March 29, 2020

Print Media Bastion May Be Giving Way

On any train, plane or bus, readers unfurl broadsheets that still do justice to the word, thick with advertising. More than 72 percent of Germans who are older than 14 read newspapers regularly, according to the Federation of German Newspaper Publishers.

So it came as something of a shock when, at the end of last year, news of trouble emerged at several German newspapers and other news organizations. In October, DAPD, a news service, filed for bankruptcy protection. In November, Frankfurter Rundschau, one of the first dailies to begin publishing in occupied Germany after World War II, took a similar step. In December, The Financial Times Deutschland shut down.

Is the newspaper industry in Germany about to go the way of its counterparts elsewhere in the developed world?

Perhaps. Certain technologies, including the Internet, have taken longer to catch on in Germany than elsewhere. Advertising has already declined sharply at German newspapers; perhaps now readers will move on, too.

“I would be very surprised if there were no crisis,” said Norbert Bolz, a professor of media science at the Technical University of Berlin. “There is a structural crisis. But I have to say, honestly, how surprised I am by the success of the main media houses in dealing with this.”

Analysts say the shutdowns and bankruptcy filings at the end of last year were prompted largely by factors unique to the individual publications and organizations.

The German news agency business, for example, is unusually crowded. DAPD, cobbled together from the German-language service of The Associated Press and a former state-owned East German news agency, competes with a larger service, Deutsche Presse Agentur, as well as several other German-language news wires.

Frankfurter Rundschau, which is still publishing as its biggest shareholder, DuMont Schauberg, seeks a rescuer, has been hobbling along for years. A decade ago, it was bailed out by the state government of Hesse, and a publishing arm of the Social Democratic Party now holds a 40 percent stake.

The FT Deutschland, which was started in 2000 by two publishers — Pearson of Britain and Gruner Jahr, which is controlled by the German media conglomerate Bertelsmann — was never able to mount a convincing challenge to the dominant German business daily, Handelsblatt. Pearson sold its stake to Gruner Jahr in 2008.

The downturn in print advertising has affected German papers, but they have largely been able to compensate by raising their cover prices. Over all, newspaper revenue was flat last year, according to the publishers’ group — a relatively buoyant performance, given the slide elsewhere. The number of newspapers in Germany actually increased in 2012.

In an effort to head off further declines in advertising, the publishers of four German national papers — Handelsblatt, Frankfurter Allgemeine Zeitung, Süddeutsche Zeitung and Die Zeit — formed an alliance this month to promote their appeal to marketers.

Publishers have also persuaded the government of Chancellor Angela Merkel to introduce legislation that could result in a new source of revenue: licensing fees from Internet companies like Google. The measure would authorize the publishers to demand fees from search engines or aggregators that link to their articles. The publishers’ success in lobbying for the measure, which is bitterly opposed by Google, demonstrates their continued clout, analysts say.

The troubles at Frankfurter Rundschau, FT Deutschland and DAPD “are not an indicator of a dying print market,” said Steffen Burkhardt, a media researcher at the University of Hamburg. “Publishers in Germany are in a fantastic situation compared with print publishers in other markets.”

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Fewer Americans File for Bankruptcy

The number of bankruptcy filings in June was 120,623, or an average of 5,483 a day, a drop of 6.2 percent from May, when filings totaled 122,775, or 5,846 a day, according to a report from Epiq Systems, which tracks bankruptcy filings. There was one additional day to file in June compared with May. Average daily filings are down nearly 10 percent from June of last year.

Though economic factors like foreclosures and unemployment play a role in bankruptcy, over the long run, the filing rate tends to be more closely tethered to the amount of outstanding consumer debt.

Access to credit, however, can influence the bankruptcy rate over the shorter term: as lenders tighten their standards, filings tend to rise because struggling consumers can no longer rely on credit cards or other loans to get them through a rough period. But when more new loans are being made, filings tend to fall — at least for a while.

“There is a lot of mythology about what drives bankruptcy rates,” said Robert M. Lawless, a professor at the University of Illinois College of Law who specializes in bankruptcy. “But consumer credit appears to be the most significant indicator.”

Over all, he said he expected filings to decline 5 to 10 percent this year, leveling off at about 1.46 million, largely because consumers have slightly more access to credit now than in recent years. But he also said that consumers had taken on less debt in the past three years, which means there is less debt to discharge and fewer incentives to file bankruptcy.

That estimate compares with about 1.56 million bankruptcy filings in 2010 and nearly 1.45 million in 2009. Filings surpassed two million in 2005, when many people rushed to declare bankruptcy before a new law went into effect that made it more difficult, and significantly more expensive, to file.

There have been 731,237 filings this year. “If they keep going the way they were,” Professor Lawless said, “bankruptcy filings will keep going down a little bit.”

So far this year, the vast majority of the bankruptcy cases — nearly 70 percent — were Chapter 7 filings, which provide individuals with the proverbial “fresh start” because their debts are forgiven. (To qualify, filers need to pass a means test to determine whether they are unable to repay their debts.)  

In contrast, a Chapter 13 filing requires individuals to use their disposable income to pay back a portion of their debts through a three- or five-year repayment plan. Some people choose Chapter 13 because it allows them to save their primary homes from foreclosure, though they are required to catch up on their mortgage payments. Slightly more than 27 percent were Chapter 13 filings. (The remainder were mostly commercial filings.) The overall split between Chapter 7 and Chapter 13 filings is consistent with last year’s ratio.

While the overall number of bankruptcy filings was down last month, there were variations from state to state. For instance, filings in Georgia rose 13 percent and were up 33 percent in Delaware, compared with May. But filings in Wyoming fell 30 percent, in South Dakota 21 percent, in West Virginia 18 percent and in Wisconsin 17 percent.

In both New York and New Jersey, the number of bankruptcy cases dropped by 5 percent.

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