The Seattle Times Co. has received a $ 9.9 million federal coronavirus aid loan that will provide temporary relief to the newspaper amid a sharp drop in advertising revenue due to the COVID-19 pandemic.
“This is a lifeline for us for the next 60 days,” said Alan Fisco, the company’s president and chief financial officer, who admitted that the Seattle Times had otherwise faced layoffs and cuts within hours. “That gives us a little air to breathe.”
The $ 349 billion loan, offered under the Payroll Protection Program (PPP), allowed small businesses to borrow up to $ 10 million for up to two and a half months of payroll.
The loans, administered by the Small Business Administration and offered by private lenders, are forgivable when borrowers use most of the money to retain or recruit staff during the 60 days after the loan is funded. Some of the money can be spent on incidental expenses such as rent.
Fisco said the Times, which also owns the Walla Walla Union bulletin and the Yakima Herald-Republic and a printing plant in Kent, has started considering a PPP loan after a sharp drop in advertising revenue. The Times predicts ad revenue will decline 45% in April year over year, Fisco said.
Similar losses have already resulted in cuts and layoffs across the US media industry. ONE current survey by the New York Times It is estimated that 33,000 news media workers have been “laid off, on leave or their salaries cut since the coronavirus hit.”
In the Pacific Northwest, the damage was particularly severe, with layoffs and cuts in publications ranging from regional daily newspapers to Seattle’s alternative weekly newspaper The Stranger, which laid off 18 employees, including six reporters and editors, in early March.
Fisco said cuts were becoming more likely in the company’s three newspapers, including the Seattle Times, even though demand for coverage of the pandemic had boosted website traffic. Given readers’ desire for news, cuts would have been “absolutely the worst time,” Fisco said.
But the wage loans themselves were hardly a sure thing.
Since its inception on April 3, the PPP has been plagued by technical glitches and inconsistencies among private lenders. The Times initially applied for a loan from Wells Fargo but was turned down after the bank decided to work with borrowers with fewer than 50 employees. The Seattle Times Co. employs 849 full-time and part-time workers in its three newspapers and printing plants.
The federal government typically defines small businesses as those with fewer than 500 employees, but the SBA makes exceptions for a number of industries, including newspapers, which can have up to 1,000 employees.
The Times switched to Seattle-based WaFd, which approved the loan on Easter Sunday, just days before the SBA announced that the PPP was out of funds.
“At least for the moment we are postponing all plans for large-scale layoffs or working time reductions,” Fisco wrote on Tuesday afternoon in a message to the employees. “There may still be targeted cuts, but nothing to the extent that we would have had to do without this support.”
However, Fisco admitted that the loan is only a short-term solution. During the Great Recession, The Times “lost revenue that never came back and we expect the same thing to happen here,” Fisco said. “To what extent we don’t know.”
Some industry experts say up to 30% of advertising revenue may not come back, which could cause newspapers that were already running at low margins to become “operationally unprofitable” if they keep their current workforce, said Ken Doctor, an analyst for the Media industry. “This is a long-term problem that will not be solved by a federal emergency program.”
The doctor said the industry is already pushing Congress to find more permanent solutions. Among them is a proposed waiver of US antitrust law, which would enable the entire newspaper industry to negotiate with Google and Facebook over the payment of fees for the use of newspaper content.
Fisco said the Times is “working with industry associations and some members of the state’s congressional delegation” to seek longer-term federal aid to news organizations, “including grants to support newsrooms.”