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Media and journalism inside the systemic crisis

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 Media and journalism inside the systemic crisis
Rosario de Mateo, Laura Bergés

Introduction
The evolution of media industries can not be analysed as an isolated body, but instead they are
part of the growth and exchange economic model known as the Information Society. Began in 2007,
the crisis of this model has been taken to justify a crisis in media and journalism.
Less advertising, collapses in the share price, falls in consumption, more unemployment make
it is clear that the economic crisis has hit the media industry. But is this just a business crisis, or is it
also a crisis for journalism and its role in democratic societies? And, if that is the case, is the
journalism crisis attributable to the economic crisis or, rather, was it forged during the years of high
profitability and high salaries in the mass media? These two sides of the crisis, in the media industry
and in journalism, are addressed by this chapter, which explores the evolution of mainly Spanish media
in the years before the crisis. We analyse the evolution of media’s supply and demand, its effects on the
results of different types of companies, and the transformations in their business models. From that we
move to analyse the crises in journalism, where the economic interests overhang the general interests.
Changes in media industries have led almost all media to a greater or lesser degree of dependence,
with more trivialization of news, precarious employment and so precarious journalism.
However, in order to understand how they reached the current situation, the political and
economic transformations of recent decades must be addressed -transformations that occurred as
solutions for the previous crisis in the seventies, in what has been called the Information Society and
neoliberal globalization.

Collapse of the Information Society?

The subprime mortgages of September 2007 were the first signs of the global financial crisis,
which would later be extended universally from September 2008 following the collapse of one of the
world's largest banks, Lehman Brothers. Somewhat later, this crisis hit the productive economy,
causing fear and uncertainty in all sectors of activity, both in terms of supply and demand.
But the current financial and economic crisis, which also affects the media, does not seem to be
a short-term crisis like those of 1962, 1987, 1993 and 2001. Instead, it seems to be a structural crisis of
the capitalist economic and social system. Therefore, partial and often disjointed solutions would not
be sufficient. Instead there is a need for structural measures to change the model of production and
exchange created at the beginning of the nineties and known as the Information Society.
The industrial, monetary and oil crisis of the late sixties and early seventies marked the
beginning of the end of the growth and exchange model that appeared after World War II and was led
by the United States. The saturation of existing markets due to overproduction and lower productivity
reduced growth in traditional industries. As a result, the profitability of the industrial sector declined,
prompting heavy debt for companies and countries that were unable to find their own funds to make
investments in other activities, mainly in the service sector, profitable. This was one of the main causes
of the breakdown of the international monetary system created in 1944 in Bretton Woods, which was
substituted by a widespread floating currency exchange rate. The 1973 oil crisis ended the timid
economic recovery that seemed to have dawned, and the world economy changed from a credit system
with excess liquidity to another one with a shortage of liquidity (IASC, 1983, 1984).
From that moment, the grounds were prepared for possible changes in the production and
exchange processes. Given the choice between a reform seeking a more sustainable economy and a
reform whose main objective was still maximum profit, the second option was chosen, and driven by
the Thatcher and Reagan governments, international economic organizations, and multinational
companies. Thus began what some have called the third industrial revolution, or what is now almost
universally known as the Information Society. The proposal for this new growth model was specified
in the US, in 1991, through the High-Performance Computing Act, which led to the Global
Information Infrastructure (GII) proposed by Vice President Al Gore in 1994, and which was renamed
by the European Commission as the Information Society (EC, 1994). Both projects focus only on
economic aspects, not social or political ones.
 15

In those projects, economic growth and trade have their main base in the service sector, where
information and communication technologies (ICT) play a key role. The implementation of ICT will
also be extended to the primary and secondary sectors of economic activity, for greater productivity in
a global market characterized by liberalisation, deregulation and international competition and,
consequently, privatisation of public enterprises, especially those in the service sector, including those
of the audiovisual industry. Furthermore, this model is based on the existence of a flexible regulatory
framework that will assist technological convergence in order to increase the productivity of
businesses, enabling them to accumulate enough capital to be able to act in a globalised market. It is
also based on the role of the market, whose rules command the operation of different industries and
companies, with the financial market being the most extreme case, as it is fully globalised and lacks
any regulation.
Thus, the principles governing the Information Society are certainly not neutral because they
are targeted mainly at economic restructuring, and do not cater for their social impact, which is
promoting the gradual dismantlement of the previous development model known as the welfare state.
The countries that are most deeply involved in this process are world's most developed
countries, which have clear competitive advantages in this new economic order in comparison with
other countries that can only act on the change in tow of the rules issued by the US and the EU, and its
member states, also supported by regional economic organisations such as the Organisation for
Economic Cooperation and Development (OECD), and international economic institutions such as the
International Monetary Fund (IMF), the World Bank and the World Trade Organization. And, as a
fundamental lobby throughout this process, multinational or transnational companies.
In that sense the last round of negotiations under the General Agreement on Tariffs and Trade
(GATT became the World Trade Organization in 1995) was significant as it led to the dominance in
the global economy of deregulation, liberalisation and global competitiveness of services and to the
extension of intellectual property and derived economic rights, with the General Agreement on Trade
in Services (GATS) and the Trade-Related aspects of Intellectual Property Rights (TRIPS) being
signed in 1994. The GATS included, but without any agreement, telecommunications, computer,
audiovisual and other services. The United States succeeded in introducing these controversial issues,
especially the audiovisual one. It was just a matter of time before there would be more agreements, but
the important thing was, despite the cultural exception achieved by the European Union largely at the
behest of France, that the cultural and, more precisely, the communication industry, was incorporated
in the dominant industrial status.
On the one hand, the convergence of telecommunications, computers and audiovisuals created
exaggerated expectations by many analysts because it seemed to generate the possibility of new
businesses whose profitability, in some cases, is still uncertain and, in other cases, has been a failure,
as happened in the late nineties, with the stock market debacle that did away with most Internet-based
companies (de Mateo, 2006). On the other hand, this growth model is based on the service sector
which, since the end of World War II, has taken the highest percentage of the active population and
contributed most to the growth of the Gross Domestic Product (GDP). The problem is that the service
sector depends on economic evolution and the income of the demandants. And, in times of economic
crisis like the present, consumption is reduced, since it depends on surplus income, which questions
the growth model of the Information Society based on the service sector, which has employed an
increasingly less necessary active population.
The Information Society, like before, continued to pursue the maximum profit, which has led to
a continuous and increasing waste of resources and to the pursuit of greater productivity to save those
resources. For labour, it marked the beginning of precarious contracts, with rising unemployment rates,
and decreasing or stagnant wages, which put increasing pressure on the living standards of many
people.
But these limitations of the growth model of the Information Society were masked by a
liberalized financial system, in which, since the early nineties, the financial sector has been the
connecting element between goods and services, consumption, income and debt. Thus, the rapid exit
from the crisis of 1993 and 2001 was due to the indebtedness of households and businesses to consume
and invest. In 2000, that debt was massive and increasing, due to the collapse of interest rates, enabling
 16

