The Impact of the Financial Crisis on Mass Media in Cyprus

note: This is a first attempt to gather evidence, views, as well as scholarly sources to outline the impact of the financial crisis on mass media in Cyprus. Additionally, this article has also used information from interviews and discussions with editors, media owners and journalists. 

Combined with my past and present experience working with the media, the resulting article is surely not exhaustive on the matter and more aspects regarding the impact of the financial crisis on mass media in Cyprus are yet to be explored.

Useful information and opinions were also gathered during a round table discussion organized by Politeia: “Crisis, Media and Democracy”, 19 June 2013, with the participation of relevant stakeholders (journalists/editors, media owners, representatives from the Union of Cyprus Journalists, Advertisers associations, academicians, bloggers etc). 

The OSI Reports (Footprint of Financial Crisis in the Media, analysing the sutuation in several Eastern European countries) have been especially helpful. Paragraphs and chunks taken from those reports seem to be eerily prophetic and needed very little editing from my behalf to match with an estimating opinion on how the future could unfold for the media in Cyprus!

Impact of Advertising Drop: not just profits

In the words of Antonis Makrides, president of the Union of Cyprus Journalists, “Advertising is the blood donor of media”. As spending on advertising and marketing has dropped in the last years, the financial woes of media organizations have deepened.

At a round table discussion (organized by Politeia (2013) regarding the Impact of the financial crisis on Press and its implications on Democracy), editors and journalists, media owners and managers, academicians, representatives of advertising companies unions and other stakeholders, have come together to examine the depth of the problem, establish a common understanding about it and its implications and ways to tackle them.

The round table discussion was based on the assumption that the financial crisis, causing a drop in advertising revenue that the bulk of media organizations' survival depends upon, will cause media to shrink with a lot of outlets shutting down and subsequently the media will not be able to perform their duty to society: to investigate, analyse and reveal and present the facts to the public, thus to help the public articulate informed opinions and make informed decisions. A blow in the media's ability to perform this role will lead to uninformed citizens, prone to manipulation, false information and superficiality in the news, thus based on information of poor quality, to make wrong decisions and this becoming a blow to democracy itself.

Of course, the impact of crisis on media and subsequently on democracy is neither unique to Cyprus, nor new to the world. Reports and papers presented here, that have studied the cases of other countries, outline and describe similar findings. Though there are disparities of the urgency of the situation among countries: For example, the serious, prolonged financial crises in several of the eastern European countries (crises that have pre-existed that of Cyprus) have far more serious implications on media and in the societies (see report of OSI, 2010) rather than e.g. western more well-off European countries. However, what is worrying, is by deducting the differences of those countries with Cyprus and by combining them with the patterns of the downward spiral effects of severe financial crises, a conclusion to be drawn is that the Cyprus media will soon face the same difficult situations and ailments of media in Easter European countries.

From a point of view, advertising revenue is of utmost importance for the independence and impartiality of media organizations (Reuter, Jonathan, and Eric Zitzewitz, (2006)). Advertising revenue allows media organizations to be as such, because then they do not need to endorse practices of political affiliations and rely on corporate and other external vested interests that would want to control media's opinion and direction by having them relying on their sponsorship and financial support. Thus, media organizations that are more independent (and, therefore, more reliant on advertising revenue), are in even more disadvantaged position than media of government (or politically-affiliated) ownership.

With advertising markets still largely at a standstill and people’s purchasing power considerably below the pre-crisis levels, the future will be hard. More cost-saving measures will follow, further withdrawal of foreign companies investing in Cyprus (and providing advertising revenue) is probable and bankruptcies of media organizations seem to be imminent.

The situation has become more difficult not only in terms of generating revenue through advertising but also maintaining advertisement prices.

The effects on the Media Labour Relations and Labour Market

At the early effects of the crisis, most media organizations started by reducing staff in non-editorial departments such as marketing, administration and advertising. But as the issue became more serious, salary freezes, abolition of annual bonuses and wage cuts among editorial staff followed suit and, eventually, lay-offs of journalists. This is a pattern found not just in Cyprus, but in other cases as well (State of the News Media, 2013).

Media organizations are constantly being forced to reduce costs, and the journalists’ salaries remain low, also cutting on the number of staff so as to reduce personnel costs. Despite the cuts, an attempt is made to maintain the level of quality and quantity and the remaining employees are given extra work at the same pay scale.

Consequently, when there are replacements of experienced journalists that have been recently laid-off, many times they are replaced by inexperienced journalists in order to be hired on a lower than usual salary and this is another factor that effects the quality of news coverage. Also, newly-hired (young) journalists are hired under weaker, less favourable labour-regulating conditions: Instead of being registered by their employers to the Union of Cyprus Journalists (that would ensure some privileges like access to trainings and protection as journalists and in their job), they are instead hired on personal contracts that weaken their status as journalists and make them more vulnerable to pressure, sacrificing essential integrity and impartiality.

