It takes a long time for newspaper paper stock prices to feel the effects of structural change in media, but when they do it makes for depressing reading. Johnston Press's announcement today about a rights issue to raise £212m is just the latest in a ceaseless flow of profit warnings, revenue reforecast and closures that have become the norm in the magazine and newspaper industry. The thing is that it's not that these businesses are doing anything wrong, it's that the landscape has changed so much that their products lack the relevancy to advertisers and consumers that they once had.
In the digital networked society, consumers have more choice in how they get their information and many of those channels are far more effective at distributing information than print. In fact there's such a big shift that the web is now the second most used media channel here in the UK, and likely to move into pole position over the next 18 months. Within the same timeframe the web will also overtake television in terms of total advertising spend, and the regionals are at the sharp end: hit by the Google effect among the smallest of advertisers, suffering from the migration of several of the 'classified pillars' to dotcom verticals, failing to make the grade in their own online audiences, and all this before local IP-geotargeting properly undermines their 'ownership' of the local display advertising franchise. Make no mistake: it's the content model and business model of print that has been undermined. For the regional press that specialise in being a mile wide and an inch deep it just hurts earlier than most. The only news in the latest announcements may be that it's taken so long for the changes to work their way into the market cap and the ability of these firms to raise finance.
As for what's next? Any media group that hasn't separated its content from its delivery channel is in need of some major surgery. Print and broadcast need new business models to succeed in the digital networked society, and for those that feel having a web edition means 'job done', dwell on this: online revenues will rise steeply, but will they really offset the sustained erosion of volume and yield in the historically high margin print sector?