economic growth based on real estate and financial speculation and mass consumption by individuals
and families. From 2004 to 2007, growth was based on credit that financial institutions covered with
funds from other financial institutions. This lasted until September 2007, when what was known as the
subprime mortgage crisis emerged, which meant the excessive accumulation by financial institutions
of a debt negotiated to infinity.
This excessive growth, with periods of welfare in developed countries, was at the expense of
unsustainable spending, and often wastage, of resources that now, in 2010, seems to be unsustainable
because such stability has been forgotten. At the same time, one of the elements essential to the
functioning of democracy and the economy has been lost, namely trust.
In Spain, the financial and economic crisis, and that of the media will be long and complicated
as the growth model is based primarily on low added value, low productivity and labour-intensive
industries: construction, automobiles and tourism. That is why in the current economic crisis the
unemployment rate is higher than in other countries. The unemployment rate in Spain was 8.5 in 2006
and 8.3 in 2007; and grew rapidly to reach 11.3 in 2008; and 18.0 in 2008. Moreover, it is also a highly
externally dependent economy, in terms of both energy and capital. With the prospect of more than
two decades, it can be said that the media industry, and mainly its audiovisual industry, followed a
similar development, but later on, to other industries in the process of structural changes to the global
economy that initiated in the late sixties. The dominant media companies have also been immersed in
processes of growth accompanied by liberalisation, privatisation, concentration and
internationalisation in the same way as other industries (Harvey, 2005; Arriola and Guerrero, 2000).
These business dynamics have an overt influence on the social communication markets.
Considered in such a way, the media, like companies from any other economic activity, suffer
from a global economic and financial crisis that is questioning the arguments of the advocates of
neoliberalism. Its choice of unlimited growth, based mainly on the service sector, to overcome the
crisis of the seventies seems to have reached the point of no return. The problems with overproduction,
sub liquidity, debt, monetary, financial and energy crises of the seventies have reappeared from 2007
onwards. The solution is not easy, since the current economic and financial crisis does not seem
cyclical but rather is a structural crisis of the capitalist system that has to cope with its development in
a world of limited resources.

Media companies: transformations towards a crossroad

In this changing context, the media industry has been subject to a transformation combining
new technological opportunities, greater availability of financial resources, changes in advertisers’
expenditure strategies, reassignments in audience markets, and changes in corporate governance.
Too much media?
The media industry crisis can be characterized as a crisis of overproduction, after two decades
of expanding communication markets. The excess production of consumer goods which, among other
factors, led to the crisis of the seventies would therefore affect the production of services that during
the nineties absorbed surplus capital from other activities, leading to a crisis of overaccumulation
(Bellamy Foster and Magdoff, 2009). Ever since the eighties there has been continued growth in the
supply of media, either by the expansion of the supply of traditional media or by the emergence of new
media (see Table 1).
Table 1. Media supply in Spain: 20 years of growth

1989 2012
Television
National free to air channels 4 30
Pay-tv channels 1 108
Regional channels 8 47
Local channels 100-200* 1,117
Radio
FM stations 389** 6,186
General programming national
3 5
networks
Regional public networks 8 27
 17

Daily press
National press published in
2 4
Madrid
National press published in
2 2
Barcelona
Sport news 4 5
Financial news 2 5
Regional and local press 70 80
Freesheets for big cities - 2
Internet
≥ 7.25
Information indexed by the major
- billion
search engines
websites
Digital media controlled by OJD - 357
Source: the author is using data from TDT and Impulsa European Audiovisual Observatory 2009-2011, for television;
Amoedo 2008 for radio stations, http://www.worldwidewebsize.com/ for internet, local tv *: estimates for 1991, Guimerà,
2006. ** Does not include publicly owned stations.

In Spain, there were 2 national channels and 8 regional channels in 1988, while in 2012 there
were more than 1,000 channels, in addition to the growing online audiovisual offer. There has been an
increase both in the public sector, with new regional, local and national channels, and especially in the
private commercial sector, most favoured by new broadcasting technologies (cable, satellite, DTT,
IPTV). As for the printed press, after the restructuring of the market in the eighties following the fall of
the dictatorship, and going into the nineties, two new national general interest newspapers were born-
El Mundo, in 1994, and La Razón, in 1998 - and in the 2000s, another pay-newspaper appeared –
Público, in 2007 - along with four new free nationally circulated newspapers - 20 minutos, in 2000;
Metro, in 2001; Qué!, in 2005; and ADN, in 2006. Three of these new titles – Público, Metro and
ADN- have not survived the crisis, together with some regional and local papers, which have closed the
doors between 2010 and 2012. Anyhow, the Office for the Control of Circulation (Spanish acronym
OJD) controlled, in 2012, 98 dailies, compared to a total of 80 newspapers in 1989, with a greater offer
of financial, sports and local newspapers.
The number of radio stations and networks has also been increasing steadily since the approval
of the Technical Plan of 1989 (Royal Decree 169/1989). With that plan, the number of frequencies for
the commercial exploitation the FM wavelength grew from 389 to 758. And, in 2006, a new technical
plan was approved (Royal Decree 964/2006) that licensed 866 new frequencies to private radio, which
meant an increase of 83.4%; and 235 for public radio, with a 48.7% increase on the previous situation.
The emergence of new electronic media has been added to the increasing supply of traditional
media, opening the door to a market for wide content in which media companies compete with
governments, other companies and institutions, citizens and social organisations to offer cultural,
informative, advertising and entertainment content directly to users. In addition to websites, social
networks and blogs are other public spaces not only for personal and group communication, but that
sometimes also act as social mass media (for example, Twitter and Iran). The major search engines
offer access to at least 21.39 billion websites, corresponding to the visible web, which occupies 167
TB of information. There is also the invisible or deep web that multiplies the figures, with an amount
of information calculated at 91,000 TB. Although this information is inaccessible to main search
engines, technologies to expand the coverage of the search tools are developing to provide greater
coverage of the entire web.
Among this vast amount of information scattered across the net and accessible from anywhere
in the world, national rates of Internet use can delimit a smaller supply of digital media and
comparable sites. In Spain, for example, the OJD controls 357 sites, including online newspapers and
television, and a few radio stations, but also some corporate websites, political parties, classified
advertising sites and thematic portals, among others.
Thus, in the nineties and 2000s, there was a significant increase in the supply of media, driven
mostly by the same traditional media companies that pursued multimedia, horizontal, vertical and
conglomerate growth strategies. The growth was also driven by the entry of new players, competing
with media companies, especially in the new digital markets, where these companies converge,
 18

compete and cooperate with telecommunications and ICT multinationals as well as with companies,
institutions and citizens that also offer content through digital networks.

Adspend: less money for information, more money for entertainment and personalised
messages
The increase in the number of media, services and communication technologies has led to a
major restructuring of advertising markets, cushioned by a shift of total advertising expenditure in a
context of economic growth, interrupted by short-term crises in 1993 and 2001. The development of
below-the-line advertising should be noted as the major change in advertising markets, thanks to the
liberalisation and development of telecommunications and ICT, and through a progressive
"colonization" of new spaces / times as carriers of commercial messages, which include facades,
public and private vehicles, sport and cultural events and centres, among others. According to Infoadex
studies, in Spain below-the-line advertising1 represented 20% of total advertising expenditure in 1980;
it grew rapidly through 1989-92 to reach 53%, surpassing media for first time in 1991. From there,
Infoadex data allocates just over half of the investment in below-the-line advertising (between 51/54%
of advertising expenditure in the 1991-2011 period). Other sources calculate the weight of above-the-
line advertising to be below 25% of the total expenditure by companies on advertising services (Bergés
et al., 2006, with input-output tables INE-Idescat).
In any case, from the nineties on, in a context of saturated markets, companies have increased
their advertising efforts and sought methods for more personalised promotion to create a more direct
and enduring relationship with consumers. This translates into significant growth in telephone
advertising, mailing and brochures, first, and in the 2000s, the use of email, social networks and other
forms of advertising that seek personalisation through new digital ICTs (behavioural-marketing, search
engines and social network marketing, viral marketing). There has also been a major increase in
expenditure on in-store advertising and signage, sponsorship and, although with less weight,
advertising linked to games.
Thus, traditional media have to face increasing competition from other media in attracting
advertising revenue. This will determine their strategies, including the definition of products, which
must be more attentive to the interests of advertisers and major advertising companies that concentrate
the greatest purchasing power. The high presence of sport in the supply of media can be explained by
its high advertising value: it admits sponsorships that subsequently gain notoriety thanks to the
presence of sport in the media, while also serving as a vehicle for other advertisers.
Figure 1: Media adv ertising market share (1980-2011)

