Illustration: Allie Carl/Axios
It’s a brutal, scary time for American media — with companies scrambling to cut costs and secure cash in a scenario reminiscent of the early pandemic.
Why it’s important: The new economic reality means layoffs, hiring freezes and other cost-cutting measures.
Driving the news: New data from Challenger, Gray & Christmas shows that news media layoffs are starting to tick up again after a relatively stable summer.
- So far, nearly 3,000 media jobs have been cut this year, with more than a third (1,100) coming from the news media industry.
- BDG, Recount, Gannett, Recurrent, CNN, Netflix, Acast, Future, Warner Bros. Discovery, G4 and more have all announced layoffs in the past two months.
Between the lines: Inflation and supply chain issues have slowed the ad market dramatically ahead of what is usually the most lucrative time of the year.
- Snap Inc., which announced plans to lay off 20% of its staff, sent shockwaves through the social media industry last week when it cited a pullback in ad spending by major brands ahead of the fourth-quarter holiday season.
- Analysts expect the slowdown to continue well into 2023. One company has halved its forecasts for growth as a percentage of ad spending for next year.
The financial stress on Big Tech companies have killed most programs to pay publishers for their content.
- Pending US antitrust legislation that would help local news companies get paid by Silicon Valley platforms appears doomed in Congress.
The big picture: The boom in ad sales has forced Big Media to reckon with an even bigger problem – cord-cutting and a decline in consumer spending on subscriptions.
- The US pay-TV market (cable and satellite) is now shrinking by more than 6% annually, setting a new record for the worst level of decline, according to an analysis by MoffettNathanson.
- Without narrow packages (digital live TV packages), the pay TV market shrinks by almost 10%.
- The world’s largest entertainment companies, including Netflix, Disney, Paramount and Warner Bros. Discovery, have all lost billions of dollars in value as Wall Street’s love affair with unprofitable streaming betting ends.
News companies are also seeing a significant traffic slowdown in response to a post-Trump news cycle full of depressing headlines.
Be smart: For media startups, a murky financial outlook has created a difficult fundraising climate and has killed any incentive to go public.
- Companies like Substack scrapped plans to raise money this year, due to the brutal economic environment.
- BuzzFeed is currently valued by public investors at 16% of the $1.7 billion it was valued at when it raised $200 million from NBC Universal in 2016.
- Digital media giants like BDG Media, Vice Media and Vox Media are exploring ways to either sell or generate enough short-term cash to keep operations afloat.
Yes but: There are still some points of optimism in the industry.
- The New York Times continues to grow its paid subscriber base at a healthy clip. Semafor was able to raise $25 million ahead of an October launch. News Corp’s revenue rose to a record $10.4 billion for the fiscal year that ended in June.
What should we look at: A difficult economic climate is exacerbated by an erosion of media confidence and a deterioration of press freedom.
- American trust in the mass media remains near record lows, according to new data from Gallup.
Editor’s note: This story has been updated to remove a line saying Puck suspended fundraising plans this year because they could still raise a Series B round in 2022.