Projo and Other Daily Papers Hire Lobbyists to Block Budget Reform

Tuesday, January 21, 2014


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The local newspaper industry has paid lobbyist Joe Walsh $30,000 to fight a provision in Governor Chafee's budget that would end the monopoly on legal notices and take ad revenue away from the state's struggling newspapers.

Legal notices are ads for foreclosures, public meetings and other government business that have historically been published by law in newspapers to notify the public of important state and municipal information. Chafee's provision would end this mandate, instead creating a web site where the public could access such content for free. Chafee's provision is in line with the newspaper industry's steady losses to online media. 

A new preferred news source

A new study found that online news sites beat newspapers as the preferred news source for every age group – including those over 55 years of age. The survey of 10,843 people in nine countries found that a majority of consumers in every age group now use online media instead of printed newspapers as their main source for news. The study was conducted by the Reuters Institute for the Study of Journalism at Oxford University. It polled individuals in the “urban” portions of Brazil, as well as throughout the entire countries of Denmark, France, Germany, Italy, Japan, Spain, United Kingdom and United States. 

The Providence Journal is not immune to a dramatic loss of readership. And its distinction as the paper of record is challenged by declining circulation. The Alliance for Audited Media reported that The Journal's newspaper sales dipped 11.7% on Sundays during the six months ended Sept. 30. The paper’s Sunday print circulation was 104,010, down 13,774 from the same period last year. The Journal also sold an average of 76,447 traditional print editions on weekdays between April 1 and Sept. 30, a decrease of 7,286 since September 2012. In 1990, print circulation at the Providence Journal 203,647 on an average weekday. 

A.H. Belo in Dallas, Texas, recently put the Providence Journal up for sale, but that move follows a downward slide that includes closing all nine local news bureaus, trimming Guild members, including both editorial and ad personnel, to about 160. Ad revenue and circulation have plummeted.

Alternative methods for legal notices

The Governor, apparently, thinks he can do better. 

"The FY 2015 Budget provides entities the option to use alternative methods of posting legal notices," according to the budget summary. The provision, Article 22, would give the state 120 days to establish rules for a public website.

The Chafee administration's argument is that newspapers no longer reach more people than the Internet. Since 82 percent of Rhode Island adults have used a state web site for services, it will be a difficult argument for newspapers to defeat. Not only will the proposed web site be available for free - not behind a pay wall or stuck in a newspaper box – but it aims to be proactive. Users will be able to sign up to receive postings that match their business or interests.

It's hard to tell how much money the state will save because the Department of Administration can't keep accurate records. Each department handles legal ads differently. A fair estimate, according to a source, is between $500,000 and $1 million. 

"The very idea of having to publish legal notices in a newspaper seems pretty old fashioned," said Dan Kennedy, Assistant Professor of Journalism at Northeastern University.

"But when this has come up before in other places the argument in favor of keeping the old system is that you're dealing with a third party. You're not totally dependent on the government to publish this stuff. We all know how easy it is to alter content on a web site."

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Even those over 55 years of age prefer online news to print, according to a recent study by Reuters Institute for the Study of Journalism at Oxford University

Third party value

Kennedy said the newspaper industry will likely use the possibility of government corruption as part of their argument against the provision.

"You need something, some sort of third party who keeps an eye on this. There is something about printing it on paper that makes it kind of permanent and unalterable. As we think through ways to save the taxpayers money and not subsidize legacy media we also need to think about what sort of controls we have in place so that the new system we use is not subject to abuse."

There's also the fight to keep the word "legacy" in legacy media. Legal ads are historically published in the paper of record, as deemed by the government. Losing that distinction could be as detrimental to a newspaper's respect as the ad revenue is to its bottom line. 

Before he was Professor of Journalism at Roger Williams University, Michael Scully worked for a weekly newspaper in the South. In an effort to legitimize the paper – and increase ad revenue – he fought to have the paper deemed the "paper of record."

"I tried to get my weekly paper turned into the paper of record. I was competing with the Washington Post. The (opposition's) argument was that there was a guarantee that the  Washington Post was going to be there for awhile," he said.

They were right. Scully's paper went out of business ten years later. He said lessons like that will not be lost on the local newspaper industry.

"Their argument is going to be 'we've been doing it for 100 years, we'll do it for 100 more.'"

A logical plan

However, even the most stalwart of newspaper supporters can see the logic in Chafee's plan. David M. Ettlin, retired longtime Baltimore Sun Reporter and Editor, believes the trend to take legal ads away from newspapers is another blow to his industry.

"In a world that is increasingly online, it seems a logical move. But it would devastate what remains of the bottom line in the fiscal outlook for many newspapers," Ettlin said.

"The questions it raises include demonstrating whether the intended audience for legal notices in print would be at all deprived of access in a move to a free government site online."

It's a trend that is gaining momentum all over the country.

"There has been a lot of activity in many states to either relax or eliminate the process that legal notices have to be in a print publication," said Alan Mutter, adjunct faculty member of the Graduate School of Journalism at the University of California at Berkeley.

"This is a very choice business for publishers because people have no other place to go. There's no competition. When they need to put an ad in the paper publishers can charge fairly steeper rates for something you could theoretically cut and paste and put online. These are very expensive ads."

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Ad revenue vital to business

And the newspaper industry needs every penny. Ad sales are about 70 percent lower than they were in the heydays of the business, back when newspapers were basically printing money. What remains are legal ads, something newspaper publishers have come to count on while the water rises around them.

"It was something that was countable, and they really were able to sustain with higher rates without fear of competition," Mutter said.

"To lose it would blow an irreparable hole in the budget of newspaper publishers in the state. Not a big enough hole to sink the ship, but another hole when they already have a number of holes." 

To put the ad revenue holes in perspective, consider the strategy of advertising company PriMedia Inc. Ten years ago the company was buying ads in The Journal for ten or twelve clients. Today, it's one or two.
"It's simple. The number of readers is going down and the cost clearly hasn't. There are a lot of different ways available to the average advertiser that are in many ways more efficient and less costly," said Jim Cooney, PriMedia President and CEO.

A former newspaper reporter and self-proclaimed fan of the medium, Cooney said he hopes the industry finds its way out of the abyss. He's also a fan of at least one of the paper's ad packages. 

"Sometimes The Journal is still a good solution, depending on what you need to do. There are some things they offer that are really effective. I love the [advertisement] stickers that go on the front of the newspaper. They get a lot of attention."

Efforts to reach Howard Sutton, publisher of the Providence Journal were unsuccessful.


Related Slideshow: Rhode Island’s Changing Media Landscape

Radio, print, television and digital - the faces in Rhode Islands's media has changed drastically over the past months... Let's take a look at some of the biggest moves:

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John DePetro

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Helen Glover

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Mike Stanton

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Tara Granahan

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Gene Valicenti

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Ron St. Pierre

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(Photo: Alan Levine, Flickr)

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