50,0

45,0

Telev is ion
40,0

35,0
market share (%)

30,0

25,0

20,0

15,0 Internet

10,0 Radio
Outdoor
Magazines
5,0
Supplements
Cinema
0,0
80

82

84

86

88

90

92

94

96

98

00

02

04

06

08

10
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

Source: the author using Infoadex data and estimates for 1989-1991

1
According to Infoadex, below-the-line advertising includes: personalised mailing, brochures and mail, marketing by
phone, promotional gifts, signage, exhibitions and fairs, sponsorship and social marketing, sport sponsorship, business
publications, directories and yearbooks, promotional games, rewards or loyalty cards, and mobile marketing. Above-the-
line advertising includes: daily press, Sunday supplements and magazines, radio, television, cinema, internet and outdoor
advertising.
 19

Moreover, and as in the above-the-line advertising market, the introduction, in the nineties, and
subsequent expansion of the private television market (with new free-to-air channels in 2003/05, and
more public channels also financed by advertising) has resulted in a greater concentration of media
advertising expenditure in television at the expense of newspapers and magazines, the media that has
lost the biggest market share. The press has also suffered from competition from outdoor advertising
(especially since 2001) and, as from 2006, internet. In Spain, the press’ share of the advertising pie has
been in decline since the late eighties: 30% in 1980, and 36% in 1988; 30.4% in 1991; 29.1% in 2001;
21.2% in 2008; 17.6% in 2011. Magazines also lost much of their share after the introduction of
private television (Figure 1).
As the supply of advertising media has changed (more promotional vehicles), so has the
demand for advertising. The changes in this demand, and particularly above-the-line advertising
expenditure, have been linked to the evolution of the economy; although the relationship between GDP
and advertising expenditure is not strictly parallel (Figure 2). The economic crisis of the early eighties
was cushioned by the development of media and advertising systems after the dictatorship, leading to
growth rates in advertising expenditure in Spain of over 20-30% throughout the decade (current rates),
which was considerably above current GDP growth rates.
In the nineties, advertising expenditure grew at lower rates than the variation in economic
growth, except in 1991-1992, with the expansion of the advertising market due to the introduction of
private television, and in 1998-1999, when advertising demand grew more than GDP, driven by the
major promotional effort by the sectors subject to liberalization and privatization (telecoms Telefonica
and Retevisión / Auna appeared among the main advertisers just after its privatization was completed).
The economic growth after the 2001 corresponded with similar growth in advertising expenditure,
which plummeted in 2008-2011, with the traditional media being the most sensitive to the crisis.
Figuere 2: Evolution of ad spending relative to GDP (1981-
2011, current prizes)

50,0

40,0

30,0
% variation

20,0

10,0

0,0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

-10,0

-20,0

Ad spending GDP

Source: the author using data from Infoadex and INE.

The decrease in advertising expenditure was greater than the fall in GDP, due to the weight in
advertising markets of some of the sectors that were most affected by the crisis (automobiles, finance,
culture and media, construction, public sector) and the high concentration of expenditure by a few
companies. These major advertisers are cutting investment by migrating to digital media at a time
when the media mix is being restructured (WARC, 2009, 2010).
It should be noted that 90% of the investment controlled by Infoadex corresponds to 20% of all
advertisers: major brands with multimedia advertising expenditure, both in traditional media and in
new media, that ultimately also affects the former, for example, through sponsorship or outdoor
advertising. On the contrary, more than half of the advertisers controlled by Infoadex only spend on
newspapers (Infoadex, 2012), which have, therefore, an important position in the market for small and
medium advertisers.
 20

Audience mutations
The restructuring of the media industry and markets also includes increased media consumption
and a redistribution of audiences. From 1999 to 2012, newspapers, radio and, especially, the Internet,
have increased their penetration, while the audiences of supplements, magazines, television and film
have been reduced (Figure 3).

Figure 3: Use of m edia in Spain (1999-2012)

100
90
% population (≥14 years)

80
70
60
1999
50
2012
40
30
20
10
0
ts

et
s

a
n
s

io
er

en

io

em
rn
ne

ad
ap

vis

te
m

in
R
az
sp

In
le

le

C
ag
pp

Te
ew

M
Su
N

Source: AIMC, 2012. Press, Radio, Television: users/day. Internet: users/yesterday.

Supplements and cinema: users/week. Magazines: users/publishing period.

In the late nineties, the Spanish rate of daily press readers fell to a minimum of 35.2% in 1999,
before rising again from 2003 to 2008 (42.1%). This increase should mainly be attributed to the free
sheets, which in nine years has reached about six million readers. Withdrawal of some titles in 2011-
2012 has brought down the number of readers to 37%. Sports and general interest national newspapers
also gained readers. Less importantly, the financial press also increased its readership over those five
years. In contrast, the evolution of the regional press was more variable, but with a downward trend
(Table 2).

Table 2. Readership of the top 50 newspapers (thousands of readers)

Growth Growth
2011-2012 2000-2001
(readers) (%)
National press 4.057 3.336 721 21,6
Regional and local press 8.010 8.188 -178 -2,2
Sports press 5.879 3.721 2.158 58,0
Freesheets 3.495 221 3.274 1481,4
Financial press 375 146 229 156,8
Source: the author using data from AIMC, 2012 http://www.aimc.es

However, increased readership has not meant increased sales (Table 3). National newspapers
did increase their sales up to 2007, thanks to the emergence and upward trend of new titles. Meanwhile
the older newspapers evolved in variable fashion: rising for La Vanguardia and, slightly, El Pais; down
for ABC and El Periodico. In the sports press, a growth in readership does not correspond to more
sales. Instead, circulation decreased, mainly due to the poor performance of the leading title, Marca.
But, undoubtedly, it has been the regional and local press which has suffered the greatest decline in
circulation, although the Catalan press developed more positively.
 21

Table 3. Daily press circulation 2001-2008

Growth Growth
2011 2001
(copies) (%)
National press 1.031.010 1.087.438 -56.428 -5,2
Regional and local press 1.535.566 2.087.909 -552.343 -26,5
Sports press 638.952 787.307 -148.355 -18,8
Financial press 192.248 104.965 87.283 83,2
Free sheets 1.455.778 247.782 1.207.996 487,5
Total 6.389.120 6.403.310 -14.190 -0,2
Number of titles controlled 99 93 6 6,5
Source: the author using data from OJD. http://www.ojd.es/

The largest increases therefore correspond to reading figures, and not sales, making press
viability more dependent on advertising revenue. Since 2003, when sales of copies accounted for 46%
of daily press income, the weight of circulation in the income structure fell to 38% in 2007.
Newspapers have tried to stem this loss of income and buyers by selling other products associated with
the newspaper, which came to assume about 10% of revenue in 2005-2006. However, these
promotions, which do not add informational value to the product itself, have proved ineffective for
retaining or attracting new buyers, such that the policy of reducing costs has led to a reduction in its
role and weight in income. It should also be noted that readership of newspapers increases in all age
groups until 2009, even among the youngest, resisting competition from internet better than other
traditional media, mostly due to the expansion of free sheets. From 2010 onwards, however,
newspapers have been loosing titles and readers, especially among people under 34 years (Figure 4).

