Why are traditional newspaper publishers still surviving in the digital era? The impact of long-term trends on the Flemish newspaper industry’s financing, 1990–2014

ABSTRACT

The foundations of traditional newspaper publishers have been undermined, which raises the question why they are still surviving amidst an unfolding digital era. This is explored in a longitudinal (1990–2014) analysis of the Flemish market. Competitive pressure and changes in the newspaper market are related to publisher’s strategic responses (cost leadership, differentiation, and focus) and their financing. The findings reveal a market that shifted from the mature stage of its product life cycle to the decline stage since 2008 and structural shifts in publishers’ business operations. Realisation of cost-efficiencies, for example, through expansion, is the key mechanism behind keeping up net operating profits and indicates resilience in a changing environment. The findings aid discussions about traditional publishers’ future strategies.

KEYWORDS:

• Newspaper market
• strategy
• digitalisation
• financial performance
• longitudinal analysis
• Belgium

Acknowledgements

The authors wish to express their gratitude to Centrum voor Informatie over de Media, Nationale Bank van België, Nielsen Belgium, Vlaamse Nieuwsmedia, Vlaamse Regulator voor de Media, and Vlaamse Vereniging van Journalisten for (access to) data; and to Tobias Klein, Robert Picard, Mikko Grönlund, Rens Vliegenthart, and the (anonymous) reviewers for useful comments that helped shape this contribution.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. One newspaper publisher, Concentra, was listed from 2000 to 2001 (De Bens & Raeymaeckers, 2010).

2. In the French-speaking part of Belgium (i.e. Wallonia), Corelio acquired Mediabel in 1999, Concentra and IPM (i.e. Rossel et Cie) jointly acquired Mass Transit Media in 2003, and De Persgroep and Rossel et Cie jointly acquired Editeco in 2004/5, which would be merged with Uitgeversbedrijf Tijd into Mediafin in 2006. Expansion to the Netherlands has increased substantially in the recent years: De Persgroep acquired Het Parool (2002), PCM Uitgevers (2009), Wegener (2013), and Mecom (2015); Concentra acquired Media Groep Limburg (2014); and the newly created Mediahuis acquired NRC Media (2015). De Persgroep’s acquisition of Mecom also included activities in Denmark.

3. Corelio unsuccessfully launched two newspapers. t Stad, an addendum to Het Nieuwsblad, was launched in 1998 and terminated in 1999. Espresso, a “light” version of newspaper De Standaard, was terminated one year after its launch in 2004 (De Bens & Raeymaeckers, 2010; Hauttekeete, 2004).

4. The net advertising revenues are estimated through correction of gross revenues for average price reductions and promotions. The national data providers of WARC give yearly recommendations about the reduction percentage; it is currently 43%. Information obtained by email on 7 July 2016. Figures for Flanders are estimated by taking a percentage of the net advertising revenues for Belgium. This percentage was based on Wallonia’s and Flanders’ share in the gross advertising revenues of dailies and weeklies (i.e. 55% in 1990, up to 62% in 2014).

5. Information was obtained from Nielsen by email on 1 December 2015.

6. Gaps occurring in the data were treated as follows:

• – Financial data were missing of publisher Hoste in 1990 and 2000. Estimates (i.e. averages) have been calculated based on the preceding and following years, as these missing figures would bias market figures.

• – Gross advertising revenues per medium in Flanders in 1990 and 1991, provided by Mediamark Belgium, are based on reports (Associatie van Communicatieprofessionals (ACP), 1992, p. 48; Mees & Poppe, 1991, pp. 7, 9).

• – Gross advertising revenue per newspaper could not be obtained from 1990 to 1992.

• – Subscription prices are missing from 1989 to 1993 and from 2012 to 2014. Estimates are calculated based on the average difference between prices for single copies and a newspaper’s subscription price (on a yearly basis, per copy). Digital (only) subscriptions are cheaper compared to print (only) subscriptions, but no historic data were available. Therefore, a current (i.e. in May 2016) price difference between print and digital subscriptions of 25% on average is applied to estimate prices of digital subscriptions.

• – No readership study was conducted in 1992 and 1995. Estimates for reach (i.e. reader last period) are calculated based on an average of the preceding and following year.

• – Data of GDP per inhabitant are calculated differently by Eurostat since 2014, which means that an estimate is calculated for this year based on a 1.3% growth compared to the preceding year (Nationale Bank van België (NBB), 2016, p. 16).

7. Data are retrieved from Studiedienst van de Vlaamse Regering: http://www4dar.vlaanderen.be/sites/svr/cijfers/Exceltabellen/media/algemeen/Medium%20nieuwsgaring/MEDIALGE021.xls

8. These percentages are based on the average number of employees during a financial year (in FTE) in 1993. However, the years 2003 and 2013 are based on the number of employees at 31 December of the respective financial year (in FTE).

9. Numbers for journalists in 1990 and 1995 are based on the entire market (De Bens & Raeymaeckers, 2010, p. 109), while those for 2000, 2005, and 2015 are based on our own calculations and exclusively relate to the sampled newspaper publishers. Data about the number of employees (in FTE) are obtained from annual accounts and reported numbers newsroom staff from different sources: De Bens (2001, p. 192) for 2000, De Bens & Raeymaeckers (2010, pp. 314, 351, 374, 385, 396, 406) for 2009–2010, and Vlaamse Vereniging van Journalisten (requested) for 2015. A total of 644 journalists were working in the newsroom of a paid newspaper in 2000, 647 in 2009/2010, and 670 in 2015. In comparison/verification: De Bens (2001, p. 192) reported 28.6% in 2000 and 33.6% in 2009. The latter is close to the calculated 34.0% in 2010 so figures are considered comparable.

10. The figure for 1993 might be an underestimation, as elsewhere 1,221 journalists were reported (De Bens, 2001, p. 191).

11. Data are obtained upon request from the national journalist survey by email on 8 November 2015 (Raeymaeckers et al., 2013).

12. Publisher De Persgroep has intensified its publishing activities in the Netherlands since 2002 and also expanded to Denmark in 2015. In 2008, 65% of consolidated revenue derived from publishing activities, growing to 86% in 2015. Regarding geographical origin: revenue generated in the Netherlands increased from 42% in 2009 to 56% in 2015. Denmark accounts for 10%. In other words, today De Persgroep generates the least revenue in the Flemish market in which it was established.

Additional information

Funding

This work was supported by the University of Antwerp [Grant Number 28311].

Notes on contributors

Miriam van der Burg

Miriam van der Burg is a PhD student at the Media, Policy & Culture research group of the Department of Communication Studies, University of Antwerp (B). She specialises in media economics.

Hilde Van den Bulck

Hilde Van den Bulck is full professor of Communication Studies and head of the Media, Policy & Culture research group of the Department of Communication Studies, University of Antwerp (B).