 2008 recession, and local TV filled the void left in local news. As a result, Americans now rely on TV to provide local news. According to the Pew Research Center, today, 41% of Americans say they prefer to get their local news from TV, compared to 13% who prefer print newspapers. Yet, per The New Yorker, local TV stations employ only “a fraction” of the journalists that newspapers once did.  

Local TV stations, too, face growing competition from cable TV and online video streaming. Pew Research Center data shows that local TV advertising revenues dropped roughly 7.5% from 2010 to 2019. Broadcasting & Cable reports that ad sales executives surveyed by the Internet Advertising Bureau stated that, so far this year, due to the coronavirus pandemic, those revenues have dropped a stunning 27%. According to the National Association of Broadcasters, some broadcasters have reported as much as a 90% decline in ad revenue. Until this year, local stations were able to supplement lost revenue with growing revenues from licensing fees, but with no live sports and skyrocketing unemployment, cord-cutting is likely to explode. As a recent survey by The Trade Desk shows, only 26% of young adults plan to keep their cable subscriptions, putting this revenue stream at risk.

As their two main sources of revenue decline, local TV stations – especially in smaller markets – are likely to have to cut back their local news coverage. This is happening already.  For example, Gray Broadcasting discontinued local news on its NBC affiliate in Casper, Wyoming after the FCC and DOJ blocked its acquisition of the CBS affiliate in that market. In a statement to TVNewsCheck, Gray explained that, without the cost savings the merger would have achieved, it could no longer afford to produce local news in Casper.

As a result of lost revenues, local newspapers were already in a fragile state before the pandemic struck. As The Guardian reports, local newspapers face an “‘extinction-level’ crisis,” just when our need for local news is greatest. Local TV stations now face a similar crisis.

Like the spread of COVID-19, this crisis could have been mitigated with earlier intervention. The FCC has been aware of the growing competition local newspapers and TV stations face from cable and new digital media for decades and has made repeated efforts to relax regulations first adopted generations ago to enable them to compete with these new media more effectively. To do so, the FCC has sought to eliminate its half century old prohibition on the cross-ownership of newspapers and broadcast stations in the same market and to loosen its even older ban on the ownership of two or more full-power TV stations in a market and its related ban on stations entering into cooperative arrangements designed to achieve needed cost savings in smaller markets.

These efforts, unfortunately, have been blocked repeatedly by a single three-judge panel of the federal appeals court in Philadelphia. As a result, rules first adopted in the era of black-and-white television continue to strangle efforts by local newspapers and TV stations to compete on a level playing field with these newer media for both viewers and advertisers.  

Fortunately, efforts are now underway to save local journalism. Both the FCC and the National Association of Broadcasters have asked the Supreme Court to overturn the Philadelphia court’s most recent decision blocking its regulatory reform efforts. A bipartisan group of U.S. Senators have also asked Senate leadership to waive the Small Business Administration’s affiliation rules to allow otherwise ineligible local media outlets to receive small business relief funds in federal coronavirus aid programs so that they can keep the public informed during this crisis. As the Senators’ letter notes, the CARES Act waived the affiliation rule for hotels and restaurants so those establishments could “benefit from small business assistance,” and it is critically needed for local media as well.

While these are positive steps, they do not go far enough in addressing the longer-term issues that threaten local news. Structural changes are necessary to ensure the viability of local journalism. Local news organizations need a limited antitrust exemption to negotiate with tech giants to secure a fair share of the revenue their content generates. Legislation with bipartisan support, the Journalism Competition and Preservation Act, was reintroduced last year to allow newspapers to negotiate collectively with Google and Facebook. This proposed legislation should be expanded to allow local TV stations likewise to negotiate jointly with these giant tech companies that are fast becoming tollgates for streaming local news content to viewers. 

Finally, the Justice Department’s Antitrust Division needs to abandon the overly narrow way it defines media markets. By treating each medium as a separate market, the Division has repeatedly blocked TV and newspaper mergers that would have generated important efficiencies, while ignoring the reality that in the digital age all media now operate in a single market for both viewers and advertisers.

Time is short, and the coronavirus pandemic has made the danger to local journalism greater than ever. Action is needed now.

William Kolasky is a partner in the Washington, DC office of Hughes Hubbard & Reed LLP, where he represents a number of media companies. His colleagues Philip Giordano, Amanda Butler, Nicole Sarrine, and James Canfield assisted in researching and writing this article.

The opinions expressed in this article are the author’s own and do not reflect the views of Hughes Hubbard & Reed LLP.

William Kolasky

William Kolasky is a partner in the Washington, DC office of Hughes Hubbard & Reed LLP, where he represents a number of media companies.