Local Media Outlets To D.C. Lawmakers: Consumers Are Leaning On Us During Coronavirus Crisis, But We Need A Lifeline

The latest injection of money into coronavirus small-business relief will be a lifeline for many businesses — but local newspapers, radio and TV stations worry that it won’t be enough of a rescue.

As some publications and stations have seen spikes in readership or viewership during the crisis, they also are facing a dire drop in local advertising revenue — estimates have ranged from 40% to as high as 90%.

Radio has been hit especially hard. Many commercial stations are entirely dependent on advertising, and the lion’s share of that comes from local businesses — the mom-and-pop auto dealers, mattress stores and even attorneys who have scaled back amid the mass shutdowns.

In fact, these stations argue that at the very moment they are providing valuable needed information to the public, they also are at risk of shutting down because of plunging local advertising revenues.

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“One of the first things they cut is the advertising,” said Ron Stone, president and CEO of Adams Radio Group, based in Lakeville, MN, which owns and operates stations in five markets. “When those dollars get cut, it has an immediate impact on stations.”

Adams has lost about 65% of its business in April, he said, and “those are dollars you cannot get back. It is not re-sellable.” He has, however, retained its 100 employees during the crisis. The company recently qualified for $1 million in a small-business loan via the Paycheck Protection Program, the chief Small Business Association effort to address economic impact of the crisis. The loan amounts may be forgiven in recipients spend their money on such things as maintaining their payrolls. But that will cover about eight weeks, he said.

“I suspect that the losses that radio stations will incur going forward for the next 12 to 18 months are going to be substantial,” Stone said. Many “won’t be able to survive. They won’t have the liquidity to survive it. There will be no buyer and no financing, and the only other option is to sign off the air.”

Another chain, Emmis Communications, which is based in Indianapolis and owns eight radio stations, secured a $4.75 million loan through the SBA program, according to an SEC filing. “Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020,” the company said in its filing. “The Company intends to use as much of the Loan amount as possible for qualifying expenses.”

The problem that some newspapers and stations have run into is that they do not qualify for the SBA loans, as they are part of larger chains that have more than 500 employees. During the past few weeks, a coalition of media industry trade groups — including the National Association of Broadcasters and the News Media Alliance — have been lobbying Congress to get a provision in relief legislation that would make larger chains eligible for the relief program if they have fewer than 500 employees per physical location of their businesses. That would be similar to a provision for the restaurant and hospitality industry that was included in the original CARES Act in March.

“Even though these news outlets may be owned by larger groups, they operate independently,” a bipatisan group of four senators — Sen. Maria Cantwell (D-WA), Sen. Amy Klobuchar (D-MN), Sen. John Kennedy (R-LA) and Sen. John Boozman (R-AR) — wrote in a letter to Senate leaders.

“It is so important to us to address this issue, because these are the people who are on the front line of delivering the information to us about this crisis,” Cantwell said on the Senate floor last week.

David Chavern, president and CEO of the News Media Alliance, which represents newspaper publishers, said that one projection is that publishers will see 50% declines in the second quarter — and that was on top of problems that the industry has been having even before the crisis. Poynter.org has kept a list of layoffs, pay cuts and furloughs throughout the industry.

Even though there have been plenty of attacks on the news media from political figures, that hasn’t been a factor so far in the push for local media relief. “We have not really seen this being a really highly partisan issue,” Chavern said, comparing it to the common scenario where voters express their disdain for Congress yet “love their congressman.”

The most recent relief bill did not include the provision for local media, but the trade groups are hoping that it can be included as part of the next legislation, expected sometime in May.

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One of the new factors, though, is the potential public backlash. That was what happened when certain recipients such as Shake Shack and Ruth’s Chris Steakhouse received after they secured SBA loans under the special provision for restaurants. They eventually returned the money, but the public shaming is a warning sign for any media conglomerate that would be a beneficiary of small-business loan funds and the federal outlay is quickly depleted. Even smaller companies like Axios, with almost 200 employees, got some flak for securing a loan, as scrutiny over why it couldn’t access capital from its existing investors. Axios announced Tuesday that it would return the funds.

That said, local media companies say they have a different story to tell.

“Most broadcasters operate by market. They operate as a small business but get rolled up in a rule as large businesses,” said Robert Hubbard, division president at Hubbard Broadcasting, which owns radio stations in nine markets and TV stations in six.

He said that the advertising hit has been a “big number,” and the impact has been greater on radio than on TV. Stations have laid off employees, he said. If the SBA loans are opened up to a wider range of outlets, Hubbard could not say yet whether his company would seek to access such funds.

As states start to reopen, there is some expectation that businesses will have a need to advertise, even if to get out the word that they are back in operation. Yet the economy likely won’t just rev up like it was.

“I don’t know what the appetite will be for Americans” to go out, Hubbard said. “It is not like everyone is going to just run out. There is something in the middle [between fast reopening and continued stay-at-home], and I don’t know what it is going to be.”

Broadcasters and publishers are pushing for another route for relief: federal advertising dollars. A group of more than 240 lawmakers sent a letter to President Donald Trump urging him to direct federal agencies to spend their advertising dollars — estimated at $5 billion-$10 billion — on local media. They still have not received word, and there is a possibility that such an ad spend would be included in future legislation.

Stone, of Adams Radio Group, thinks that the industry — with federally licensed stations — needs a more substantial relief from the government. He said the predicament of stations has similarities to the airlines, which recently got an injection of loans to keep them going for the coming months.

“You are going to have communities all over the country losing stations, which are essential especially in an emergency,” he warned. “That is what we face.”

Meanwhile, Stone is spokesman for an effort to enlist more than 10,000 stations on Thursday for an emergency radio-thon, which will raise money for Feeding America.

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