Executive Director and CEO, Lenfest Institute for Journalism
Jim Friedlich is Executive Director and CEO of the Lenfest Institute for Journalism. Previously, he was head of product development for The Wall Street Journal and was CEO of Empirical Media Advisors, a consulting firm on digital transformation by news organizations.
The change in the paradigm is that news organizations are now much, much more focused on finding repeat loyal local visitors than just the mass of eyeballs that they had been looking at before. And the incentives are no longer how do we get from 5 to 10 million monthly unique visitors or UVs to how do we get from 100,000 to 200,000 local loyal repeat visitors and what’s the best way to engage them. That is partly the content and it’s partly the user experience.
There’s a large and vital sector in local advertising, which is pure digital search engine email marketing, that kind of thing. A lot of the money from local marketers no longer goes through any of these media at all. It’s using a collection of often self-service tools like Google, Facebook and others that in many ways that’s really where the money has gone and the extent to which local media can serve a role in that and play a part in that ecosystem is a big question. It takes expertise and software capabilities and sales capacity that most local media don’t have.
(There is) an encouraging but still relatively small cohort of local nonprofits that have emerged around the country, and I believe this trend will accelerate.
One of the dynamics that’s worth thinking about and talking about is that in a number of different markets there has emerged a philanthropic component to local news and it remains a small subset of the philanthropic support that local arts, environmental concerns or health care receive, or education receives, and there are people like the Democracy Fund who have numbers on this that can compare the size of each of those sectors, but it is absolutely growing.
I think you can envision a time when television, local TV news begins to face in a big way the same secular challenges that local newspapers are already facing, and that’s an aging viewer and revenue pressures to match.
Local television is driven by two or three principal revenue models. Most local TV stations are still highly ad-dependent and the categories tend to be retail, auto, various local categories. They have usually two-year or four-year spikes in revenue from political advertising that depend upon which state and which city one is considering. So WFLA in Florida does extremely well in the political cycle and a New York City station much less so. But political advertising is highly lucrative for the right stations because when it rains, it pours; and the rates that they receive are regulated and are kind of the best available rates and are quite lucrative for the local station. So there’s kind of regular advertising; political advertising; and there’s a third revenue source called retransmission. And retrans is also regulatory. It’s what cable needs to pay and is required to pay for the carriage of the local stations, and in some cases it’s quite lucrative and it falls right to the bottom line. It’s simply a payment that they receive. They have no sales costs against it, they have no programming costs against it, it’s just money, good.
There needs to be some holistic trusted place that is the clearinghouse for valid information that includes, I’m going to say Journalists with a capital J, meaning professionals, who can evaluate, understand and pursue things that need to be pursued. I don’t know what that looks like. I really don’t. And I wish I could tell you if I had this golden ticket it would change everything. I don’t know what the golden ticket would be. We need to create the value in our communities. There’s an understanding that if they’re going to have good government, roads that work, no graft in their county, a sheriff that does his job, schools that actually have some semblance of serving their kids, someone needs to be watching, asking and pushing those organizations. And that has almost always fallen to the newspaper. So the question is who does it if not the newspaper?
The best work, and this is completely biased, but there have been a number of what you could call local heroes who have embraced and bought and invested in their hometown paper. Glen Taylor ... has bought the Minneapolis Star-Tribune and invested back into it. John Henry, the Boston Globe. Gerry Lenfest in a different way with a nonprofit structure that is now supported by the community at large, not only his finances in Philadelphia. And I believe you’ll see more of that. It’s not a coincidence I think that the first two I mentioned, Glen Taylor and John Henry, also own sports teams. I think it’s the same mentality that I want to own the Boston Red Sox, this is my town; I want to own the local newspaper and make sure that it thrives.