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Is Mainstream News Media Dying?

By Katie Spence - Apr 17, 2013 at 6:00PM

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Americans used to trust mainstream media for their daily dose of news, but that seems to be a thing of the past.

There's no question that America is deeply divided by politics. And while it's normal for individuals to hold a particular bias, mainstream news media is supposed to be a nonpartisan resource that reports on local and world news, in a fair and balanced fashion. That's part of the job description. However, a Gallup poll from September 2012 reports that 60% of Americans "have little or no trust in the mass media to report the news fully, accurately, and fairly." Additionally, social media sites like Twitter and Facebook (FB 1.83%) are becoming increasingly popular sources for news. Consequently, this could be bad news for investors in mainstream media.

When news doesn't make the news
If you haven't heard about alleged mass murderer Kermit Gosnell and his abortion "House of Horrors," it's possible to blame mainstream media. The "big three" -- Walt Disney's (DIS 3.51%) ABC News, CBS(PARA 4.66%) CBS News, and Comcast's (CMCSA 0.07%) NBC News -- in particular, and mainstream media in general, have all come under criticism for failing to report on the case until a veritable "Twitterfest" forced the media's hand, by causing #Gosnell to become a top-trending Twitter topic last Thursday and Friday. 

Moreover, via Twitter, conservatives alleged that mainstream media's liberal bias, and typically pro-choice leanings, caused the burial of what would normally be a sensational, front-page news story about infanticide, racism, government corruption, and details that are the very definition of macabre. Jeffrey Toobin, CNN's senior legal analyst, responded to these accusations by saying it wasn't a political decision, but "a business decision" and that CNN picks stories it thinks people will be interested in.  

The price of biased views?
Regardless of whether or not there was an overt attempt to cover up the Gosnell case, and whether or not there are liberal leanings in mainstream news media, the fact remains that there is a perceived bias, and this perceived bias is becoming news in and of itself. For investors, this could be problematic. Here's why:

  • First, if mainstream media is actually being swayed by political biases, the validity of their news stories could be questioned. I don't know about you, but when I'm watching the news I want the facts -- unbiased, undistorted facts. If that's not what I get, I'll look elsewhere.
  • Second, although local TV news stations are still the top news source for Americans, the number of viewers is declining, according to the 10th edition of "The State of the News Media" produced by the Pew Research Center. For example, in 2006, viewership of adults under 30 was 42%. In 2012 that number had declined to 28%. 
  • Third, if you take out the ad revenue from political advertisers in 2012, which can't be replicated in a nonelection year, TV news-producing stations' average revenue declined by 36% from 2006 to 2011. 

All three of the above reasons are enough to give investors cause for concern.

Other things to consider
Right now, the "big three" attract an average of 22 million American viewers each night. However, the average age for an evening news viewer is 53. When you consider that those over 50 are less likely to get their news digitally, but those under 30 are moving away from traditional news sources, according to the Pew Research Center, you can see that there is a potential future problem.  

In addition, social media sites like Twitter and Facebook are becoming increasingly popular news outlets. According to the Pew Research Center, 15% of adults now primarily get their news from friends and family via social media, and that number is growing. Among adults ages 18 to 29, that number is closer to 25%. And as can be seen with the Gosnell case, Twitter is a powerful resource for information.  

Another trend to consider is that advertisers are taking their business from the news industry and putting it in "mobile devices and local digital advertising." This is a big red flag. Think about it: Advertisers follow where consumers are spending their time, and are now putting their ad money in places like Facebook and Twitter. That's bad news for mainstream news media, especially considering they're already struggling financially.  

That's a wrap
Right now it's too early to predict what will happen to mainstream news media. There are some concerning trends, and overt problems that leave me questioning their future. But things could still turn around. Investors should continue to monitor the trends I mentioned above, and if market share becomes more of a problem, or viewer trust continues to decline, I'd say it might be a good idea to nail the news media coffin closed.

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