Most newspaper articles written by analysts who are not employed by a newspaper are unlikely to showcase any good news, but there is some. Table 1 details the top five newspapers from July to December 2000 compared to the latest full year available.
In 2013, the top five sold in total a little more each day than the top five in 2000. Also evident is the fact that three of the top five dailies of 2013 did not exist in 2000. They were launched from 2002 onwards, proving there is life and innovation in newspapers.
All three of the new newspapers are tabloids and four of the top five are tabloids too and cater for the popular end of newspaper reading. Newspaper purists might decry the relative demise of so-called serious newspapers, but there is no doubt that the newcomers have found new markets and invigorated the whole sector. While tabloids may appeal to the mass market, their consumers believe they are buying value.
The Daily Sun is unquestionably the most successful daily newspaper the local market has ever seen.
Newspaper circulations since 1990
When looking at the weighted circulation trend of the three newspaper categories against that of the weighted performance trend of all media, it shows all media’s performance has increased through the years. However, dailies and weekly/weekend newspapers have plummeted. In contrast, the circulation of local newspapers has increased dramatically. Free-to-air television and pay-TV are the main, but not the only, beneficiary of print’s falling share of performance.
The dailies’ torrid time started in the mid-1990s and then stabilised. An examination of statistics from the Audit Bureau of Circulations (ABC) reveals that the downward slide occurred mainly among Independent News and Media South Africa’s more important titles. This was in fact a deliberate ploy by the then new management of Independent to reduce the massive print and distribution bill (under the old Argus company, its titles competed with each other and were circulated far and wide with a negative return on investment). The new owners at the time were able to bring the group to profitability quickly and, before its recent sale to the Sekunjalo Independent Media Consortium, the remittances to Ireland helped support the international side of the business.
The fairly good – buoyant even – circulations of a number of titles and new entrants are testimony to what was relatively good times compared to what has come to pass in the last couple few years. The writing was on the wall – it read ‘digital technology’ – and almost everybody knew it.
Digital technology in fact helped the print medium in the last decade or so. It enabled cheaper printing and more efficient internal processes in the newsroom right through to the presses. But more recently it turned into a competing distribution medium that is changing the very nature of communication. Moreover, digital technology has revolutionised other media and enabled all kinds of additional options that now compete for consumers’ time and marketers’ advertising spends. The drums of change in the communications revolution are beating ever louder: it is a brave person who predicts how media will change, and a braver person to invest in it.
Before trying to be brave and taking a stab at the direction in which newspapers are going in the next decade or so, it is worth looking at the current situation with a few more stats and thoughts…
• The unofficial word from Media24 suggests that the recent decline of Daily Sun had a great deal to do with an over-managed optimisation of distribution. This had reduced numbers of costly returns from far-flung places (the print and distribution bill meant the title was not as profitable as it could have been) and glitches in the distribution network. It does indicate the crucial role that distribution has in print.
• The circulation success of the local newspapers segment is largely due to freesheets. These do not suffer from the vagaries of relying on consumers to part with money, or to even request the publication. They can blanket a community and, as communities grow, so can they.
For instance, The Sandton Chronicle’s circulation in 1990 was 34 000. It is now 50 800 and has spawned a new title, Fourways Review, itself now at a circulation of 36 500.
Soweto was once a media no-go area because it didn’t have malls and shops to support local newspapers (Johannesburg CBD was once Soweto’s shopping centre). The massive place now has numbers of local newspapers.
• There’s been lots of action in the local newspaper space in the last few years. Once upon a time, the dominant local daily had the biggest communities. It was largely a ploy to ensure competitors could not sneak in under the radar. Thus Media24 (when it was Naspers) reigned in Cape Town’s northern suburbs, the Boland and the southern Free State. Times Media ‘owned’ the Eastern Cape. The Argus Group (now Independent) had Johannesburg and Natal through its proxy Caxton, and the southern suburbs of Cape Town. Perskor (now folded into Caxton) had Pretoria, the Northern Transvaal and the Eastern Transvaal. Fast forward a few generations and the descendants inherited the structure.
But war has been declared: Media24 has launched a number of titles in Caxton’s stronghold of KwaZulu-Natal and elsewhere. It has done so out of its purchase of The Witness in Pietermaritzburg, and its printing presses. So where a group has the presses, it makes sense to optimise the run-times, and garner ad spend that happily moved from a declining daily to a vibrant local weekly. Provide the options and ‘futureproof’ the business.
• Local newspapers may be where the action is in this part of the world, but it doesn’t necessarily hold true elsewhere. Reports from the UK suggest that the relatively safe haven of local newspapers is currently under attack from hyperlocal online and other digital operations.
• Circulations may have fallen, and the once pole position that daily newspapers had may now be history, but they still manage to draw in large sums of advertising monies.
In 1990 The Star’s revenue,was R73 million and accounted for 4% of all spend, according to Nielsen’s AdDynamix. In 2012 its revenue had risen to R479 million although its share had fallen to 1.4%. That’s in a market that has many more other print opportunities, as well as TV, radio, online, outdoor and sponsorship vehicles. There are simply more and more places to spend advertising money, so share would have fallen anyway, no matter how the newspaper fared. It is inevitable. Yet so many newspaper barons hark back to the old days (pre-TV and online) when they ruled, and they rue their relative demise.
• Media Inflation Watch indicates how quickly dailies and weeklies have got out of line cost-wise in the last few years. Rate of inflation combined with performance deflation has yielded an uncomfortable MIW Index (equivalent to the cost per thousand circulation).
