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27 May 2015

Lorna Tilbian: 'Real Cause for Optimism' in News Media Industry

City media analyst Lorna Tilbian has written of the "real cause for optimism" in the news media industry as digital revenues rise rapidly to begin to offset declines in print.   

Writing about the adapatibilty of the industry, Lorna Tilbian, executive PLC director and head of media, Numis, said there were "excellent examples of innovation" in the industry which would "ensure that newspapers – a vital component in preserving communities, upholding democracy and keeping power in check – will not only survive, but prosper." 

Lorna wrote: "Over the last decade the global newspaper industry has faced unprecedented turmoil. The increased prevalence of broadband has driven profound and ongoing changes in consumer behaviour which have presented structural challenges and opportunities for publishers.There has been a significant difference between the performance of display and classified advertising. Across the board classified advertising has been hit hardest, with regional classified consistently hit hardest.

"Any assessment of this structural change has been overwhelmed by a severe cyclical downturn in advertising as corporate profitability and consumer confidence in the wider economy collapsed. This cyclical downturn has been particularly felt in higher yielding classified advertising markets that have been changed forever, in combination with the advent of a wide array of online players.

"All things being equal, a continued rebound in corporate profitability and consumer spending should result in growth in display newspaper advertising. However, all advertising is not equal and the outlook for newspaper companies will depend on the type of advertising they are exposed to and able to capture. This is where the adaptability and innovation of newspaper companies will come to the fore. There is real cause for optimism at several national newspapers which have hit an inflection point whereby the decline in physical advertising is being more than offset by growth in digital advertising. Regional newspaper publishers too are showing clear signs of stabilisation as overall rates of revenue decline have decelerated and revenues from digital activities have risen rapidly.

"The growth of the internet has removed some of the barriers to entry to the news media publishing business and enabled the development of a range of online-only news sources that could operate in real-time. These included not only pure-play news organisations, but also search engine aggregators, internet news portals with news feeds and social networks. Most publishers responded by providing online versions of the print copy which could be accessed for free online. Due to their investment in news, more than any other media, national and local newspapers still occupy a unique space in the marketplace, providing the highly trusted news and information which their readers rely upon.  

"I believe that the next decade will see newspapers move away from a free ad-funded model towards a diverse range of online business models appropriate to the publisher's readership base. Digital encompasses a number of non-mutually exclusive business models such as online advertising, paid content/subscription/pay-per-view, enterprise, user data/market research and licensing content and technology. We are already seeing some excellent examples of innovation in these areas from within the industry and publishers should continue to pursue these initiatives. These will ensure that newspapers – a vital component in preserving communities, upholding democracy and keeping power in check – will not only survive, but prosper."