MDIF on the financial survival of newsrooms
Takeaways
Cut costs and conserve cash
Listen to your core audience and become a source of trust
Be transparent
The context
In its 24-year run, MDIF, which invests in independent media around the world, has seen its portfolio companies through its share of crises — publications reporting on war zones, suffering political attacks, diving head-first into heated protests. Key Kiarie, MDIF’s Chief Investment Officer and Patricia Torres-Burd, MDIF’s Managing Director of Media Services, shared their tips to help media companies weather the crisis, make quick decisions, and turn challenges into long-term opportunities. “This is a marathon, not a sprint,” Torres-Burd emphasized.
What we learned from MDIF about how to restructure your newsroom's finances in this pandemic.
Financial survival tips
MDIF pinpointed common issues facing media companies during the pandemic.
As ad budgets are cut, events are cancelled, and print circulation decreased, revenue is plummeting at media companies
Management and human resources teams are dealing with issues they have not planned for. These include managing a virtual organization under a time of duress, ensuring that teams have the tools to conduct proper remote work, and that there is a standard of reporting safety with enough gear to protect staff
Crises are often ripe moments for attacks on media with demands of censorship, politicizing events, and adding legal pressures to journalists
Media companies are forced to act decisively. “A crisis will magnify any problems you already have within your organization,” said Kiarie
But MDIF sees a silver lining. “In crisis there’s always the eventual chance for opportunity,” Kiarie explained.
Fix your cash. Cut costs and conserve cash where possible. Build cash reserves, manage cash flows, reduce revenue projections by between 30% to 70%, and put immediate cost-cutting measures into place across your organization.
Additionally, make sure to collect — as much as possible — any capital that’s owed to you. “If you decide not to cut costs, you’ll find that your probability of survival will be reduced,” Kiarie explained. Think of these cuts as long-term activities, adds Kiarie — a team might find that they’re able to do more with less.
Think about your team. Now is the time to postpone hiring and consider staff reductions, said Kiare — these are extremely difficult decisions to make. “Most of the cost bars that we see in our portfolio companies, people, staff is the biggest percentage, and it is the most difficult place to make reductions,” explained Kiare. In difficult situations, media companies should also consider offering salary reductions or part-time roles in place of cutting staff.
Torres-Burd adds that it’s important to consider the health of existing staff members. They’re not immune to the virus, especially as many go out onto the field to report. Make sure to implement an internal covid crisis scenario with your staff, and put in continuity and redundancy plans if key team members get sick. This is also a time to think about a little kindness — teams might benefit from a daily mental health check-in or a buddy system to drop off and deliver food.
Listen to your core audience. “Social distancing doesn’t mean that you have to be distant,” explained Kiarie. “You can continue to make a connection.” This is a time to listen closely to your audience. Prioritize building trust, focus on their needs, understand your niche, and engage your audience to build a community.
It might help to find a connection that’s not necessarily about the pandemic. Remember that this may also be a time to win new audiences, as people realize their go-to news source may not be the answer during a pandemic — preempt what readers might be looking for as they adapt their daily lives to quarantine, but don’t lose sight of your core audience and focus.
Most importantly, make sure integrity remains front and center. “Coronavirus is important but many of you have audiences that are dedicated, that are loyal, and that are looking to you for pure journalism,” said Kiarie.
Build relationships. Relationships with clients, publications, and other organizations can help weather the storm. Understand how your existing clients can serve your audiences now or be partners in the future. Is there something that an existing client can advertise that a reader now might be looking for? Can an event be pushed from May to December?
Partnerships with other media organizations can help reach a shared audience. Alliances with organizations can strengthen your reporting — for example, a health organization with key information on the crisis, or a data firm tracking cases worldwide.
Maintain transparency. Tell your readers about the decisions you’re making and why you’re making them. If you’re making staff cuts, explain your decisions.
It might be a good time to ask subscribers for more money, or to suggest a one-time donation. Even those who don’t choose to donate will remember your transparency — this is a long-term investment into your community.