Figuere 4: Daily press readers per day. Evolution by

age, 2001-2011

45

40

35
% of population

30

25 2001
20 2011

15

10
5

0
14-19 20-24 25-34 35-44 45-54 55-64 65 and more

Source: AIMC, 2002, 2012

The social penetration of radio improved three points over 2001, reaching ratings of up to 58%
of the population in 2004. Although in recent years the rate has decreased to 55.2%, the radio audience
seems to have stabilized around that index. The greatest increase in audience, between 2001 and 2011,
corresponds to music radio, earning 5 million listeners. All-news networks also gained audience, while
growth has been lower for general interest radio (Table 4).

Table 4. Radio audience in Spain, 2001-2011 (thousand listeners)

Growth Growth
2001 2011
(listeners) (%)
General interest 10.804 11.411 607 5,6
Music 7.703 12.738 5.035 65,4
All news 935 1.382 447 47,8
Source: the author using data from AIMC, 2012
 22

In this period, the evolution of audience share shows a concentration of listeners in the Prisa
group networks (Ser, C40, Cadena Dial, Máxima FM). In general interest radio, Prisa-Ser increased
its audience share, to 36%. The remaining market is more fragmented (share between 4-20% for
national networks, and less than 4% for regional ones), with increases for new networks and, to a
lesser extent, for COPE. Public radio lost its audience share, both RNE, the national network, as well
as some regional public networks.
The growing number of licences for commercial exploitation of FM has had a major impact on
the musical spectrum, increasing the audience fragmentation which already characterized the musical
radio market. However, music networks operated by Prisa have kept their position, even increasing 3
points of their market share, up to 64%. The rest is divided between three national music networks,
with audience shares of 8-13%, and other networks (national and regional public and private
networks), with market shares below 5%. Thematic radio, meanwhile, has gained audience thanks to
the increase in listeners to new private networks (sports and music, Intereconomía). In contrast, R5TD,
an all news national public radio, has lost listeners.
Television has lost one point of its average daily audience in the last decade, but remains the
most used media, with an average daily audience of 88.6% of the population. Despite this reduction,
however, the average time devoted to television has risen to 238 minutes per person per day, in 2011,
eleven minutes more than in 2000. That is, less people consume more television. TV consumption has
declined especially among younger people, but also in other age groups (Figure 5).

Figure 5: Television view ers per day. Evolution by

age, 2001-2011

100
95
90
85
80
75
% of population

70
65
60
55 2001
50
45 2011
40
35
30
25
20
15
10
5
0
14-19 20-24 25-34 35-44 45-54 55-64 65 and
more

Source: AIMC, 2002, 2012

Besides falling younger audiences, the major change in TV demand has been greater
fragmentation, with pay-tv and new free-to-air channels created from 2005 gaining audience. Thus,
audience share of the three traditional mainstream channels fell from 70% to 51,46% between 2001
and 2011, although the free-to-air national channels as a whole have maintained and even exceeded
their share (from 76 to 80,3%). The regional public channels have a lower share, despite there being
more channels, while pay TV gained audience.

Table 5. TV audience in Spain, 2001-2011

Growth
2001 2011
(share points)
TVE+T5+A3 70,3 51,4 -18,9
All national free-to-air channels
75,8 80,3 4,5
(TVE+T5+A3+Cuatro+La Sexta)
Regional and local channels 18 11,9 -6,1
Pay-tv 2,7 4,8 2,1
Other channels 3,2 2,3 -0,9
Source: AIMC, 2002, 2012
 23

Media companies in the red? Not all, not always.

The restructuring of media and advertising markets has had a different effect on the results of
different types of companies in those markets. The crisis of 2008-2009 represents an abrupt change for
many companies that have had years of profits, but arrived too late for many media companies that had
already experienced their crises and that in the past two decades have had to close their doors or have
been acquired by larger media groups.
Two groups stand out for their expansion into the daily press market, Prisa and Vocento. With
different strategies, both groups have achieved a leading position in terms of audience, circulation,
turnover and profits. Prisa’s strategy was based on leadership of general news and its struggle for
leadership in sports and the economy; Vocento’s was based on the merger with ABC, in the national
market, and its expansion into regional markets.
But in contrast to the success of these two groups, there have also been some failures among
the titles launched in the last two decades: El Sol and El Observador only resisted for a few months
before closing; El Mundo settled its place in the market, with positive results in the nineties but with
more difficulties in the 2000s, when it was eventually integrated into the Italian media group RCS.
More recently established journals, La Razón and Público, have presented negative results since they
were launched, meaning 14 years of losses for La Razón, and the withdrawal of Público.
Thus, the national press published in Madrid came into the crisis with positive results for El
País, but was in the red for El Mundo, ABC, Público, La Razón, and also for the financial press. The
regional and local press results are more diverse, both in recent years and in the past two decades. But
the best figures are those for local titles integrated in large press groups. Prisa and Vocento each
accounted for about 24% of the turnover of the top ten press groups, and El País (Prisa) and Correo
(Vocento) were the two companies with the highest net profit in 2010.
Economic results from the expansion and restructuring of the radio market have been different
too. We should first note the prominent position occupied by networks controlled by Prisa, thanks to
takeovers of smaller networks, syndication agreements with independent stations and expansion with
new licenses. Prisa concentrated around 50% of sales and 65% of profit of the large Spanish radio
networks in 2010. Prisa has achieved positive results in a growing radio business, which has been
reinforced by the group's position in the Hispanic music market with radio stations and record
companies in Spain and Latin America.
For the other actors, results have been more diverse, with all companies going through some
period of losses, either due to their introduction in the market (Punto Radio), or to changes in markets
and changes in ownership: COPE, the Church’s network, announced losses for some years in the
nineties; Onda Cero accumulated losses in the nineties and in 2000, although positive results appear to
have been consolidated since 2004, after Planeta was floated on the stock exchange, although it was in
red in 2010.
In the case of radio, then, the crisis came after a major restructuring of the sector over the past
20 years, which has resulted in greater concentration in large media groups, in particular, in Prisa,
added to the peculiar presence of the Church in the Spanish radio system. Smaller radio companies
suffered a crisis in the eighties and nineties, and were mostly integrated into the large media groups.
Only in the music sector were there a few independent networks with positive results (Kiss FM, with a
national music network; Flaix and Teletaxi, in Catalonia).
Radio markets also illustrate the different evolution of informative media and that of
entertainment/fiction media. The business of general interest radio is limited to fewer actors, and it is
more difficult to achieve profit (in absolute terms and profit margin). Instead, music radio has
performed better economically and admits a greater level of competition between players of varying
size.
In the television market, free-to-air TV companies have accumulated positive results since
1994/1995, with just a year of net losses in Antena 3 TV, because of the restructuring of its ownership,
revision of valuation of content stocks and other extraordinary circumstances, while maintaining a
positive operating margin in all years. Among the main channels, Telecinco presents itself as the most
profitable TV channel in Europe. On the contrary, Cuatro (Prisa) and La Sexta (Imagina-Televisa)
 24

have been introduced at losses, pushing for mergers: Cuatro was bought by Telecinco in 2010, and La
Sexta by Antena 3TV.
Expanding the supply of pay- television with new technologies has resulted in losses, once the
monopoly of Canal + in the pay-tv market was broken in 1996. Since then there has been:

 the merger, due to losses, of the two competing satellite pay-tv platforms, Sogecable and Via Digital, in
2003. Later, in 2010, this pay-tv platform, Digital +, was sold to Telefónica and Telecinco, with Sogecable as a minority
holder.
 the collapse of Quiero TV, the pay DTT platform;
 concentration on cable television, with ONO (resulting from the acquisition of regional independent
companies and the merger with Auna Cable);
 emergence of new IPTV, also with losses.

