Financial crisis isa situation in which the supply of money is outpaced by the demand for money. This means that liquidity is quickly evaporated because available money is withdrawn from banks, forcing banks either to sell other investments to make up for the shortfall or to collapse. The media industry plays an important role in the provision of information to the public and investors. This presentation looks at how the world financial crisis has affected the media quantity, media content, professionalism and employment in the media industry.
Financial crisis isa situation in which the supply of money is outpaced by the demand for money. This means that liquidity is quickly evaporated because available money is withdrawn from banks, forcing banks either to sell other investments to make up for the shortfall or to collapse (www.investopedia.com). Financial crisis is caused by a number of factors such as Strategic complementarities in financial markets, Leverage, Asset-liability mismatch, Uncertainty and herd behavior, Regulatory failures, Fraud, Contagion and Recessionary effects (Kolb, Robert 2010 Dwyer, Gerald P. and Paula T. 2009 ).
The world has indeed faced a severe financial crisis of unprecedented dimensions in a world that has never before been so closely connected and interdependent. The consequences are global. The situation is volatile. The current financial crisis is rapidly becoming an economic crisis and threatens to become a social crisis in many countries. The media plays an important role in the passage and dissemination of information. The media plays an important role in how investors look at current information and how our opinions are shaped based on the information they provide. Information constantly streams into homes, offices and even cell phones via television, newspapers, magazines and the Internet (Lorimer, Rowland & Scannell, Patty 1994, John, ed 2004, Dyck, Natalya V. and Luigi Z,2008 ).
The information can be overwhelming and hard to understand, and determining whom to trust can be confusing. . the global economic downturn has affected countless businesses across the world, forcing them to slash costs, lay off employees, and reduce output. Media businesses are no exception. However, when media businesses are hit, it is not just their turnover that suffers but their primary function, the delivery of news to citizens, feels the impact too. It is evident that the crisis-related financial constraints have had an impact on the breadth, depth and overall quality of media coverage of the relevant current affairs issues and news. More broadcasting and print space is increasingly dedicated to entertainment and tabloid-style information, rather than current affairs, news or educational information (Gentzkow, Matthew, and Jesse 2006, McQuail, Denis. 1992, Pieter J. 2008).
Impact of financial crisis on the media industry
The financial crisis has greatly impacted on the media industry in a number of ways both in the long and the short term as follows:
To start with the global financial crisis has led to the deterioration of the media content and quality of information. despite some progress observed over the past few years with very few leading media outlets introducing new programming content or modern broadcasting technology, the rest of the media market is weaker today compared with two to three years ago. The main reason for the unstable economic situation of the media lies with the perceived strong political and other business interests’ interference in the media. This situation of the media poses serious threats to the quality of information they provide to the audience (Della V,, and EthanK, 2007).
The media employees are very important in both their personal and professional lives as they have to play a major role in strengthening the country’s democratic system and informing the public. In most cases the media remain still challenged in their role by the same old problem, and that is excessive interference of politics, which becomes consequently a major obstacle for the media in fulfilling their mission. we have seen so far an increase in the number of programmes and shows, that is quantity, but certainly not quality. Evidently, there is clearly a lack of the investigative component of journalistic reporting in the media, absolutely the media in general, with very few exceptions, has so far failed miserably to fulfill their mission of providing the public with a platform for informed choices due to the lack of in-depth reporting on important economic, social or other issues. (Lorimer, Rowland & Scannell, Patty 1994, John, ed 2004, Dyck, Natalya V. and Luigi Z,2008 ).
Due to financial crisis the media is witnessing a lot a process of tabloidisation, where even well-respected media turn to reporting gossip and lifestyle issues, which I believe is something that should not be happening. In view of these there is lack of enthusiasm among professionals for genuine investigative journalism can be largely attributed to the indifference shown by institutions and the general public when it does produce worthwhile findings. The major problem being that these reports are not accompanied by an adequate response from public opinion, the police, prosecutors or courts. It is recognized, of course, that investigative journalism is expensive, since it involves a large commitment of reporting staff that are then not available to cover everyday matters; it also carries costs in terms of travel and gathering information. However, if there is no reaction to the outcome of such investigations the question arises whether they are worth bothering with at all, especially at a time of financial constraint. The situation of public broadcasting is much the same as that of the rest of the media (Della V,, and EthanK, 2007).