Table 2 (a and b) indicates by how much this is. For instance, in 2012 dailies upped rates by 5.3% on the previous year but delivered 9.6% less circulation. This yielded a 17.2% increase in calculated cost per thousand circulation (termed MIW Index).
A R100 spend in dailies in 2008 would need to rise to R210 in 2013 to buy the same circulation. In weekends and weekly newspapers, the R100 would need to rise to R190 and to a lower R144 in locals. However, the all media figure is R137 with free-to-air TV a miserly R109. The consumer price index (CPI), in contradistinction, is R132.
So where to for newspapers?
In the pre-history of 1976, the Swedish Press Commission established for that country a rule of thumb that said a newspaper must penetrate 50% of its local constituency for it to be of value to its community and supporting advertisers. Penetrations of less than 50% were deemed to be proportionately threatening to viability. This rule of thumb was given for the underlying reason why the still lamented Rand Daily Mail folded. Too many changes to editorial positioning and target meant it became irrelevant to any one viable sector. Whether or not this 50% rule still holds good is a moot point, but a number of local dailies and weeklies must be close to or beyond that point.
It is clear that a number of newspapers must go to the wall, simple economics of oversupply and consumer/advertiser demand dictate it so. It is a question of which and when.
Perhaps some dailies could reduce frequency from five times a week down to three or twice a week. Back in 1920, Grahamstown’s Grocotts Mail was a daily freesheet. Over the passage of time, faster-growing areas eclipsed the town’s economy and it no longer had the advertising base to support a daily. So frequency was reduced to twice weekly and then the current once a week.
The Diamond Fields Advertiser (DFA), a daily circulating in Kimberley, had an advertising revenue of R25 million in 2012 (source: Nielsen’s AdDynamix), or just little more than R2 million a month. In the Johannesburg suburb of Randburg, the local weekly freesheet Randburg Sun’s revenue was calculated at R42.1 million in 2012, or R3.5 million a month. So R2 million a month for a daily selling 185 820 copies in a 20 day month versus R3.5 million for a weekly community giving away 241 548 in the same period. Furthermore, the printing for the DFA was once done in Kimberley itself until it wasn’t economic to continue. So today the newspaper is printed in Johannesburg and trucked daily a distance of 475km. Another diesel price hike or more tolls en route drives more nails into the probable marginality of production.
In Cape Town, Die Burger from Monday to Saturday got some R361.6 million in ad revenue in 2012. But TygerBurger, its local freesheet chain of 12 community newspapers covering Cape Town’s northern suburbs, got an eye-watering R223.8 million. That makes it a larger recipient of advertising monies than most traditional paid-for weekly newspapers, even dailies. The Mail & Guardian, for instance, was monitored by Nielsen’s AdDynamix at R87.9 million in the same period. The Cape Times got just
Upping frequency happens too. In 1887, The Star was moved from Grahamstown to the new town of Johannesburg and upped frequency from three times a week to daily. One might have expected Nelspruit’s Lowvelder or one of Polokwane’s newspapers to convert to daily if digital distribution and competing media hadn’t overtaken the process.
Perhaps some newspapers will mutate into other platforms?
Tablet versions were deemed to be the future of newspapers by investment maestro Warren Buffet in 2010. Previously he famously said, “It may be that no one has followed the newspaper business as closely as we have for as long as we have – 50 years or more. It’s been interesting to watch newspaper owners and investors resist seeing what’s going on right in front of them. It used to be you couldn’t make a mistake managing a newspaper. It took no management skill – like TV stations. Your nephew could run one.”
He also said, “For most newspapers in the States, we would not buy them at any price. Newspapers have a far better past than a future”
Later, Buffett retracted those words with deeds and invested into a chain of local US newspapers, together with their printing presses.
Looking at some of the touchpoints of the media brand called Beeld, its Monday to Friday newspaper had an average per-day circulation of 64 974 in the fourth quarter of 2013 and got 496 000 total readers for the average issue in Amps 2013 BA (Jul 2012-Jun 2013). But its website, Beeld.com, had 762 861 unique browsers in January 2014. And in early March 2014 it had 65 127 likes/15 484 talking about on Facebook, and 62 900 followers on Twitter.True, these are different time periods and metrics, but it is evident that Beeld is a lot more than just a newspaper issued daily on newsprint. If (or perhaps when) non-print touchpoints are monetised to a sufficient level, it might give Media24 management the option of dumping the oh-so-last-century and oh-so-expensive technology of putting ink on to dead trees and oh-so-inefficient trucks to get them into purchasers’ hands.
Additional touchpoints to futureproof the brand are not limited to the big newspapers. There is scarcely a local newspaper without some form of online, mobi and social media presence, some quite significant. Vaalweekblad, a paid-for weekly in the Vaal triangle, had an average circulation of 11 145 (ABC Oct-Dec 2013). But its website achieved 10 498 unique browsers in January 2014. It even has a global reach – some 1 200 of those browsers were from non-South African locations – although this isn’t likely to be of much value to local retailers.
The real threat to newspapers’ existence comes from shifting advertiser spend patterns, particularly those of retailers. To date, they have shown a remarkable predilection for spending large sums in print, especially on expensive loose inserts. Through the years, newspapers and loose inserts have proved their return on investment value and, despite many attempts to usurp their role, inserts are still very much in demand.
A big game-changer could consign all of that to history, along with many titles the advertising revenues support. There are plenty, both existing and to be launched, waiting in the wings, ready and willing, and wanting to be that game-changer. A Google perhaps? Or maybe a Warren Buffett.
This post was first published in the April 2014 issue of The Media magazine.