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October 2008
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Survey: Newspaper Company Profits Down in FY2007
NSK’s annual survey of newspaper company business performance has found that profits dropped in fiscal 2007, reflecting the serious challenges facing the Japanese newspaper industry.
The survey, conducted by NSK’s Accounting Committee, reported year-on-year decreases in operating profits, pretax profits and net profits in a second straight year of declining business results. In particular, the rate of decline in both operating profits and pretax profits increased from a year earlier.
According to the survey, total industry revenue dropped 3.1 percent year-on-year to \1,810,303 million, while operating expenditures fell 1.7 percent to \1,743,077 million.
Among the total revenues, circulation income slipped 0.5 percent to \1,006.6 billion, while advertising revenues fell 6.0 percent to \556,083 million. “Other” operating revenues decreased 6.7 percent to \247,620 million. In each category of revenue, the year-on-year decline was greater than in the year before.
Operating expenditures were down 1.7 percent. By line item, general expenditures were down 1.1 percent, reversing an increase in the previous fiscal year. Personnel expenditures were down 3.4 percent, expenditures on newsprint dipped 1.4 percent, and other material costs dropped 0.5 percent. However, the margin of these cost declines was lower than in the previous year.
The annual survey assessed closing accounts of a sample of 41 NSK member companies that publish daily newspapers. It divided the newspapers by size of circulation ? more than 800,000 copies, more than 400,000, more than 200,000 and less than 200,000. Only papers with a circulation under 200,000 copies logged a collective year-on-year gain in circulation and advertising. They also registered a large 14.3 percent increase in operating profits -- very different from the general decline reported for the newspaper industry as a whole.
Media Ethics Gathering Discusses Quasi-Jury System
The National Federation of Mass Media Ethics Councils held its 52nd national convention in Kumamoto City on Sept. 25-26, bringing together representatives from the newspaper, news agency, broadcasting, publishing and advertising fields. The convention theme was, “The Media’s Strength, Responsibility and Potential.”
Following a plenary session and lecture on the first day, the participants split into seven sub-groups: five on news reporting and two on advertising. A plenary session on the second day passed a resolution calling on media people to adopt an even stronger sense of ethical responsibility and called for more efforts to promote media ethics in general.
The first day’s plenary session heard from wrongly jailed former death-row inmate Sakae Menda, 82, who spent 34 years in prison before being acquitted of murder in a retrial. Menda said that although he was finally acquitted, Japan’s judicial system is still defective. He called on the mass media to act as defenders of human rights in Japan.
In other sub-groups, two of the five news sub-groups discussed the planned change to a quasi-jury system for criminal justice. The discussions focused on the so-called lay judge system under which ordinary citizens are to play a role in deciding the outcomes of criminal trials. The lay judge system is due to be introduced in May of next year.
The participants in the other sub-groups discussed subjects including: “anonymity in society and the freedom of newsgathering and reporting,” “Internet society and media ethics,” “crime victims and news reporting,” “complaints and media responsibility,” and “ethical/legal compliance and the potential of advertising.”
The sub-group discussions on the new criminal justice system began with representatives from NSK, the National Association of Commercial Broadcasters in Japan, and the Japanese Magazine Publishers Association explaining their respective organization’s preparations for the new system.
Attorney Masanori Ono, the acting general manager of the Japan Federation of Bar Associations’ headquarters for the implementation of the lay judge system, explained his federation’s December 2007 draft guidelines on media coverage of criminal cases. The draft calls for:
1) the media to clarify the source(s) used for articles on criminal cases whenever the news is based on information from investigators;
2) the media to generally refrain from disclosing any previous criminal record of a suspect mentioned in news reports; and
3) the establishment of a third-party Press Council.
In the discussions, a city news editor of a national newspaper rejected the bar federation’s call for better sourcing of media reports, asserting that the media provide well-balanced reporting on criminal cases based on information obtained from both the investigators and the defense. “The fact is that defense counsel usually refuse media requests for information. In many cases, we can’t even get the name of the defense counsel in a case,” the editor said. “If it is too much for counsel to tell the media the details of the case, couldn’t an attorney at least tell us how their client is being investigated?” he asked.
However, Ono reminded the media that any cooperation with the media by defense counsel might disadvantage the suspect and threaten attorney-client trust.
In reference to pretrial procedures in which prosecutors, defense counsel and judges discuss the trial schedule and key points, a reporter from a regional newspaper complained that the media are kept in the dark about such discussions. “It is essential that media get and use information from defense attorneys. But the attorneys refuse to cooperate,” he complained. Ono said defense attorneys could certainly more easily brief the media on pretrial procedures than they could shed light on investigatory steps.