In pay-TV, Sogecable achieved a positive operating margin in 2002-2007, but net results have
been negative since the launch of the payment platform, except in 2005. In terms of costs, the main
reason for losses in pay-tv are the high prices paid for sports broadcasting rights and film rights, and
changes in the market for broadcasting football. In late 2007, Sogecable accumulated losses up to 777
million Euros (Annual Accounts 2007). In terms of income, demand for pay-tv appears to have been an
elastic demand, limited by the evolution in purchasing power, and increasingly fragmented between
different technologies. Pay-TV, therefore, has to face the crisis in an unstable market, subject to
technological, regulatory and business changes, and also in audiovisual consumption, which have
further impeded the path of profit in this business.
 25

Table 6. Net results of the main media in Spain (2001-2010)

2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
El País 10.555.000 -1.300.000 27.670.000 73.902.000 74.911.000 96.635.000 83.974.000 54.419.000 48.020.000 34.927.000
El Mundo-Unidad Edit. -16.995.000 -13.464.000 4.203.000 19.023.000 23.015.000 23.834.000 20.531.000 -1.649.000 -5.971.000 503.000
ABC -15.187.422 -24.989.929 -6.519.352 -12.484.964 1.820.110 5.769.612 10.220.620 2.294.450 251.120 2.489.140
La Razón -3.703.885 -8.547.478 -12.223.473 -4.031.725 -249.074 -5.375.772 -6.902.795 -17.817.454 -23.054.002 -24.397.151
Público -7.921.403 -15.089.241 -23.631.365 -12.402.225
National press Madrid -16.274.705 -49.940.112 -14.699.987 45.002.109 76.505.051 97.052.674 87.312.356 38.894.347 25.211.147 13.019.492
La Vanguardia -1.208.958 -4.090.595 -7.182.385 2.551.950 14.146.990 16.308.820 14.275.024 11.558.207 3.802.090 4.540.858
Ediciones Primera 3.544.859 1.903.358 -11.241.363 5.764.991 4.452.757 7.343.982 13.426.209 11.494.365 9.512.613 10.529.770
Plana-El Periódico
El Correo 12.649.303 11.655.592 16.837.171 22.611.296 20.036.738 18.044.809 38.387.536 11.720.238 11.209.993 12.200.147
Main regional press 14.985.204 9.468.355 -1.586.577 30.928.237 38.636.485 41.697.611 66.088.769 34.772.810 24.524.696 27.270.775
As 10.330.000 7.290.000 7.707.000 11.021.000 9.561.000 7.625.000 3.378.000 3.782.000 3.499.000 488.000
Mundo Deportivo 2.954.151 1.190.114 -218.046 802.453 1.920.654 1.599.834 1.767.309 1.611.358 1.165.426 1.639.852
Sports press 13.284.151 8.480.114 7.488.954 11.823.453 11.481.654 9.224.834 5.145.309 5.393.358 4.664.426 2.127.852
Cinco Dïas -246.000 -323.000 22.000 592.000 209.000 169.000 -2.072.000 -2.212.000 -1.199.000 -946.000
Gaceta de los Negocios 415.326 -8.349.464 -11.152.138 -8.399.675 -5.870.490 -5.050.465 -4.410.119 -3.393.586 -3.284.778 -2.597.727
El Economista -3.385.107 -5.945.636 -6.427.898 -6.659.714 -2.021.247 -6.929
Financial press -3.215.781 -14.618.100 -17.558.036 -14.467.389 -7.682.737 -4.888.394 -6.482.119 -5.605.586 -4.483.778 -3.543.727
Total press 8.778.869 -46.609.743 -26.355.646 73.286.410 118.940.453 143.086.725 152.064.315 73.454.929 49.916.491 38.874.392
SER 38.779.000 29.453.000 24.623.000 44.903.000 28.696.000 24.730.000 18.965.000 19.829.000 23.199.000 34.080.000
Uniprex-Onda Cero -219.000 7.345.000 1.629.000 18.853.000 75.061.000 4.943.781 -2.856.062 -162.947.411 -23.026.231 -279.722
COPE -9.072.619 -9.183.383 326.042 3.743.970 3.939.547 4.280.877 3.855.485 3.926.554 2.942.961 2.527.788
Punto Radio -4.051.718 -4.704.712 -10.280.127 -5.278.718 -7.584.773 -3.866.086 -6.504.760 -44.018 -104.171 -79.472
Total radio 25.435.663 22.909.905 16.297.915 62.221.252 100.111.774 30.088.572 13.459.663 -139.235.875 3.011.559 36.248.594
Telecinco 113.934.000 68.461.000 269.222.000 319.331.000 318.710.000 312.088.000 186.620.000 81.808.000 52.312.000 78.852.000
Antena 3 TV 91.818.000 47.829.000 91.940.000 175.387.000 306.900.000 207.472.000 102.859.000 -208.351.000 -31.293.000 39.416.000
Sogecable 720.345.000 -56.868.000 -28.383.000 15.533.000 -216.029.000 -42.158.000 -157.193.000 -320.702.000 -58.537.000 1.603.000
La Sexta -39.747.938 -77.159.161 -93.218.787 -114.214.198 -138.491.969 -449.392
Veo TV 57.229 18.419 8.740 667 -9.208.121 -1.779.634 -991.294 -1.036.834 -999.296 -430.187
Net TV 4.440.258 2.100.945 -283.200 -9.584.907 -9.115.605 -1.353.048 -1.847.154 -2.401.217 -745.684 -525
Total television -34.324.354 -74.980.375 -93.160.468 -123.288.187 -156.406.114 -3.104.672 -2.706.162 -3.885.296 -1.782.498 -310.841
Source: the author using data from annual accounts available in Bureau van Dijk database, 2011
 26

