Welcome to Second Rough Draft, a newsletter about journalism in our time, how it (often its business) is evolving, and the challenges it faces.
Three years ago, fearing that a recession might be just ahead, I wrote a column with some suggestions about how newsroom managers might think about it. In the event, the Biden Administration and especially the Federal Reserve skillfully managed what is known as a “soft landing,” and no recession occurred (even if the popular vibes were otherwise). Undeterred, and because the circumstances today are importantly different, this week I am going to go there again. (As before, don’t take your macroeconomic guidance from me: I am one of those people who predicted nine of the last five recessions.)
Reasons to worry right now
I’m worried, however, right now for a number of reasons, some of them new:
First, if recession follows Trump’s erratic tariff moves and full-blown trade war with China, it will be the first recession primarily caused by sheer executive ineptitude since 1937. When that occurs, the harm tends to be more lasting—the economic damage in 1937 was only finally undone by the coming of the Second World War in 1940-41. Today, the reckless commitment of Elon Musk and many House Republicans to slash federal spending would likely foreclose any rapid or effective initial response to a slump. It’s hard to imagine a 2025 TARP (as in 2008) or Paycheck Protection Program (as in 2020).
For different but related reasons, counter-cyclical aid to nonprofits, including nonprofit newsrooms, is likely to be limited, particularly from institutional foundations. Those funders are already facing unprecedented demands across their portfolios from victims of and gaps left by Trump and Musk’s nihilism, including on public health, environmental issues, international development assistance, racial justice— and likely soon domestic public broadcasting. (Beyond those domestic concerns, cuts to US international public broadcasting and US government aid to journalism internationally amount to a sum about 12 times the size of the entire Press Forward initiative, opening another enormous funding gap.) Many grantors are also already worried about the possibility of increased taxation on income from their endowments, and the sort of counter-cyclical leadership we saw from Ford Foundation President Darren Walker in 2020 seems unlikely to recur. A positive but much more modest step, led by the MacArthur Foundation, to temporarily increase the draw on its endowment from five to six percent, could be wiped out by market declines. It’s simple math, for instance, that six percent of an endowment that has fallen by 20% is less than five percent of one that is flat.
It remains the case that very few newsroom managers with responsibility today have ever managed through a conventional recession. The slump of 2020 was the deepest but also the shortest in memory, that in 2007-08 was not recognized as such until it was almost over—and its bottom is already more than 16 years ago.
What is to be done?
So much for why I’m concerned. What to do about it? How should managers think about planning for a recession?
Retain talent if possible. Many big companies respond to downturns by cutting employees first. You have already started to see some of this in the auto industry. In a newsroom, it makes no sense. Your talent is your greatest asset, and should be the last thing you cut, not only for its own sake in the short-term, but also because layoffs today inevitably make recruiting harder the day after tomorrow. If cuts are in order, think about everything else you might trim before shedding staff, including limiting travel and freelance costs. In legacy media, the time may be coming to accelerate adjustments you know you were going to have to make eventually, such as limiting print days or print delivery footprints.
Understand your revenue streams. Advertising would surely fall in a recession; it always does. And it may be even a bit worse than that: if you are getting a larger share of ad revenues than your share of audience attention—as remains the case, for instance, with print publications and probably also linear TV—you should expect that the marketing “reset” that accompanies downturns will be especially costly. On the other hand, we simply don’t have much historical experience with how small dollar contributions would fare in a recession, and paywalls, like the print circulation of old, may hold up relatively well. Where will revenue from events fall on this continuum? Those requiring audiences to travel are almost certain to suffer, as may sponsorships (see advertising above, unless the “reset” actually helps), but local event attendance may be more resilient.
This is what reserves are for. If you have been wise and fortunate enough to be able to save up for a rainy day, a recession is a downpour. In better times, nonprofit newsrooms should aspire to have on hand a full year’s expenses. In a recession, if one comes soon, I would not hesitate to spend that down to six months’ expenses by the end of 2026. It is not too soon, I think, to begin discussions with boards about how to approach this possibility.
Don’t cut prematurely, but do now dial back what you easily can. It may turn out in retrospect that a recession has already begun. (It is generally defined as two consecutive calendar quarters of a contracting economy, and some believe that the economy will ultimately be seen to have begun shrinking in this year’s first quarter.) But that is by no means clear, and this is not yet a time to be cutting back on core operations. It may, however, be a moment to limit peripheral spending, to defer costs which could just as easily be incurred at a later date, to postpone “nice to have” (but not “must have”) updates of all sorts. As I acknowledged last time I wrote about this, that sort of behavior, of course, is part of how recessions begin. So Donald Trump won’t want you to take my advice. But he has both more money and a greater ability to borrow, both personally and in his official capacity, than you do.
Let’s all pray that Trump’s tariff blunders aren’t as costly as they seem, or even that he, for once, admits error and reverses himself entirely. But nothing we know about economics suggests the former, and nothing we’ve observed over the last 10 years offers much prospect of the latter. So, unpleasant as the task may be, if you’re running a newsroom or in some way responsible for one, I hope crafting your recession plan is front of mind right now.
Second Rough Draft will likely be off next week. See you soon.
Smart and actionable. Thanks, Dick.
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