Most of the media consumers feel that the public broadcasters are failing to fulfill their obligations to society because, as one may put it, “they are mainly prisoners of the state of politics and the economy,” and are not capable of developing an independent mission. Moreover, where they try to evade the influence of political power centres they fall into another trap: they imitate the behavior of the commercial broadcasters whereby Instead of reporting on all segments of society, they primarily broadcast content to boost their ratings. And by abandoning their public responsibility they cease to be of importance to the public. So, almost all the average consumer paradoxically ends up “Over informed”. This forces the consumers to search for information elsewhere and in the search for reliable information he or she has to look to a range of media, which is not only costly but frustrating. As one put it: “the media speculate more than they present real information on important issues”. The consequence is the consumer becomes apathetic and loses interest in obtaining information at all. This has greatly affected the media industry I that most of the media consumers have lost confidence in the media industry consequently making the media loose value in the society thus leading to abandonment of the traditional media (Gentzkow, Matthew, and Jesse 2006, McQuail, Denis. 1992, Pieter J. 2008).
The financial crisis has led to the increase in the deterioration of editorial independence within the media industry. Despite the significant improvement in broadcasting quality and progress in programming there is a deteriorating situation in news reporting. There is clearly abiased coverage of events and reports by the majority of media outlets, with editorial decisions beingtaken depending on specific political or business allegiances. One has to search for the news indifferent mainstream media in order to be able to come up with an informed opinion majority serving the interests of its politically appointed managers and their patrons, rather than the interest of the public. It is evident that politics and private business do interfere a lot into media matters, and I strongly believe that the editors and journalists bear much responsibility for this situation. It is important to note that in many cases, the state is a significant advertiser in media therefore, by providing uncritical, mercenary coverage, media not only diminish their credibility but they also expose themselves, and their audiences to political manipulation. In effect, governments are using taxpayers’ money to buy positive media coverage, and, by extension, public support. Sometimes the no-ethical-constraints approach is a decision of an individual journalist, not an outlet. These trends of increased politicization of the media, not just through purchased coverage and dubious deals between individual journalists and politicians, but also because of the greater pressure of politically-affiliated owners on their financially strapped, overstretched, and insecure editorial staff is the most worrying in the media industry and this trend has proved to be dangerous in the media industry (Gentzkow, Matthew, and Jesse 2006, McQuail, Denis. 1992, Pieter J. 2008).
As a result of financial crisis there is a total lack of ownership transparency over media outlets’ funding, and despite official records deposited in the regulatory bodies’ archives or other state business registration offices, the situation remains unclear and unexplored. It is in the interest of the media owners to avoid transparency, because it makes it easier for them to interfere in their relationships with their employees, journalists and editors. Many media owners use the media outlets they own as a supporting tool for their other business interests. In addition, with few exceptions, there are noticeably more inexperienced journalists covering day-to-day issues than a few years ago. It will take some time to establish a professional class of specialized journalists. The issue of critical or unbiased reporting is also related to the professional capacity of journalists, it is not that they are unprofessional, but it’s because, in my view, the owners always keep a ‘watchful eye’ on them, and of course, as noted earlier, politics is always behind business in the media industry, so journalists are not always given a chance to express their professionalism. There is an ideal relationship between the owner of a media institution and its editorial policy in the sense that the owner should take care of the accounts and the editor the quality of the newspaper. Lip service is paid to editorial autonomy, which is respected in situations of lesser importance.But otherwise the media are used as a means of defense or attack (Stromberg, David, 2004, 1992, Pieter J. 2008).