On the lay judge system and reporting on criminal cases, representatives from the Asahi Shimbun and the Yomiuri Shimbun explained how their editors and reporters are dealing with the new challenges.
According to Satoshi Izumi, a deputy chief of the city news group at Asahi’s Tokyo head office, the Asahi in June adopted draft guidelines that have been implemented on a trial basis at Asahi offices across Japan since July.
Izumi said the Asahi aims to (1) clarify the source of its information as much as possible and (2) pursue well-balanced reporting by collecting information and comments from both sides in a criminal process.
Izumi said some top-ranking police oppose revealing the source of news reports. He cited one article that attributed information to”a ranking investigatory official.” However, identifying that source would likely not be difficult because only two ranking police investigatory officials were involved in the case. Later, he quoted one official who said he would refuse to cooperate with the Asahi if it continued to give out such clues to its sources. “After another article quoted “parties involved in the investigation,” police told the Asahi that they objected to that expression as it “sounded like an admission that investigators overtly violate their confidentiality obligations,” Izumi added.
In view of such trial considerations, the Asahi plans to implement its new guidelines by next spring. Izumi said, “The new guidelines must not be just a manual. We want our crime reporters to share in creating a new writing style,” he said.
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Testing Services Aim to Promote Newspaper-Reading
A growing number of Japanese newspaper companies are using proficiency tests to examine readers’ comprehension of current topics, economic activity, and other diverse subjects.
The testing is aimed at raising interest in newspapers, but some test organizers, especially local newspapers, also see the testing as part of an effort to contribute to society. Some newspapers are working with outside companies or organizations to explore the possibility of developing the testing into a new profit-making project.
Last year, the Mainichi Shimbun launched a News Proficiency Test that roughly 20,000 readers have taken so far. About 10,000 people took this year’s first test in June.
Koichi Masuda, the head of the Mainichi’s new-business development office, said the number of applicants for conventional testing usually tends to fall in the second year. “Mainichi’s test project is making progress, and it looks like the number of people taking our test will keep growing,” he said.
However, Masuda said the testing project is barely breaking even. The company charges a fee ranging from \2,900 (for the first certificate) to \6,500 (for the fifth-degree certificate). Takeshi Odawara, an official in the new-business development office, said, “We need at least 50,000 test-takers a year to make this project viable and at least 100,000 to make it profitable,” he said.
Starting this year, the Nihon Keizai Shimbun (Nikkei) has offered what it calls the Test of Economic Sense and Thinking (TEST) on economic and business activities. Over 10,000 people took the first such test on Sept. 26.
Ryo Abe, a Nikkei business-planning official, said that given that the testing is only for businesspeople, the number of test-takers exceeds his expectations. The fee for the test is \5,250. “We need at least 30,000 test-takers a year, and we need to raise that to 50,000,” Abe said.
The solicitation of companies and organizations to get their members to take the tests promises success for the business. At the Mainichi, a majority of the test-takers are students and the Mainichi is approaching universities for group testing. The Nikkei is prodding major companies to get their employees to take its tests.
The Mainichi’s Odawara said the test will be upgraded to meet university requirements for admissions criteria for students. The Nikkei expects companies to use its test to evaluate employees.
The Mainichi’s Masuda admitted that testing is actually not a very profitable business. “We cannot sustain the testing as an independent project,” he said. The Nikkei’s Abe shared his view, but said that as the publisher of a business daily, it is natural for the Nikkei to try to raise interest in economic and business matters. “We expect the testing to help Japan turn for the better over the longer term. We are not pursuing only short-term profits,” Abe stressed.
Some regional newspapers are planning unique proficiency testing. The Shizuoka Shimbun and the Yamanashi Nichinichi Shimbun started a project to test readers’ knowledge about Mount Fuji two years ago. The Mount Fuji Proficiency Test checks applicants’ knowledge of data and information related to Japan’s tallest mountain. The test supports an effort to win UNESCO designation of Mount Fuji as a World Heritage site.
The two newspapers also launched another test this year on earthquakes. The so-called Namazu test is named after a freshwater catfish said to predict quakes. The test by the two Tokai area papers promotes earthquake awareness.
The questions for both the first- and second-degree certificates can be obtained from the print editions of the newspapers, and applicants are asked to mail in their answers. Anyone who passes the second-degree test can attempt the third-degree certificate at designated testing sites.
