ABC, FCC Moves Paint Outline of Audience-Focused Multimedia Companies
Important Details: What may at first look like a day’s worth of alphabet soup may tell us more about the re-development of local news media. On November 13, two organizations meaningful to US local media, the Federal Communications Commission (FCC) and the Audit Bureau of Circulation (ABC) moved forward with game-changing plans. ABC’s new rules will take effect next year, after finalization in March. The FCC’s changes are proposed, pending a full commission vote in December.
ABC significantly redefined paid circulation standards, including:
- Changing the rules by which newspapers will be considered “paid” by ABC, now regardless of the price for which a copy is sold as long as some payment is collected;
- Streamlining reporting of what will be called “verified” circulation, including copies purchased by sponsors or distributed to schools and newspaper employees;
- Creating a new, separate category for copies distributed at hotels and subscriptions purchased by businesses for a group of employees;
- Allowing newspapers more flexibility to convert current home subscribers to a greater frequency;
- Revising ABC regular public reports to “provide a summary of the total average circulation (paid and verified) and the distribution by channel, such as newsstand sales and total home-delivery copies”.
The moves both give advertisers greater visibility into who’s being counted and how, and give publishers greater leeway in pricing newspapers. Formerly, regular paid circulation had to be priced at 50% or greater of the stated price, say 25 cents for a 50-cent single copy paper, and similarly for subscriptions.
At the FCC, chairman Kevin Martin has proposed the following changes in the 32-year-old rule essentially banning ownership of newspapers and TV stations in the same market:
- One company could own a newspaper and either a TV station or radio station in a market — but not both;
- The relaxed rules would only apply in the 20 largest US media markets;
- A newspaper could only buy a TV station if there are at least eight other independently owned newspapers or television stations in the city after the merger;
- A newspaper cannot buy one of the top-four rated television stations in a city.
The stated reasoning behind the proposed change is telling, a kind of federal government bailout of the now-officially acknowledged distressed newspaper industry:
“Consumers have benefited from the explosion of new sources of news and information. But according to almost every measure newspapers are struggling. At least 300 daily papers have stopped publishing over the past thirty years. Their circulation is down, their advertising revenue is shrinking and their stock prices are falling. Permitting cross-ownership can preserve the viability of newspapers by allowing them to share their operational costs across multiple media platforms [Outsell emphasis]”.
If the FCC change were to go through as planned, it might aid the finalization of the Tribune company privatization sale, though Tribune CEO Dennis Fitzsimons immediately expressed concerns about the delays involved. The Tribune has sought a temporary waiver of its cross-ownership in five cities (all allowed because dual ownership preceded the three-decade rules). While newspaper/TV ownership might continue in Chicago, Los Angeles, New York and Baltimore, its Hartford ownership would have to be split because that metro area is not among the top 20.
Implications: Outsell believes that both moves point the local news industry in a clear direction — that of locally oriented, multimedia-producing, wider-audience-serving companies that operate agnostic of content type.
We expect that landscape to be dominant by 2017. It will make little sense to have separate broadcast- or print-oriented local media companies, given both the multimedia wants of emerging audiences and the cost savings involved in bringing all such content production — and ad sales — under a single roof. FCC Chairman Kevin Martin’s words point to that understanding, though those now owning print and TV outlets have been slow to move on such a vision. Similarly, the ABC push gives daily newspapers greater impetus to get closer to ad-monetized, almost-free business models, the emerging predominant model of our media era. These changes also give greater weight to “audience” as a measure of customer reach — providing support to the recent Audience FAX experiment. That audience will increasingly be counted across print, niche print, broadcast and Web.
So the question isn’t whether this will take place, given revenue potential and cost savings. The question is just the big one of who will efficiently bring together versatile content-producing and ad-selling staffs. The companies that step into the modern era — former print or broadcast tycoons, or roll-up artists, or well-funded start-ups — will be the winners as we move toward 2017.