The media crisis is also connected to the diffusion of the Internet. The Internet is an inexpensive and pervasive medium to transmit the news swiftly on a global scale. The new technology challenges the traditional media that have enjoyed the monopolies on communication information to the public. The Internet is an opportunity to bypass media companies for the public other than the established media. Due to tabloidization of news selection and headlines, the “ratings war” among the broadcast media, with a tendency to turn the main news broadcasts into infotainment shows, lower quality, lesser frequency and narrower range of topics in investigative reporting, decreased diversity of sources, with stories often based on one interview, increasing reliance news agencies and unconfirmed reports on the internet, blatant hidden advertising of both a commercial and a political nature, increased attempts to use media as a political tool, changes in political rhetoric about the role of media in democracy (persistent accusations of producing ‘only bad news’, frequently addressed to outlets pursuing accountability journalism), in coverage of the crisis, a distinct absence of credible expertise and context, shallower and infrequent coverage of culture and social issues, cuts in regional and international coverage resulting in capital city-centred and inward-looking reporting and superficiality of contents which have led to general disillusionment among audiences and alienation from traditional media, particularly among the middle classes and younger citizens (Aoki & Yukawa. 2003,)
Media consumers say they feel sufficiently misinformed and some admit that they make a conscious effort to avoid all local media or rely on a few trusted bloggers to provide them with necessary information and context. More active people have realized that they can get their news and analysis much faster over the internet, with greater diversity and impartiality, as compared with local TV and the newspapers due to the facts that the internet is a less expensive news outlet in relative terms and that the internet new sources can be said to fall outside the purview of official monitoring, for the most part, since most state agencies are more concerned with monitoring traditional mass media outlets. This is especially the case when it comes to the airwaves which are being monitored completely from above (Stromberg, David, 2004).
An explosion of blogging, micro-blogging and social networks coincided with the financial crisis and has been named by many media consumers, particularly as one of the biggest recent changes in the media landscape. Some traditional outlets in the world have turned this trend to their advantage, expanding their presence on Facebook and Twitter. The financial crisis has also greatly influenced internet users’ behavior and preferences especially among the young generation. Generally there is a trend of increasingly turning to the internet as their primary source of news. Despite the low level of internet penetration worldwide, there is clearly a tendency of most of the people turning to internet forums and online discussion for news as opposed to the traditional media, and this would be one of the few overall biggest changes in recent developments in the media. However, the increase in amount of information on the internet has not translated into a higher quality of content. This is because most of the these blogs, forums or portals are run or managed, for the most part, by non-professional news people, and this may lead to misinterpretation of facts. There is not much original news produced by online portals, but merely translations from other outlets. That is why most consumers of the media would rather search for confirmation in the mainstream media, if they have any special topics of interest in the news. It is true that there is much more information now online as opposed to a few years ago, but this does not necessarily mean an improvement in its quality as we are experiencing only an increase in its volume and not its quality. When it comes to the internet, the aforementioned trends in media are amplified “Internet is full of nonsense,” this trend can be explained as, in times of financial crisis; people are seeking to get the latest news as quickly as possible. They want to find out what is taking place in the global context. The mass shift to the internet has affected the media industry tremendously due to the reduced consumption of the traditional media (Yukawa. 2006, Utagawa. 2005, )
According to those who follow the mass media, the financial crisis has had an impact on this sector as well. It is evident that broadcasters, in particular have suffered as a result of the crisis, and that their financial woes have only deepened due to the drop in advertising. Most print news outlets get by on assistance from various sponsors advertising revenue plays a non-essential role.Editors and TV station directors argue that the situation has really become difficult; not only in terms of generating revenue, through advertising and maintain ad prices, but also that it is becoming harder to even find willing sponsors. So, in some sense, the crisis has affected media private sponsorship, too. Most of the newspapers are much more concerned with the struggle for power and news and events associated with it. Of primary significance for the press is the politicization of information. In other words, a given paper gets sold to that sector of the populace which shares your political outlook. Thus, the growing interest they have in your paper is not necessarily due to any qualitative improvements, but rather due to coverage sensationalizing political turmoil and tussle. In this context, social issues and investigative stories are placed on the back-burner in favor of articles covering political developments and intrigue. If newspapers play their cards right, interest in what they have to say also increases. The business policy of the mass media has changed during the current crisis period and this is why entertainment programming has increased over the airwaves. “The crisis fosters show business activity over the airwaves. Aspects of show business have proliferated due to business necessities. In the past, a TV station could broadcast 20–25 minutes worth of programming of current affairs reportage, based on revenues derived from show business activities. Today, you cannot afford those 25 minutes and you cut it down to ten. The programming balance is changed in favor of ‘fluff’ and programmes in the public interest lose out (Casey, Joseph E. Diego G. and Christopher P. 2010 Reuter, Jonathan, and Eric Z.2006 ).
