The Seattle Times Co. has received a $9.9 million federal coronavirus-aid loan that will give the newspaper temporary relief in the face of a sharp drop in advertising revenue due to the COVID-19 pandemic.
“This is a lifeline for us for the next 60 days,” said company President and Chief Financial Officer Alan Fisco, who acknowledged the Seattle Times had otherwise faced the prospect of layoffs and cutbacks in hours. “This gives us a little bit of breathing room.”
The loan, offered under the $349 billion Payroll Protection Program (PPP), allowed small businesses to borrow as much as two and a half months of payroll, up to $10 million.
The loans, administered by the Small Business Administration and offered through private lenders, are forgivable if borrowers use most of the money to retain or rehire staff during the 60 days after the loan is funded. Some of the money can be spent on non-payroll expenses, such as rent.
Fisco said the Times, which also owns the Walla Walla Union-Bulletin and the Yakima Herald-Republic as well as a printing facility in Kent, began considering a PPP loan after seeing steep declines in advertising revenue. The Times projects that April advertising revenue will be down 45% from a year earlier, Fisco said.
Similar losses have already led to cutbacks and layoffs across the U.S. media industry. A recent survey by The New York Times estimated that 33,000 news media employees “have been laid off, furloughed or had their pay reduced since the arrival of the coronavirus.”
In the Pacific Northwest, the damage has been especially severe, with layoffs and cutbacks at publications ranging from regional dailies to Seattle’s alternative weekly, The Stranger, which let go 18 employees, including six reporters and editors, in early March.
Fisco said cutbacks were looking increasingly likely at the company’s three newspapers, including the Seattle Times, even as demand for coverage of the pandemic had sent its website traffic surging. Given readers’ desire for news, any cutbacks “would have been at the absolute worst time,” Fisco said.
But the payroll loans themselves were hardly a sure thing.
From its April 3 launch, the PPP has been plagued with technical glitches and inconsistencies among private lenders. The Times initially applied for a loan from Wells Fargo but was turned away after the bank decided to work with borrowers with fewer than 50 employees. The Seattle Times Co. has 849 full- and part-time employees at its three newspapers and printing press.
The federal government typically defines small businesses as those with fewer than 500 employees, but the SBA makes exceptions for a number of industries, including newspapers, which can have up to 1,000 employees.
The Times moved to Seattle-based WaFd, which approved the loan on Easter Sunday, just days before the SBA announced that the PPP was out of funds.
“At least for now, we are putting on the back burner any plans for broad scale layoffs, or cuts to hours worked,” Fisco wrote in a note to employees Tuesday afternoon. “There still may be some targeted reductions, but nothing to the extent of cuts we would have had to make without this support.”
Still, Fisco acknowledged that the loan is only a short-term fix. During the Great Recession, the Times “lost revenue that never came back, and we assume the same thing will happen here,” Fisco said. “To what degree, we don’t know.”
Some industry experts say as much as 30% of advertising revenues may not come back, which could leave newspapers that were already running on thin margins “operationally unprofitable if they keep their current levels of staffing,” said Ken Doctor, a media industry analyst. “That’s a long-term problem that will not be solved by an emergency federal program.”
Doctor said the industry is already lobbying Congress for more permanent fixes. Among them is a proposed waiver to U.S. antitrust law that would allow the entire newspaper industry to negotiate collectively with Google and Facebook for payment of fees for the use of newspapers’ content.
Fisco said the Times is “working with industry associations and some members of the state’s congressional delegation” to lobby for longer-term federal aid for news organizations, “including grants to support newsroom positions.”