Newspapers took a beating over the past few years
Published on November 4, 2021 by David Wylie
Newspapers are suffering.
This probably isn’t news to anyone who follows the news. Staff cuts, fewer publishing days, lower circulation, fewer advertisers.
New data from Statistics Canada shows just how dire it is for newsrooms.
“While newspaper publishers have experienced declining revenues over several years, the COVID-19 pandemic accelerated many trends that are transforming the industry.”
The report from Statistics Canada goes on:
Demand for advertising—especially print advertising—fell as many businesses closed or reduced activities during the pandemic. While the newspaper industry earned $1.5 billion in revenue from advertising sales in 2018, this figure dropped to $934.3 million in 2020. In 2018, advertising revenues accounted for 59.7% of the industry’s overall sales, but by 2020 the share of advertising sales decreased to 51.9% of total sales.
Prior to the pandemic, the industry had already been transitioning toward increased reliance on digital advertising and digital circulation sales. From 2016 to 2018, newspapers saw a 23.9% decrease in print advertising sales, but over the 2018-to-2020 period, the decline in print advertising was more pronounced (-45.2%).
Circulation sales also declined in 2020, although to a lesser extent than advertising sales. From 2018 to 2020, circulation sales decreased from $645.0 million to $596.8 million (-7.5%). While circulation sales for print newspapers were down by 12.0% over this period, circulation sales for digital newspapers increased by 43.6%. In spite of the increase, digital circulation still accounted for a small share of circulation sales overall (12.5%).
Ontario accounted for 44.2% of the operating revenue nationally and saw a 22.3% decline in operating revenue from 2018 to 2020, to $942.0 million. The Prairie provinces, British Columbia and the territories saw a 27.2% decrease in these revenues to $610.5 million. Revenues in the Atlantic provinces declined by 17.0% (to $144.4 million), while in Quebec revenues were down by 13.9% over the same period, to $435.3 million.
The operating profit margin in Quebec increased to 11.7% in 2020, compared with 2018, when the industry endured losses (-6.5%). The Prairie provinces, British Columbia and the territories had the next highest operating profit margin in 2020 (10.5%), while Ontario (0.3%) and the Atlantic provinces (-0.3%) had lower operating profit margins by comparison.
In addition to government support programs related to the COVID-19 pandemic, such as the Canada Emergency Wage Subsidy, the Canadian newspaper industry is receiving assistance from a number of other initiatives. New measures, introduced in 2019, include the Canadian journalism labour tax credit, which covers a portion of salary costs for eligible employees of qualified Canadian journalism organizations. In 2019, Quebec introduced a labour tax credit that provides additional support to the federal program. Other existing programs include the Canada Periodical Fund and the Local Journalism Initiative.
In 2021, advertising demand is expected to rebound significantly from 2020, and this should benefit the industry. However, demand for print advertising is not expected to increase to the same degree as demand for advertising in other media, including radio, television and the Internet. In addition, the newspaper industry continues to face significant competition from other sources of news (mainly online) for advertising revenue. For these reasons, newspapers are not expected to see large revenue gains in 2021 compared with 2020, unlike many other industries.