A business increasingly dependent on external funds

The expansion of the Spanish media industry over the past two decades has led to a shift in
business models from "family" companies, with an integrated production in which funding was
based on sales of copies and advertising, to multimedia groups, with a largely outsourced
production model and more dependent on advertising revenue and external resources.
As noted, the expansion of the supply of media has occurred mainly in the field of free
advertising-financed media: free newspapers, free-to-air private television, new radio frequencies,
websites and social networks on the Internet. In terms of demand, the greatest growth has also
occurred in advertising, while growth in sales to audience, readers or, pay-TV viewers, has been
lower. Given the limits in demand for paid-contents by audiences, companies have pursued
strategies to reduce costs, increase and diversify income and increase external resources.
To reduce costs, companies have adopted strategies of outsourcing parts of production and /
or marketing, to reduce fixed costs of personnel and equipment, and gain flexibility to adapt to
market changes. Outsourcing is higher in television, by the very nature of the business, but also
affects the press, substituting part of the staff and its own equipment with purchases by external
partners and agencies. It is noteworthy that, in the last decade, personnel costs have corresponded to
a lower proportion of income, while material and services consumption and the profit margins of
companies have increased.
However, outsourcing is sometimes not such, but is rather the decentralization of production
among different companies and operating centres inside the same corporate group. As in the case of
Digital + or Telecinco, part of the production is outsourced, but to companies that are subsidiaries
of the same business group. In this case, the group secures control of processes and supply, but at
the same time, creates different societies and is able to act more flexibly in different markets to seek
new sources of income. This is the case with Telecinco, which orders news production from its
subsidiary, Atlas, which, at the same time, can sell news and images to other media, thus improving
the profitability of investments.
Cost reduction has also come about through agreements and alliances between companies to
achieve scale economies. These agreements involve limited competition and, in some cases, have
ended in mergers or takeovers. In the press industry, agreements between companies for the printing
and distribution of newspapers are common, such as the agreements between Vocento or Prisa with
some local newspapers, which were eventually integrated into these groups. In local and regional
television, it is also easy to find agreements for the acquisition of contents, which in many cases
have led to the formation of networks, such as Localia TV, which disappeared in 2009, and Canal
Català, among others.
Besides reducing costs, companies have sought to increase advertising revenue by bringing
out new products and diversifying production to be in any media. Thus, the companies operating in
the pay-press market (Vocento, Planeta, Zeta, regional publishers) have used their production
equipment to create free sheets, and to protect and expand their advertising portfolio against
competition from new multinational players, although some of these new titles have been closed in
2010. Moreover, the growth of mass media companies in Spain is based on their expansion into the
audiovisual business, where most of the advertising expenditure is directed.
Furthermore, given the limits on cost reduction and increase in revenues, companies have
sought external resources to complete their financing. In this way, they have benefited from the
liberalisation of financial markets and the relaxation of limits on the concentration of ownership and
other rules on the capital stock of TV companies. The growth in external resources corresponds both
to capital increases and a growing debt.
In the nineties, the launch, with losses, of private television enjoyed the financial support of
the major European media groups and Spanish banks. Later, satellite and cable pay-tv platforms
benefited from financial resources from banks and investment firms, multinational companies and
companies from other activities (electricity, tobacco, construction), which took part of the capital of
the platforms. The free sheets in big cities was introduced with financial support from international
investment funds, shareholders of Metro International and Schibsted-20 minutes.
 27

Intra-group financing should also be considered in this category, where the profits of an
activity are intended to be used to finance the groups expansion into other activities. This applies to
the expansion of local television markets, where Prisa and Vocento could earmark a portion of the
profits generated by their news divisions to finance local channels, especially in those markets
where they were already present. Also small press publishers took advantage of the resources
generated by the press and its advertiser’s portfolio to expand their activities to the audiovisual
market, enduring several years of losses. However, this growth in the local markets has been
interrupted by the fall in advertising spend on local media and increasing competition from thematic
national DTT channels. The Planeta-deAgostini group disposed of the resources generated in the
publishing business to expand its activities into TV, and to finance the loss-making introduction of
the daily La Razon. Media corporations also opted to make their companies public to attract more
financial resources from the stock market and improve profitability for large shareholders. In early
2000, Prisa and Sogecable, Telecinco, and Antena 3 TV went public.
Finally, we should note the increasing debt of media groups. In the nineties, the expansion of
private television involved banks, not only as shareholders, but also as creditors, allowing high
levels of debt, up to 11% for Telecinco in 1994 (measured by assets/equity). Later, the expansion of
large groups and the emergence of new products also heavily relied on borrowing, taking advantage
of the close relationship between media groups and financial institutions. We could highlight the
case of Prisa, who, in 2008, reached a debt ratio of 6.4% (assets / equity). In many cases, the
companies chose indebtedness to improve capital efficiency thanks to financial leveraging. But
financial restrictions from 2009 onwards have pressed the most indebted companies. That is the
case of Prisa, which was forced to sell its television division and to restructure its share capital with
new investors from the US.

Table 7. Debt, personnel costs and profit margin

in the main media groups in Spain (2001-2011)
PRISA Antena 3 TV Vocento
2001 2,5 1,5 no data
2002 2,4 2,0 no data
2003 2,5 3,5 no data
Debt 2007 4,8 2,8 1,9
(net assets/equity)1 2008 6,4 3,3 1,9
2009 6,0 3,0 2,1
2010 3,1 2,6 2,0
2011 no data 2,7 no data
2001 26,1 20,4 no data
2002 26,7 22,2 no data
2003 25,2 22,9 no data
Labours costs 2007 16,9 13,5 30,7
(% on income) 2008 16,7 17,6 37,2
2009 19,3 20,7 41,0
2010 21,0 16,7 31,8
2011 no data 17,1 no data
2001 6,5 8,3 no data
2002 6,5 -4,7 no data
2003 4,8 -32,7 no data
2007 7,1 19,7 9,8
Profit margin
2008 3,2 11,9 3,6
2009 2,0 9,3 -0,4
2010 -2,6 14,1 1,6
2011 no data 13,0 no data
Source: the author using data from annual accounts available in corporate websites
 28

Journalism loosing its democratic function?

Changes in the political-economic context and in media markets and industries have
obviously affected the forms of making journalism, and the very situation of journalism in the
communication system and in the social system. Some of the main protagonists of the Information
Society or globalisation projects are at the core of the media framework, either as shareholders and
directors, creditors or other external lenders or advertisers. Changes in advertising markets and
audience markets put pressure on the definition of products (that is, in the definition of content
offered by media) to make them increasingly attentive to market research. Expenditure on
production is optimized for maximum productivity with content able to attract audiences and
advertising. The marketing, production and financing strategies of media companies should be
considered, then, as to be new strains of the journalism model in the Information Society.
For years, information and even entertainment through media were considered (and in some
cases, apparently, still are) a public service due to their capacity to legitimize, reinforce and
reproduce the political, economic and social values of the system. The situation changed with the
liberalization of television, which strengthened economic arguments in managing the media. In this
context of commodification of communication and journalism, the oversupply of content makes it
more difficult for firms to compete in communication markets. This involves finding new ways of
reaching bigger audiences and reducing costs in order to make investments profitable, even at the
expense of trivializing and diminishing the quality of the product.
So media have been losing their social function, and have become more concerned with
achieving the maximum profits and a share of political and economic power, as described by
McChesney (2003). For example, due to their political and economic interests, dailies do not give
(except occasionally) quality differential information, or have independent information.

Journalism independence down in the dumps

Economic trends and social policies in recent years have led almost all media to a greater or
lesser degree of dependence. Three types of lack of independence should be mentioned that
condition much of the content they offer: financial, political and journalist’ lack of independence.
On the one hand, cuts in corporate budgets and a large range of workforce in journalism
have been associated with a high level of job insecurity. Along with the growing tendency to report
as quickly as possible, that job insecurity has made journalists hugely dependent on information
coming from official sources and what is commonly termed as statement journalism.
Every day, thousands of stories from news agencies, communication departments of private
companies and public institutions come to the newsrooms. This information is a raw material that
lowers the cost of media companies which is justified by considering this form of journalism more
"objective." But, in fact, this journalism made up of press releases and statements has come to
determine the agenda-setting of the media: official sources determine around 70% of the news
published in the media, and there is an increasing number of journalists working for the sources, in
communication offices and corporate communication departments. The ongoing reduction of
newsrooms staff is even increasing the percentage of news made by the sources. Little margin
remains, then, for the selection, criticism and contrast of information or investigation by journalists
due to the limited time and resources they have at their disposal.
A part of “agenda” journalism, one cannot ignore what could be dubbed "failure by
commitment." The media’s dependence on funding sources has led them to go on tiptoe, or just not
mention, information that may damage the image of important advertisers, sponsors and financial
institutions that provide them with resources. The shareholders of many groups and media
companies include companies in other sectors that were favoured by the neoliberal policies of the
90s and diversified their activities by investing in media companies. In addition, as has been pointed
out, heavily indebted media companies also depend on credit institutions.
This explains the lack of independence on economic grounds that the sector suffers: How
can the media report on the current crises or conflicts involving a particular bank if its economic
and financial viability depends on it? Therefore, it has been hard to find quality articles and in-depth
 29

