Research by the Reynolds Journalism Institute in the US has found that cuts in newsrooms have a bigger impact on newspaper revenues than cuts in other departments.
The research found that three-quarters of all US newspapers have cut 10 percent or more of their newsrooms. The RJI research examined how cuts in news, distribution, and advertising departments affected total revenues and profits. The analysis was based on data from 327 newspapers which have daily of circulations of under 85,000.
Among the findings:
Newsroom cuts are the most costly on revenues. A one percent cut in newsroom expenditures led to a .44 percent drop in revenue. A one percent cut in the ad sales force led to a revenue drop of .24 percent. A one percent cut in the distribution force led to a .08 percent drop in revenue. In dollar amounts, the picture is even more clear. Data from small newspapers with an average circulation of 13,000 showed that a 1 percent cut in the newsroom reduced expenses by about $10,000 but led to a revenue drop of $23,000 and a profit decline of $3,000.
The bigger the cuts, the impact on revenues gets progressively worse. For example, a 10 percent cut in newsroom expenditures led to a 5 percent drop in subscription revenues, while a 50 percent cut in newsroom expenditures led to a 30 percent drop in subscription revenues.
Newsroom cuts are the most costly on profits. A 5 percent cut in news expenses led to a 1 percent drop in profits, while a 5 percent cut in advertising department budgets led to a .3 percent cut in profits.
The authors advised that newsrooms should be the last department cut. When cutting costs, newsroom cuts are by far the most damaging to revenues – and the longer the reductions occur, the greater the acceleration of damage. The authors wrote, “We find that newsroom cutbacks hurt a newspaper’s revenue many times more than cutbacks in either distribution or the sales force departments.”
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