1938: Newspaper Business

Economic problems arising from a simultaneous increase in operating costs and a sharp decline in advertising revenues made 1938 a difficult if not an especially eventful year in American newspaper annals. Six months before the year began, an announced increase of 17.5 per cent in the cost of newsprint paper, the basic raw material, had been recognized as a danger signal. Coming as it did, when advances in wage scales were general and when the trend of taxation continued upward, it threatened to wipe out the profit level reached in 1937, even though 1937 levels of income were maintained.

Three months before 1938 began, it was evident that a sharp decline in advertising revenue was certain. Automotive advertising during the winter first reflected the habitual optimism of the motor industry, then abruptly contracted as that optimism was not ratified by public acceptance of the 1938 car models in the expected volume. Other large advertising interests curtailed their newspaper advertising in the first quarter of 1938.

During the first five months of the year, the curve of revenue from advertising dropped steadily. Politics held the stage and seemed to have paralyzed the initiative of business organizations. The fight in Congress over the Reorganization Bill engrossed both business people and newspapers to the exclusion of almost all other topics for many weeks. Bad news from economic fronts and predictions of worse filled the financial pages. Threats of war in Europe lent their ominous thunder to the prevailing gloom. There were fewer strikes in large industries, but the conflict between two great factions in organized labor promised small prospect of uninterrupted production if business should improve. In short, newspapers could not expect, early in 1938, to balance their budgets on prospective advertising revenues.

Circulation.

One of the major moves of 1938 was, therefore, a general increase in circulation prices. This continued a tendency which had been noted during the previous year and greatly accelerated it. Even the New York morning newspapers, which had long resisted increases in their city sale prices, were compelled to take the step early in the summer. Except for the two New York tabloid newspapers, there are few dailies in large cities selling for less than 3 cents a copy. Many now retail for 5 cents. The net result has been to increase the proportion of newspaper revenue from circulation from about 15 to nearly 30 per cent. The loss in circulation has been negligible; the daily loss is about 2 per cent; the Sunday, less than half of 1 per cent.

While advertising revenues improved slightly after June, reflecting the better tone of general business, it is probable that the loss for the year, against 1937, will be considerably more than 10 per cent.

Sales and Mergers.

Sales and mergers have been few, but important. The Scripps-Howard Newspapers sold their News-Bee in Toledo and their Times-Press in Akron to local competitors. The Long Island City Star was taken over by the Jamaica Long Island Press, which also absorbed the Flushing North Shore Journal. Both of these New York suburban papers succumbed to a combination of decreased revenue, aggravated by suspension due to a strike of white collar employees, and the increased costs required by the strike settlement. In Boston the old and conservative Transcript was operating under a trusteeship as the year ended. The Hearst Herald-Examiner and the American in Chicago were published in December, despite a strike of about 350 members of the American Newspaper Guild against a reduction in staff. The Herald-Examiner had been converted to tabloid size in midyear, in an effort to attain new public interest and at the same time reduce expenses without cutting personnel. The American Newspaper Guild also conducted major strikes during the year against the Duluth Herald and News-Tribune, and the four newspapers of Wilkes-Barre, Pa., which were shut down completely after October 1. The Miami (Fla.) Tribune was combined with the Miami Herald early in the year. Many small newspapers, new to the daily field within the past two years, found the pace too fast during 1938 and reverted to weekly status. The St. Paul Daily News was suspended during the spring.

National Problems.

As a whole, however, the newspapers came through 1938 unimpaired financially and in popular esteem. The candidates favored by the majority of newspapers were generally successful in the November elections. Animosity toward the press, strongly evident as 1938 opened in official Washington, died to nothing as the year advanced and was actually replaced by an almost friendly atmosphere. The Wage and Hour law offers difficulties of application to newspaper operation, unsolved as the year ended; but their solution is being approached by press and administration in a sympathetic spirit.

Technical Processes.

The year saw few notable advances in technical processes. Interest in pictures continued to grow, as did improvement on color printing processes. Newspapers continued their efforts to improve physical appearance and to facilitate intelligent reading by grouping and correlation of news. Editorial-page treatment of current topics is regarded by some observers as markedly improved during the year. Publishers completed, after three years' preparation, a plan for promotion of the newspaper as an advertising medium. Within newspaper ranks the year ended more pleasantly than it began, with the prospect of gains in revenue that will permit the exercise of enterprise and initiative vital to the continued prosperity of the press as it is now constituted.