"The News Industry In the Digital Realm Is No Longer In Control of Its Own Future"

Online news hires may have matched newspaper cuts for the first time. Large national online-only news operations began to get into the creation of original reporting in a significant way in 2010. AOL hired nearly 1,000 employees, over half of whom went to the new local news venture Patch.com. Bloomberg Government expects to number 150 journalists and analysts by the end of 2011, doubling Bloomberg’s Washington bureau and Yahoo added several dozen reporters across news, sports and finance. These hiring increases appeared to have compensated for the 1,000 to 1,500 job losses the study estimates the newspaper industry suffered in 2010.

More grim news for newspapers. The newspaper sector endured another year of revenue and audience declines. Advertising revenues fell by roughly 6.4% in 2010 from the year before. Weekday circulation fell 5% and Sunday fell 4.5%. Seven of the top 25 newspapers in the United States are now owned by hedge funds, which had virtually no role in the industry a few years ago. Many of these new owners are turning to other outsiders to turn the business around. One potential silver lining is the finding that 23% of Americans said they would pay $5 a month for an online version of their local paper if the print version were to perish.

Every media sector is losing audience now except online. For the first time in at least a dozen years, the median audience declined at all three cable news channels. CNN suffered most with median prime-time viewership, falling 37% in 2010; Fox lost 11%, and MSNBC 5%. In aggregate, the median viewership fell 13.7% across the entire day in 2010. Prime-time median viewership fell even more, 16% to an average of 3.2 million, according to PEJ’s original analysis of Nielsen Market Research data. Daytime fell 12%.

Local TV wins 2010 revenue race. Among traditional media, local TV may have had the best year financially. Revenue rose 17%, exceeding projections, thanks in part to a 77% increase in auto advertising and a record $2.2 billion in political advertising for the midterm elections. And, to boost audience, local TV has added newscasts at 4:30 AM in 69 cities; more than double the startups in that time slot a year ago. Nonetheless, when adjusted for inflation, average station revenue has still dropped by almost half in the past nine years.

AM FM radio listening may be on the brink of a major change — and decline. Radio has remained among the most stable media platforms, largely because AM and FM remained the primary listening format in automobiles. That may be about to change. Toyota is about to put online radio in all its models and Pandora has made an agreement with Pioneer that would include its online radio service in the cars of at least six additional auto manufacturers by the end of 2011. Meanwhile, Audio’s foray into HD radio seems to be failing. Only 31% of Americans have even heard of it and the number of stations converting to HD dropped substantially in 2010.

Auto industry bailout added to media’s modest recovery. One overlooked dimension in the year past: a key source of renewed news revenue in 2010 was the recovering auto industry, thanks in part to the federal bailout for Detroit. In 2010, auto advertising jumped 77% in local television, 22% in radio and 17% in magazines. The other benefactor of the news industry, say experts, was the U.S. Supreme Court: Its Citizens United decision allowing corporations and union to buy political ads for candidates helped boost political advertising spent on local television to an estimated $2.2 billion, a new high for a midterm campaign year.

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