analysis of a financial system that, with the crisis, has come across as a naked king being fed by the
media. While financial institutions covered capital needs for the expansion of large media
companies, these media groups repaid them by covering their communication needs, as discussed
by Almirón for the case of Prisa-Santander (Almiron, 2007). For example, the court cases against
Banco Santander and its chairman, Emilio Botín, went unnoticed in a country that fills its talk-
shows with court cases, but which are related to accidents, crimes and reality TV. Neither are the
problems with excess liquidity and solvency of many financial institutions in the current crisis
mentioned; nor is there much comment on the difficult situation of many construction and real
estate companies which in recent years have supported many local media and, in some cases, large
groups too.
The third level is enterprises’ lack of political independence. Communication policies in
Spain are characterized by fragmented legislation, sometimes improvised according to the political-
economic situation of the moment, and easily changeable. Popular Party governments resorted to
the laws accompanying the budget to reduce restrictions on the concentration of ownership in
television and to regulate the implementation of Digital Terrestrial Television, setting up a payment
model that collapsed shortly after (Quiero TV). Years later, in 2005, the PSOE government passed a
law in defence of pluralism (Ley 10/2005, dated 14 June, on Urgent Measures for the Promotion of
Terrestrial Digital Television, the Liberalization of Cable and Development of Pluralism), which
enabled the introduction of two new analogue free-to-air channels, La Sexta and Cuatro (the latter
substituting Canal +, a payment channel which has become obsolete due to the growing supply of
payment platforms). That political decision facilitated the market position of both companies in
view of the large increase in supply planned for a few years later, with the analogue switch-off and
final introduction of DTT.
In 2009, four years later, and in view of the crisis in media industries, two new decrees have
been approved, authorizing mergers between operators (Royal Decree-Law 1 / 2009, dated 23
February, on urgent measures concerning telecommunications) and re-authorizing a model of pay-
tv in DTT (Royal Decree Law 11/2009 of 13 August, which regulates, for licenses at the state level,
the provision of payment- digital terrestrial television with conditional access). From the urgent
measures to promote pluralism the government has shifted towards emergency measures to allow
concentration, which took effect in 2011 with the merges of Cuatro (Prisa) and Telecinco
(Mediaset), and of LaSexta (Televisa and national companies) with Antena 3 TV (Planeta-
Bertelsmann). From measures to facilitate the growth of free-to-air TV it has switched to the
authorization of a model of pay-DTT, opening the door for the Mediapro group, which was willing
to exploit its rights to football through pay-tv, with Gol TV.
The connection between the political system and the media system can also be seen at the
regional level. There are certain correlations between the party ruling in regional governments and
the results of the tenders for regional and local DTT licenses (de Mateo, Bergés, 2009); and
business cycles in private television are correlated with election cycles (Bergés, 2004). Similarly,
some of the newer regional public channels commission content production and advertising sales to
private media companies, increasing their dependence on political decisions. All these political
decisions determine the practice of journalism and business strategies to compete in a rapidly
changing industry that is moving in different directions, depending on which party is ruling.

The economic appeal of trivial and sensationalist journalism

In times of falls in advertising and sales, the media are focusing their goals on reducing costs
and increasing audiences, often at the expense of the quality of the end product. "Serious"
information for mass audiences is no longer profitable enough (but is for a smaller public willing to
pay), and therefore, journalism tends to trivialization. An example: the worldwide media (400
accredited journalists) attended the presentation of Real Madrid player, Cristiano Ronaldo. This is
information that does not cost much money or effort but which generates high interests on the part
of audiences, advertisers and media companies themselves, as they can monetize this investment in
other ways. For such information there are resources. Instead, it is more difficult to find money for
 30

investigative reporting of political or economic cases that are of social interest for democratic
accountability. Cost reduction strategies also limit the geographic coverage of newsrooms, which
become more dependent on official sources and main news agencies.
In recent years, national and local information, sensationalist reporting of events (and the
pseudo-events of reality television) have gained ground on international, analytical and critical
information. On mainstream channels, morning and afternoon magazines have replaced political
and economic debate and information with talk-shows in which the loudest voice is the one that is
heard the most.

Newsrooms: downsizing labour costs, downsizing quality

Many media firms have not used the years of high profit to redefine the business model and
consolidate their companies in order to ride out the current crisis with better safeguards. Now,
immersed in the crisis, both of audiences and advertising expenditure, they tend to seek quick
solutions to balance their income statements. The outsourcing of parts of the production process
gives them more flexibility and less costs and allows them to avoid collective agreements. In the
newsrooms, that means substituting staff journalists with collaborators and freelance journalists.
Economic interest takes priority over informative interest in many cases and, therefore,
companies that still make profits (although lower) opt to downsize under the justification of being
more competitive. These decisions seem to be more socially acceptable and easier to justify in
moments of crisis in all economic sectors. Some examples: El Periódico (Grupo ZETA), has agreed
with the unions to fire over 400 of its staff of 2,300; or the persistent rumour of a potential dismissal
program in the Grupo Prisa, very much influenced by the latest bad results of the group.

Table 8. Dismissals in Spanish media (2008-2012)

Company Dismisals
Grupo Prisa El País 83 (compensated leaves)
Localia TV 300
Prisa Com s.d.
La SER 258 (Pre-agreement)
Television division 1.240 (planned)
Grupo Z Grupo Z 442
Salaries reduced between 5-7%; retributions to free-
lances reduces by 10%
Vocento Abc 238
Qué 131
Other local media 30
Unidad Editorial El Mundo 300
200 (planned)
Grup Godó La Vanguardia Administration
20 +60 (compensated leaves in pre-print department
and newsroom)
Prisma Publicacions 14
Schibsted 20 minutos 55
Planeta ADN 76
Metro Internacional Metro España 83 (closed)
Magazines RBA, Hymsa, MC 500
Ediciones, others
Telemadrid 123
La Gaceta de los Negocios 67
La Voz de Asturias 65
El Punt-Avui 41
La Mañana 21
El Mundo de Almería 18
Diari de Sabadell 7
Diari de Terrassa 4
Diario de Almería 8
Gente de Madrid 8
 31

Regió 7 7
Total dismissed journalists: Aprox. 7.000
2008 / April 2012
Source: Fabian Nevado, 2009 “Situación del sector medios de comunicación”, presented at the conference of the
Association of Journalists of Catalonia, in April 2009; Observatorio de la Crisis de la Federación de Asociaciones de
Prensa de España (FAPE), and Federación de Sindicatos de Periodistas.

The most common and perhaps less traumatic way of undertaking some of the layoffs is by
DNI, meaning early retirement incentives in the companies. This implies losing the most
experienced and the most expensive productive structure, and filling those vacancies with less and
younger staff and, in most cases, external work. Many of these "early retirees" have been mainstays
in their respective media and, in turn, the references and sources of credibility and information for
many people. Some experts have dared to qualify early retirement as the worst of solutions, taking
into account labour market efficiency and final product quality.
The latest staff restructures in the media have meant, in many cases, less human capital, with
more freelance workers and collaborators, who do the same work or more. They enter a dangerous
spiral where the journalistic content impoverishes as the media dispense of more experienced
professionals. Furthermore, the use of external partners reduces pluralism and quality of
information because, often, the same freelance or external company will be offering the same or
similar content to different media, to make better profits out of low-paid work.
Reducing the number of journalists doing the same amount of work, results, in many cases,
in so called “table journalism”. Increasingly, many news reports in newspapers are the result of "cut
and paste” information from news agencies or media offices, which spend much more time and
resources in preparing the text that best meets their expectations. Thus journalism loses the critical
capacity and the verifying dimension that is supposed to characterize this profession.
It cannot be forgotten that the journalistic profession has also entered the tunnel of
uncertainty. Added to dismissals, vast amounts of journalism graduates enter the labour market each
year. In 2012, the number of journalists was around 70,000 people, while the market could only
provide work for less than half. This oversupply of labour for fewer jobs increases the
precariousness of the sector.