Financial problems have greatly influenced employment in the media industry as well. Most of the media companies around the world have been forced to undertake major changes towards significant downsizing globally. In order to avoid the fate of the financial crisis, all media sectors have had to cut costs. Some started by reducing staff in non-editorial departments such as marketing, administration and advertising. But it was not enough. Salary freezes, abolition of annual bonuses and wage cuts among editorial staff followed, and, eventually, layoffs of journalists. The number of journalists employed in media is down by more than 50% from the years before. Media companies are constantly being forced to reduce costs, and the journalists’ salaries remain low, which often results in biased reporting. Most of these media companies reduce the cost by cutting on the number of staff so as to reduce personnel costs. Despite the cuts, an attempt is made to maintain the level of programming and the remaining employees were given extra work at the same pay scale. In order to reduce travel and coverage costs, the coverage of the media has been restricted to few kilometers in that they cannot search for information in the deeper ends of the world because of the travel costs being too high (Copeland, Tom, Koller, Tim, & Murrin, Jack. 1991).
As a result of the financial hard times news outlets will think twice about sending reporters to the outlying regions and that regional issues will be neglected. Let’s say that you had news bureaus in six countries and that you were forced to close two and that your pool of 40 reporters was cut to 30. It can have an effect on all that. Due to the crisis, reporters might not get paid for months on end. . on the other hand, Common practice across the world is to use former staff members as freelancers, even if they continue working full time. This, to some extent, eases the budget conditions of the media, but puts journalists at a greater social risk, as freelance relationship can be terminated without notice and compensation and does not have provisions for sick leave or holiday. All this has an impact on the level of professionalism in the field. The quality of news suffers as a result (Cranberg, Gilbert, Bezanson, Randall, & Soloski, John. 2001).
The financial state of journalism, especially of newspapers, has deteriorated after the global crisis due to deduction in advertisement revenue. Advertising revenues, audience shares and circulation data all indicate that the media industry is hard-pressed financially. Advertising revenue is down from last year and staff cuts have been made but there have not been any significant programming changes. The media industry makes a lot of revenue from advertisement and as result of the financial crisis the revenues from advertisement have declined by a larger percentage thus reducing the profits gained in the media industry. This has accelerated the deterioration of the financial situation of the media companies due to the discouragement large corporations from investing in huge advertising outlays. It should be noted that the gross advertising revenues do not reveal a realistic picture of the market, as they are based on price lists, and participants give massive discounts. According to experts, the overall decline in net advertising revenue in all types of media is about 25–30 per cent. The reduced advertising investment has been caused largely by foreign companies, which are big advertisers in the media industry market, trying to optimize and implement cost saving measures. The public service and national electronic media have seen a huge percentage drop in their advertising revenues. The audience share of some national TV channels has also decreased compared with previous years. Public service TV stations lost their significance in most country’s media landscape, but this is only partly and indirectly due to the financial crisis. The most severe losses were registered in the serious printed press. Advertising revenues of dailies and weeklies have dwindled by large percentages, but the loss is even bigger in real revenue terms. Astoundingly, the economic and business press has been hit even more by the drop in advertising revenues than the general-interest print media (Butler, Alexander, and Umit Gurun, 20091992, Pieter J. 2008).
Consumers, media and advertising professionals alike detect increased levels of hidden advertising in media content. It is important to note that the frontier between content and advertisements is totally blurred, particularly in new media. According to the Advertisers Association, in the last six months, bought content in media (articles or broadcasts that appear as genuine journalism, but instead are unmarked advertising) has become a standard service offered by advertising agencies. A highly respected advertising executive even claimed that there are virtually no media in today’s world that do not mislead their audiences by presenting advertising as journalism, and it seems that there are no more constraints, ethical or otherwise to stop editors from using their journalists to write or produce material paid for by advertisers (Brad, and Terrance Odean 2008).
