Despite some success growing their business online, U.S. newspapers will continue seeing overall sales decline, according to a new forecast.

The bleak outlook highlights the urgent need for federal intervention to help save an industry that’s essential to self-governance and civic engagement.

News publishers are finding some success with digital business models but overall circulation will continue falling through 2026, according to the U.S. Entertainment & Media Outlook released this week by PricewaterhouseCoopers.

The forecast shows large trends reshaping the news industry as it adjusts to the wholesale loss of advertising sales to a few dominant tech platforms.

“Despite growing signs of digital success for some publishers, the changing habits of readers and advertisers will continue to take a significant toll on the U.S. newspaper market across the forecast period,” the report said.

This stands in contrast to media and entertainment overall. That broader industry is forecast by PwC to see a 4.6% compound annual growth rate from 2021 to 2026.

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Advertising sales are rebounding from the pandemic downturn. PwC expects ad sales to grow 6.6% on average through 2026, with internet ad sales growing 9.1%.

Yet newspapers in the U.S., the biggest newspaper market by far, will see revenue decline an average of 2% per year through 2026, the forecast said.

It said a tipping point will come in 2022 when newspaper circulation revenue, both print and digital, will overtake total ad revenue for the first time.

Newspaper owners are “increasingly successful in building digital subscription bases and implementing paywalls” to achieve scale and balance long-term print circulation declines, the forecast said.

Co-author CJ Bangah, a PWC principal, said via email that “for newspapers looking for continued relevance and consumer engagement there is the very real opportunity to transform and innovate engagement models with consumers in a more and more digital world.”

Overall circulation is still forecast to decline annually by 3.3% on average between 2021 and 2026.

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“I would characterize the market as one with a net readership decline overall, where there is still optimism around the power of innovation to help unlock the long-term potential of digital news,” Bangah said.

Digital ad sales will take a few more years to overtake print ad sales, with PwC forecasting that “historic moment” happens in 2026. The pandemic accelerated that shift, it said.

“The flow of marketing money away from print newspapers will continue at a rapid rate across the forecast period, with U.S. publishers losing $2.4 billion in advertiser investment between 2021 and 2026,” it said.

Newspapers’ digital ad sales will grow over that period but won’t make up for print ad losses. PwC expects their digital ad sales to grow at a 1% compound annual growth rate through 2026, “adding just” $251 million.

“But with most of the digital advertising spend taken by technology giants like Google, Meta, Amazon and TikTok, newspaper proprietors are failing to make up the loss of income through their digital offerings,” it said.

That doesn’t bode well for thousands of gutted newspaper newsrooms, which lost around 60% of their staff over the last 15 years. Especially not if much of the industry’s digital growth goes to a few East Coast newspapers.

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PwC noted that the industry is cutting costs and consolidating, and facing other headwinds such as a huge increase in newsprint prices.

“As these challenges and trends continue, the impact will be felt by readers at a municipality or local level,” it said. “Readers may find that stories about a city council meeting or school board event are no longer published as newspapers focus on stories at a higher level including state and federal to appeal to a larger audience.”

Not mentioned is the resulting erosion in democracy, as voters lose local news coverage and abandon papers investing little in journalism. That’s already making Americans less informed and less engaged in their communities, as established by academic research.

Members of Congress hemming and hawing over whether it’s worth helping local newspapers survive should take note.

Despite the bleak outlook, the PwC report shows this essential industry is making progress where it can to evolve. But newspapers face overwhelming and unfair competition from a few companies, particularly Google and Facebook, that the government is suing for anti-competitive conduct.

A proposal for temporary tax credits for employing journalists, the Local Journalism Sustainability Act, would stop the bleeding at smaller papers in particular, as they evolve and antitrust enforcement proceeds. Another bipartisan bill, enabling news outlets to collectively bargain fair compensation from tech giants profiting from their content, would help ensure longer-term survival.

If nothing is done, and local newspapers that provide most local reporting keep fading away, the forecast for democracy is even worse.

This is excerpted from the free, weekly Voices for a Free Press newsletterSign up to receive it at the Save the Free Press website here.