Journalism: serving democracy or serving power interests?

The social function of journalism as a watchdog, as a mechanism for the control of power, as
the guardian of the right to information and freedom of expression as essential ingredients of
democracy, lost strength in the new scenario of the Information Society and with the dynamics
discussed in the media industry. Instead, media and journalism inside these groups act as the
watchdog or guardian of the interests of power, of corporate interests.
Journalism is losing that ability to control, where it was considered the fourth power in a
democracy. On the one hand are the servitudes of the lack of independence of media companies,
precarious employment in journalism and the very logic of profit-making applied to journalistic
production. On the other hand is a change in the position of journalism in the public space, from a
scenario in which newspapers and journalism occupied a central space among the media, to a
scenario of global competition in communication markets: the supply of different contents is
multiplied, and journalism has to compete for audiences and advertising with entertainment, sports
or fiction; new companies are appearing that make content available for users through new
technologies, where public or mass communication mixes with group and personal
communications; there is a restructuring of the audience share of different media and different
content; and the media markets become international. The crises of journalism in this scenario have
many parallelism with the situation described by McChesney for the United States (McChesney,
2010).
The ability to explain the reality, the role of control and criticism of abuses of power,
guaranteeing the right to information, is transferred in part to citizenship, through so-called citizen
journalism or through civic organizations engaged in reporting on their areas of interest, with
 32

observatories, online documentation centres, digital community media and other online tools or
applications. Internet and new technologies have also created the proliferation of blogs and spaces
in the network where anyone can contribute their vision of reality, talk about it and rank information
from their point of view. According to The State of the Blogosphere, at the end of 2011, there were
178 million online blogs. Although only 1% are updated weekly, many of them build small loyal
audiences and establish an almost personal relation: the audience can participate, give opinions, and
create virtual mini-communities.
The development of these forms of public information, citizen journalism and different
kinds of community media can sometimes promote demagoguery, rumour and lies, when they do
not simply feed events-journalism, as seen in the increased use by media companies of user-
generated content on news of accidents and natural disasters. In others, they can pick up the baton
of critical reporting that the traditional media are losing. It is such citizen journalism that allowed
people to receive alternative information on the Iraq war and that openly detailed the military and
industrial interests of many of the major world powers.

In search of profitable journalism: towards more informative inequalities?

Given the situation of crisis (of overproduction, of sales to audiences and advertisers, of
financing, of results, of journalism) companies that see a profit in such troubles are demanding that
the sector's business model should be rethought. Companies are seeking new ways of advertising
and obtaining more revenue by selling content to the user, with the recurrent discussion of whether
the public should pay to access the online press.
A study by the Times showed that 40% of people are informed by the Internet as opposed to
35% who buy newspapers. The amount of Internet users is growing, but it is an audience that is
used to the internet being free. In principle, economic theory states that you have to pay for scarce
goods. But in terms of online information, this is anything but scarce. It certainly isn’t, but would
the users be willing to pay for quality information? For a genuinely scarce and useful product? In
that sense, companies are seeking for new forms of payment that best suit the interests of
consumers, such as paying for downloadable content, or subscriptions to personalized information
packages. However, pay per download, a model that is being increasingly adopted by music and
film commercialisation, is not so well applied to the business of informing large audiences, because
of the frequency of transactions, unpredictability, and diversity of interests. In contrast, user
payment is an important source of revenue for companies that offer high added-value information,
such as scientific, economic and legal information, and who find their customers mainly in the
business world.
Thus, in the information societies one can find a model, already raised in 1988 by Robbins
and Webster, with three levels according to the type of information, its distribution and
consumption. In a first level, there is no segmentation of the market. Format and content are not
adapted to the different interests or needs of the audience, rather a standard product is provided that
seeks to attract as much audience as possible. Most of the mass media can be included in this group.
General interest channels have this goal: to reach the highest audience even at the expense of
content. The new Digital Terrestrial Television has introduced more channels, which should enable
greater specialization. But the lack of economic resources and profitable ideas means, for the
moment, that more choice does not translate into higher added value.
Secondly, there are payment platforms (TV or online services). These offer almost-
exclusive content (such as certain sporting events), or quality content (premiere films, quality
documentaries), for which the consumer is willing to pay. This being so, it is still content aimed at
large audiences, just that it is segmented depending on who can afford it or not.
And finally, a third level of journalism includes those media that provide information not for
free but that is specialized, well documented and very valuable to their audience. They offer
financial, scientific and business information with high added value. They are aimed at a public that
is "interested" and willing to pay large sums of money for very specific information, which they
will use for decision making or to monetize their own businesses. This can be seen in the evolution
 33

of Reuters, after its merger with the Canadian news, database and specialized information company,
Thompson. The new Thomson Reuters employs 50,000 workers, of whom only 2,500 are in the
news department aimed at mass media, while the bulk of the company is dedicated to "intelligent
information for businesses and professionals”, as their slogan states.
In this situation, media companies that target broad audiences show little interest in finding
new content, or in improving product quality to suit the needs of new users. The media’s battle to
survive in this market should involve differentiation and the quality of editorial content. But in
Spain, unlike most European countries, all newspapers are directed at a single reader profile,
without any large market differentiation (quality, middle-class, popular). This conditions them, and
means they face tougher competition because they all share the same market.
Meanwhile, the proliferation of new media, new communication channels (blogs, micro
blogs, citizen journalism ...); and of much more supply, forces them to offer a product with higher
added value. This challenge is hardly feasible for the media that target the mass audience, for whom
economic performance is the focus, but is much closer to the specialized companies that seek to
offer credibility and confidence to a much smaller audience.
Given these limitations on sales of information to the final consumer, both in traditional and
online media, media companies and independent journalists are seeking new funding resources by
appealing to the general interest. Voices calling for public funds to compensate for the general
interest service that these companies would be providing by offering quality journalism are
increasing. Companies are also asking for non-profit private funding, donations from members and
third parties, and appealing to the interest of sustaining the production of quality journalism.

Conclusions
Following the industrial, monetary and oil crisis in the early seventies, a process of political
and economic transformations began to ensure constant economic growth, obviating the scarcity of
resources. These transformations resulted in a new model of economic growth and exchange,
mainly based on the service sector, which has been called the Information Society.
This model is based on the principles of liberalisation, deregulation, privatisation and
international competitiveness, which have been applied to the development of the communication
industry, seen as an activity of economic interest rather than an activity of general interest for
democratic societies. This has had an impact on journalism, which has lost independence and whose
quality is becoming more dependent on the user’s capability to pay. Thus, journalism for large
audiences deals with increasingly trivial topics, and is becoming more precarious given the
employment situation of most journalists. Meanwhile, information of higher quality and higher
added-value (scientific, legal and business, among others), is reserved for payment services
available to social groups with greater buying power.
As the crisis in the Information Society, begun in 2007, the media and journalism crisis
seems to be a structural rather than cyclical one. However, the solutions adopted so far, such as
debt, outsourcing, the reduction of costs, and finding new sources of revenue, are designed to
maintain growth without limits in the supply of media - growth that, like the unlimited growth of
the economy, has been shown to be untenable.

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