Media in the Next Recession

The last recession in the United States has been projected to have occurred from December, 2007 to June, 2009 (Federal Reserve estimate). Some may argue a month or two on either side but most would agree that those dates are very close to real. Now, with a volatile stock market and recent weak retail numbers, some are calling for the next recession to occur late this year. Others say 2020 or even 2021. Economist Paul Samuelson who wrote the textbook that many of you had in Economics 101 was a winner of the Nobel Prize in Economic Sciences. He had a sharp wit and once said, “the stock market has forecast nine of the last five recessions.” So, no one really knows when it will occur but virtually all agree that this recovery is getting quite long in the tooth and that a recession is inevitable. Yet, it could be six months away or several years from now.

Several readers have asked me what will happen to the media world the next time the United States economy plunges into a recession. I stress that I, like most, have no idea when the downturn will hit. Also, I have based my forecast below on the assumption that the next recession will be a “garden variety” recession and not something mirroring the 2008 debacle that was the worst that we had experienced since 1933.

With no more disclaimers, here goes:

1) Newspaper—this once mighty medium has been in decline for two decades. We project that more titles will go under and a handful will successfully make the transition to digital only delivery. The Wall Street Journal, New York Times, and The Washington Post will survive but earnings will be hurt. Also harmful will be the lack of investigative journalism done in mid-sized markets. Crooked mayors and city councils will sometimes escape needed scrutiny.

2) Magazine—many long time titles will disappear but a handful will buck the trend and, a few, such as COSMOPOLITAN and VANITY FAIR may prance through the media bear market smiling.

3) Radio—young people will continue to avoid their once favorite medium of two generations ago. There will be consolidation but revenue growth will be nil. Sports and political talk will have their niches but it will be tough. Small market players will suffer a great deal.

4) Outdoor—the last authentic mass medium is not going anywhere but prices may get more realistic. Watch for boards staying up a long time with the same message or PSA billboards (especially Smokey the Bear). A sure indicator that the market is soft.

5) Cable—this one is a stick of dynamite. Some tell me that cable can go thru the next downturn relatively unscathed as TV will be many people’s only meaningful entertainment option. I respectfully disagree. When things get tight next time, many young adults will want to meet their college loan payments. Cutting the cord on cable can save them $100-120 over month in many cases. They can still get their video for less with Netflix, Hulu+, Amazon Prime Video, Freestanding HBO and ESPN, and the new Disney +. A few other players may enter the streaming game before the recession hits. People can cobble together a package of streaming options for a fraction of what they now pay for cable. Also, we see a real sleeper out there that does not get mentioned much. You Tube! It is free but has a tremendous amount of content. People who have an internet connection and are really strapped for cash will gravitate there. When I visit my county library each week, I see dozens of people at the free terminals watching You Tube. Sadly, all appear to be really down on their luck. You Tube is a great comfort to them.  Cable will try and hold people with more attractive “Trifecta” packages of Phone, Internet and Cable access but I see a significant loss if unemployment really jumps.

6) TV—some have written to me stating that local TV will have a renaissance if cable gets hit. Maybe a bit in terms of viewing and it is clear that several million folks have purchased antennas to get local station reception in recent years. Yet, advertising will not be vibrant in local TV. Network TV may still have the “upfront” cavalry charge in spring but it will be muted and could be the last one.

7) On line and Social Media—continued growth but at a slower pace than presently.

To stress again, I do not know when the next recession will rear its ugly head. When it does, some long time players will be hurt and a surprising number of time honored media vehicles will go down for the count.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com