University of New York in Prague School of Business Bachelor of Business Administration Program FINAL PROJECT The Relationship Between Newspaper Advertising Revenues and the Growth of Online Advertising and an Analysis of Possible Future Strategies for the Newspaper Industry Author: Nathan James Lord 1 Mentor: Tanweer Ali Acknowledgements I would like to express my thanks to my mentor Tanweer Ali for his support and patience throughout my studies. I would like to express my gratitude to everyone that has assisted me throughout my educational career. I would also like to thank my family for all the help they have given me over the years and my partner for the motivation she has given me during this process. 2 THE RELATIONSHIP BETWEEN NEWSPAPER DECLINE AND THE RISE OF THE INTERNET Abstract This senior project focuses on answering two research questions: Is there a correlational relationship between the decline in UK/USA based newspaper advertising revenue and the growth of global Google advertising revenue? Using a SWOT (strengths, weaknesses, opportunities, and threats) analysis, what are the challenges facing the newspaper industry particularly focusing on UK based newspapers and what strategies should they adopt to cope with such challenges? This area of research is worth investigating because it demonstrates how such an entrenched industry has been affected by a Black Swan event and what business within the industry can do to mitigate the impact. The first research question was answered by using correlational statistics and found that there is indeed a statistically significant negative correlation between UK/USA based newspaper advertising revenue and global Google advertising revenue. The second research question was investigated by conducting SWOT analysis of two UK based newspapers, The Sun and The Daily Telegraph. It was found that although there are significant challenges facing these two businesses there are some strategies they can adopt to continue operation. The newspaper industry has seen a remarkable transformation in the past years and now must continue to adapt to operation post internet. Keywords: advertising, revenue, newspaper, SWOT, industry 3 THE RELATIONSHIP BETWEEN NEWSPAPER DECLINE AND THE RISE OF THE INTERNET Table of Contents 1. Introduction............................................................................................................................6 1.1 Brief Summary of Industry Background..............................................................................6 1.2 Research Questions .............................................................................................................8 2. Methodology..........................................................................................................................8 2.1 Statistical Analysis of Results............................................................................................ 10 3. SWOT Analysis and history.................................................................................................12 3.1 Why We Are Using a SWOT Analysis .............................................................................14 4. History of The Sun ..............................................................................................................15 4.1 SWOT- The Sun ............................................................................................................... 16 4.1.1 Strengths..........................................................................................................................16 4.1.2 Weaknesses......................................................................................................................17 4.1.3 Opportunities...................................................................................................................20 4.1.4 Threats.............................................................................................................................22 5. History of The Daily Telegraph ..........................................................................................23 5.1 SWOT - The Daily Telegraph ...........................................................................................23 5.1.1 Strengths.........................................................................................................................24 5.1.2 Weaknesses.....................................................................................................................25 5.1.3 Opportunities...................................................................................................................26 5.1.4 Threats.............................................................................................................................27 6. COVID-19 Implications.......................................................................................................27 4 THE RELATIONSHIP BETWEEN NEWSPAPER DECLINE AND THE RISE OF THE INTERNET 7. Other Issues Facing Non-UK Based Newspapers................................................................31 8. Suggestions for UK based newspapers.................................................................................34 9. Conclusion ...........................................................................................................................34 10. Works Cited........................................................................................................................36 11. Appendices.........................................................................................................................41 11.1 Appendix A......................................................................................................................41 11.2 Appendix B......................................................................................................................43 5 THE RELATIONSHIP BETWEEN NEWSPAPER DECLINE AND THE RISE OF THE INTERNET 1. Introduction The newspaper industry was remarkably profitable for hundreds of years, but as of recently a Black Swan event has led to the industry facing incredible challenges in order to attempt to maintain the level of profitability they once saw. The purpose of this senior project is to examine what has caused this damage to the industry, the extent of the damage the industry has absorbed, the strategies various businesses within the industry have implemented and what new strategies business in the market could adopt in the future. 1.1 Brief Summary of Industry Background Traditional print media can be defined as “paper publications circulated in the form of physical editions of books, magazines, journals and newsletters” (“What Is the Meaning,” 2020), and has been the staple form of distributing mass media for hundreds of years. Since Johannes Gutenberg invented the printing press in 1440, until the emergence of the internet with its hegemonic acceptance as the dominant form of media distribution, newspapers were one of the primary mechanisms for educating the population of the developed world regarding both global and local events and as a primary source of information were hugely important in shaping public opinion. This resulted in the creation of vast media empires which not only provided immeasurable wealth, to a select few individuals, but also significant political capital due to their unique ability to influence popular opinion to support the objectives of powerful individuals and political groups. 6 THE RELATIONSHIP BETWEEN NEWSPAPER DECLINE AND THE RISE OF THE INTERNET Of course, now it is rare to see an individual reading a newspaper every year seeing further structural declining volumes driven as a consequence of the natural attrition caused literally by the death of newspapers’ readership, as will be demonstrated in this senior project. In addition to this, a fundamental issue confronting the sustainability of printed news media can be attributed to the emergence of the internet which has critically undermined the profitability of traditional business models of newspapers resulting in many facing bankruptcy, particularly in the case of local newspapers. The market disruption caused by the internet has created the need for all newspaper conglomerates to address this situation by applying various strategies to mitigate the effect of the disruption. This paper will discuss the relative successes or failures of these initiatives. The history of the newspaper will be investigated to provide context from which an informed opinion can be drawn. This senior project will focus predominantly on those issues facing the newspaper industry today, the causality of how this situation developed, and chiefly what strategies newspapers can adopt in order to ensure their continued operation. In 1975, weekday circulation of newspapers in the United States of America (USA) was approximately 60 million. Newspapers were responsible for distributing information on all manner of topics to almost every household across the United States of America. They did this in a cheap, cost-effective way in which the final customer, i.e. the reader, expected to pay a small fee and see small adverts for the luxury of obtaining news that was not only held to certain standards, but also accountable for their mistakes and misrepresentation. However, as other forms of media became more accessible to the general population, this number began to dwindle and with the popular adoption of the internet the weekday circulation was closer