More than 3,000 media industry jobs have been cut this year through October, underscoring signs of a serious slowdown in the ad market that suggest a media recession has started.
More than a third (1,100) of this year’s layoffs came from the news media, according to new data from Challenger, Gray & Christmas, and more are expected.
Experts are particularly concerned about what a possible recession could mean for news publishers, which are facing higher labor and distribution costs in the wake of the covid pandemic.
Hit particularly hard in the last few months, media companies face challenges similar to the beginning of the pandemic in early 2020 when advertisers pulled back amid fear and an uncertain economy. But there’s one big difference in late 2022: there are fewer government relief programs and resources available to help, Axios reported.
Here are 10 signs the ad and media recession has started.
As the economy weakenens, economists warn of a recession in 2023. As a result, many companies are slashing costs.
In a poll of 145 businesses, 25 percent of respondents claimed that advertising and marketing budgets would be the first costs cut if a recession hit.
“Traditional advertising channels like newspapers, radio features, television spots and paid online ads can be viewed as an unnecessary expense in certain fields,” one respondent said in the U.K. survey. “This form of advertising spend that is not directly linked to the sale of a product is usually cut as it doesn’t lead to short-term decline in revenue. Businesses also think they may be able to pick up their campaigns again in future quarters when confidence has returned.”
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News media layoffs will affect local communities the most, said Keith Plocek, an assistant professor at University of Southern California’s Annenberg School for Communications and Journalism, in an interview with TheWrap.
“Fewer reporters means fewer stories, especially stories that take time to put together,” Plocek said. “And those are often the most important stories, the ones that speak truth to power, that uncover governmental and corporate malfeasance. This is especially distressing at the local level. There are still lots of reporters covering, say, the [U.S.] Senate. But what about the city council in a rural area? Who is keeping track of those politicians? Who is representing the interests of the people who live there? Who is telling their stories?”
New York City-based BuzzFeed announced on Dec. 6 that it will lay off about 180 people — 12 percent of its workforce.
A digital media-focused news and entertainment company, BuzzFeed was valued at $1.7 billion in 2016, when it raised $200 million from NBC Universal. As of Dec. 7, 2022, BuzzFeed’s market capitalization is $161.40 million.
“In order for BuzzFeed to weather an economic downturn that I believe will extend well into 2023, we must adapt, invest in our strategy to serve our audience best, and readjust our cost structure,” CEO Jonah Peretti said in a company memo, according to Variety.
BuzzFeed’s decision to lay off staff comes in response to challenging economic conditions, its acquisition of Complex Networks and an ongoing audience shift to short-form, vertical video, CNBC reported.
The layoffs will affect sales, production, tech and content divisions for Complex and Buzzfeed, but not BuzzFeed News or HuffPost, according to the company.
BuzzFeed went public in December 2021 via a SPAC or special purpose acquisition company — the first media company to do so. Its merger with Complex gave it a valuation of $1.5 billion.
A representative for the outlet said in a statement to TheWrap, “The company is gearing up for an incredibly exciting milestone: becoming the first publicly traded digital media company, and acquiring Complex Networks. We couldn’t be more excited about everything that lies ahead for BuzzFeed and its employees.”
The largest U.S. newspaper chain, Gannett is cutting about 6 percent of its 3,440-person U.S. media division in its latest round of layoffs. Gannett owns 100 daily newspapers and nearly 1,000 weeklies in 44 states including USA Today, The Indianapolis Star and The Detroit Free Press. Earlier layoffs came in August, when Gannett eliminated about 400 jobs to cut costs and said it would not fill hundreds of open positions. And in October, Gannett CEO Mike Reed told employees the company was offering voluntary buyouts and requiring workers to take unpaid leave.
Gannett has faced a falling share price in recent years as revenue from printed newspapers keeps declining. The company hoped to offset losses with digital subscription revenue and marketing services, New York Times reported.
However, plummeting ad sales have “forced Big Media to reckon with an even bigger problem — cord-cutting and a slowdown in consumer spending on subscriptions,” Sara Fischer wrote for Axios.
Meta laid off more than 11,000 of its 87,000+ employees in early November, reducing its workforce by 13 percent and freezing hiring through the first quarter of 2023. The layoffs mostly affected Facebook, Instagram and WhatsApp and represented the first headcount reduction in the company’s 18-year history.
This followed a seemingly endless hiring spree. At the end of September 2022, Meta had 28 percent more employees than the prior year.
All Meta properties are driven by advertising revenue. The company generated $114.9 billion from advertising in 2021. In July 2022, Meta reported its first-ever loss of advertising sales revenue. The third quarter of 2022 saw a 4 percent loss in revenue, from $29 billion to $27.7 billion, Forbes reported.
Although ad impressions, or the number of ads shown, increased by 17 percent year-over-year, advertisers spent less on ads, with the average price of an advertisement down 18 percent year-over-year.
A new Apple update requires users to opt into data tracking, making it more difficult for Meta to sell highly targeted advertising. Non-targeted advertising is not as valuable, so advertisers pay less.
Hundreds of CNN’s 4,400 employees — a “single-digit percentage” of staff, according to a person familiar with the matter — were laid off Dec. 1, CNBC reported. That would amount to up to 440 staffers, New York Post estimated.
In April, CNN shut down the network’s expensive new streaming service, CNN Plus, three weeks after it launched. At the time, a network spokesperson said that about 350 employees would be affected.
CNN lags behind rivals MSNBC and Fox News in total viewership in 2022, according to Nielsen TV ratings data. That helped push CNN profitability below $1 billion for the first time since 2016, S&P Market Intelligence reported.
CNN parent company Warner Bros. Discovery is under a larger mandate to shore up at least $3 billion by 2024, after acquiring the assets of WarnerMedia from AT&T.
Ad slowdowns are especially hard on digital upstarts — businesses that start without significant external funding, driven usually by the savings and personal-loans from friends. That’s because contracts for digital ads are typically much easier to pull at the last minute than contracts for TV ads, Axios reported.
Axios identified five digital media companies that are laying off staff or shutting down:
Despite signs of a media recession, the New York Times continues to grow its paid subscriber base, gaining about 180,000 net digital-only subscribers in the second quarter of 2022. However, the company generated less digital advertising revenue.
News platform Semafor was able to raise $25 million ahead of an October launch. A global news platform, Semafor was founded by former Bloomberg Media CEO Justin Smith and New York Times media columnist Ben Smith. They are betting on a new article format and newsletters from well-known journalists to compete in a crowded industry that is fighting for readers’ attention, Reuters reported.
News Corp. revenues rose to a record $10.4 billion for the fiscal year ending in June, Axios reported.