The print media, relatively speaking, finds itself in better straits, even though circulation figures are down. When compared with the airwaves, advertising revenues have not dropped as much. In fact, the print media have been coping with various challenges as a result of the trends in economy and demography switching downward and new technology has begun to spread rapidly( Pieter J. 2008)
While the global economic crisis should affect the newspapers relatively in the short term, influences by the new technology may be lasting rather in the longer term. Under pressure for survival, big media as well as journalists are tested for their professional ethics. The subsequent economic slowdown has significantly influenced advertising spending of sponsoring companies, thus affected advertisement revenue of newspaper publishers. This has accelerated the crisis of the newspapers that have already suffered from long term readership decline. It evident that the total daily newspaper circulations both of morning and evening editions have greatly dropped. The newspapers publishers have incurred greater losses as well as a high drop in their profits reflected by the decline in the sales revenue (Utagawa. 2005)
As a result of financial crisis media ethics has been put in jeopardy. With the media under extreme pressure for survival, media ethics are being tested. In most cases professional journalists are arrested due to committing serious breach of code of ethics. The cases have serious implications for how professional journalists of the media should do their jobs. At the same time, it accelerates estrangement of readerships and viewers from the media. This has significantly affected the profits for the media industry due to deterioration of their image outside (Uesugi. 2008).
Another impact of financial crisis is that it has been difficult for new companies to enter the news media industry. This has greatly impacted on the expansion of the media industry. New technologies, however, may allow much wider new participants in the news media. Indeed, independent online newspapers entered into the news media industry by providing the public with alternative media other than the mass media. These moves of alternative media have not given a blow on the mainstream media yet and their influence over the society has been limited so far. However, the emergence of these online newspapers is important for the public as an alternative media is now in the market beside the established media (Croutea, David, & Hoynes W. 2001,Brad and Terrance O. 2008, Bagdikian, B.H. 1992).
We cannot ignore the fact that the financial crisis has had some positive effects, too. It forced outlets to increase efficiency and invest in online presence. It has also increased resourcefulness among audiences with people consuming more sources in order to form their opinion. The crisis, which has largely bypassed online media, has brought new audiences to the internet. The rapid rise of Twitter and Facebook coincided with the crisis and, combined with the drop in consumers’ disposable income and the need for traditional media to find new audiences, led to an explosion of online communities of consumers (Newhagen, J.E.1999, Pierre-Richard Agenor, 2002)
Finally, it is clear that the media industry in the world at large, with very few exceptions, lack influence, that they are merely abused and exploited, and that they leave the public frustrated and ill served. As one may term it “Some dogs bark, but the caravans pass by and no one gives them a second glance.” Not only has the financial situation exposed the deep underlying crisis of the media in the world, it has made even more remote than ever any prospect of positive change (The Financial Times. 17 May 2009).
In conclusion the negative trends associated with this financial crisis will, if left unattended, diminish opportunities for independent media to provide citizens with balanced in-depth information and thus increase the risk of losing some of the advances made towards democratic journalism and improve media services. Therefore the following are the measures to save the media industry from financial crisis; providing training for journalists in business and economy journalism in order to tackle the problem of insufficient or incompetent coverage of crisis-related issues, targeted support for investigative reporting projects will help to keep dubious governance practices in public view, In communities with limited access to printed media and low internet penetration, a more balanced news delivery can be achieved by means of subsidized subscriptions to quality print media or free distribution of printed copies of online publications, support for public service content is recommended as a response to the trend towards ‘infotainment’ in public media, support for innovative and flexible media business models to ensure sustainable and diverse news delivery. These initiatives will help to ensure that cash-strapped media do not compromise their public function and do not leave citizens poorly informed and open to political manipulation. Reduced export tax for print products, reduced customs duties for imports of printing line equipment as well as special conditions on investments as well.