Officials said the tests are not for profit. No fee is collected for the first- and second-degree certificates. Only those who attempt the third-degree certificate are charged a fee of \1,000.
Hajime Nakamura, a business-planning official at the Shizuoka Shimbun, said the testing is part of the newspaper’s contribution to the community. But even he admitted that it will be difficult to keep the tests going indefinitely.
The Sankei Shimbun is launching a number of diverse proficiency tests to commemorate the newspaper’s 75th anniversary. In the fiscal year ending in March 2009, the Sankei will offer tests in four areas ? in automobile culture, in Japanese language, in night scenery, and in basic knowledge for working members of society.
The Sankei aims to get universities to encourage 15,000 students to take a first test on basic skills and knowledge, in December.
This test includes questions on current topics and on Japanese language skills, in addition to questions to check “basic abilities for working members of society,” as advocated by the Ministry of Economy, Trade and Industry (METI). The test results will be fed back to university administrators and to students to assist in determining the future courses of graduating students.
The Sankei is also teaming up with outside test organizers and content providers. In some of its tests, the Sankei is handling only promotion and publicity, but in others, it will run the entire testing secretariat.
The real bottom line for these testing projects is the social significance of a newspaper publisher. Hajime Matsumoto, who heads the Sankei’s media development headquarters, said, “It is becoming widely recognized that Sankei is the best partner in jointly organizing tests of social significance… We are receiving inquiries from many parties about collaborative testing. Working with outside organizations and companies offering high-quality content and services will give us an opportunity to make a profit, he said.
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General-Interest Monthly Magazines Failing
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Japanese general-interest monthly magazines dealing with serious topics are failing one after another.
After the closure of “Ronza” magazine by the Asahi Shimbun, Kodansha Ltd. has announced it will suspend publication of “Gendai” in December.
According to the Research Institute of Publications, sales of magazines have been falling for 10 years in a row. An annual survey on advertising spending conducted by Dentsu Inc., Japan’s largest advertising agency, said the Internet surpassed magazines in 2006 as a medium for advertising. The failure of monthly magazines reflects a depressed market. Publishing houses are finding it hard to keep publishing money-losing serious news monthlies.
Katsuyuki Yakushiji, the editor of the Asahi’s Ronza monthly, said the magazine could have survived if it were running in the black. He said the magazine was a forum for open and diverse debate, challenging a trend in which opinion leaders prefer to exchange views with those in the same school of thought. But Yakushiji said the magazine’s circulation totaled only 20,000 copies, meaning that it could not become profitable.
Kodansha’s Gendai claims a circulation of 82,000. But the publisher is ending its 42-year history. Katsumi Mochida, a Kodansha managing director, said that the company can no longer sustain a money-losing monthly when the entire industry is suffering financial challenges.
General-interest monthlies are also hard-pressed in terms of circulation and advertising revenue. Since the start of this year, several long-established magazines have gone out of business. “Shufu-no-Tomo,” a monthly for housewives (launched in 1917), closed in May, while “Roadshow,” a magazine for movie enthusiasts (started in 1972) is to close at the yearend.
“Not just general-interest monthlies are in trouble,” observed Toshiharu Sasaki, chief researcher at the Research Institute of Publications.
Asahi’s Yakushiji said the younger generation’s aversion to print media and the rapid aging of the population are hurting conventional print media. “Under the circumstances, publishers are trying to secure short-term revenues,” he added.
Kodansha’s Mochida said conventional editorial policy for general-interest magazines is nearing an end. “The general-interest magazine… might be losing its appeal,” he said.
Atsushi Okamoto, the editor of the monthly magazine “Sekai” published by Iwanami Shoten Publishers, shared Mochida’s views and said the comprehensive nature of general-interest magazines is in the balance. “General-interest magazines are not research papers, but opinions and views,” Okamoto said. Although editors want readers to get an overview of current thought, readers tend to look for specific articles of interest, he lamented, saying that general-interest magazines ignore the needs of many readers.
Yasuo Ueda, a former professor at Sophia University and current chief editor of the weekly trade journal “Dokushojin,” pointed to brisk sales of business weeklies, warning against failures by general-interest magazines to meet readers’ diverse requirements.
Some articles printed in Kodansha’s Gendai monthly draw many more readers when published in book form, according to Kodansha officials. After Gendai is discontinued, Kodansha will launch a new magazine featuring nonfiction articles.
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Nihon Shinbun Kyokai
The Japan Newspaper Publishers & Editors Association
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Copyright 2008 Nihon Shinbun Kyokai
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