They are more susceptible to the media outlet’s owner “watchful eye” ensuring the outlet’s news reporting does not deviate from certain lines of interest (for example in Cyprus, politics are often behind business in the media industry), so these journalists are not always given the chance to freely function professionally.

The weakening of the Union of Cyprus Journalists' ability to protect editorial staff from practices of manipulation and interference to impartiality is caused by the stiff competition of journalists trying to simply keep having a job. Not only young journalists that have recently entered the trade are in a disadvantageous position. An eloquent descriptive narrative of the situation by Antonis Markides, president of the Union and senior journalist: “When I was then an editor in newspapers, I had the freedom and security and no fear to investigate and write whatever I wanted. I had no fear that when I was digging and exposing information, someone could tell me “don't do it because of X and Y interests”. If the media owner would ever come to me and say so, I could easily tell him off and tell him where to go! I have done that in a number of newspapers I worked at. Nowadays, I know that, even I, if the media owner comes and tell me “do not write this”, what could I tell him? Without backing and the easiness of being left without a job, how can I resist to him and tell him “no”? I am afraid I do not know whether I have that power any more”.

However, from an opposing point of view, an extensive research by Andreas Panayiotou (2013) suggests that there is substantial evidence indicating that mass media outlets have generally failed to report important news regarding the scandals in the banking sector – or even participated in cover-up of many scandals. The study suggests that banks and political factors have had an influence on media, thus regulating what and how is published.

The use of freelancers by media organizations is a practice that is gaining ground as a way to cut costs. This is, again, found beyond the scope of Cyprus (see study of Cranberg, Gilbert, Bezanson, Randall, and Soloski, John. 2001 for more about labour relations and employment practices in corporate media ownership regime). Freelancers can even be former staff members and even currently working full time elsewhere. This, to some extent, eases the budget conditions of the media, but puts journalists at a greater social risk, as freelance relationship can be terminated without notice and compensation and does not have provisions for sick leave or holiday. Lack of professionalism can be a consequence of that and thus lower output quality.

The Role of Mass Media for the challenges posed by the Financial Crisis

The current financial crisis is rapidly becoming a crisis at all levels, also threatening to become a major social crisis in Cyprus of an unprecedented magnitude – comparable with the social consequences of the war of 1974 – as well as a crisis for democracy itself.

As media plays an important role in the dissemination of information, it also plays an important role on both how analysts and investors look at news information and how the public opinion is shaped on matters beyond the economy. (Brad, and Terrance Odean, 2008).

In fact, media actors at all levels (journalists, editors, owners and others), bear the burden of the big responsibility in their professional capacity, as in these years of crisis they have to play a major role in strengthening the country’s democratic system by informing the public in the most complete and accurate manner.

However, this role of media is very challenging, considering the profound circumstances after the March 2013 Eurogroup memorandum agreement that has sent shockwaves through the Cypriot economy's foundations. This means, journalists and media organizations alike cannot “play” this completely different game with the same rules and modus operandi they used during the previous years.

Now more than ever, investigative journalism is of essence in order for media to be able to scrutinize. But investigative journalism is expensive (Houston, 2010), since it involves a large commitment of reporting staff that are then would not be available to cover everyday matters; also carrying costs in terms of travel and gathering information.

Moreover, media organizations have to take in consideration the fact that nowadays information and different kinds of data (text and audiovisual) constantly stream in every place and in different kinds of devices too: homes, offices, on the road; smartphones, handheld devices – beyond traditional desktop and laptop computers. This means news consumers are getting more demanding not only about the quality and quantity of content, but also about the variety and level of sources: different outlets, but also through social networks – beyond traditional newspapers and magazines. In other words: choice. The latter signifies that delivery of news must become individualized, being custom-delivered based on its weight of relevance on each news consumer. (See also: Westlund O. 2008 ).

Recommendations for Journalists and Media Organizations

As a recommendation, journalists should be trained in business and economy/financial journalism in order to tackle the problem of insufficient coverage of crisis-related issues - to close the gap on lack of relevant investigative skills and understanding of the matter. Media organizations offering targeted support for investigative journalism will help to keep dubious governance practices in public view (Casey, Joseph E. Diego G. and Christopher P. (2010)).

In communities with limited ways to get their voice heard and with low internet skills, a more balanced coverage of local issues and news delivery can be achieved by means of Community Media, i.e.: training, media literacy and skills, collectively using media with new technologies - strategically, for the benefit of the community.

Both the established and new media organizations and outlets have to adopt innovative and flexible media business models to ensure sustainable and diverse news delivery. Sound business models that encompass values of openness and public participation are compatible with today’s “flat” news hierarchies and technological capacity of the modern news consumer.

Journalists should be updated in modern techniques and receive training on subjects like data journalism and data scraping, contemporary online and ICT skills, strategic use of social media. Especially regarding data journalism, journalists should also be trained how to use online techniques combined with strong knowledge on how various Freedom of Information regulations work (e.g. in state, local authorities and public administration levels, EU level and also in various countries) in order to be able to gain quick and full access to information.

Such initiatives will help to ensure that cash-strapped media do not compromise their public function and do not leave citizens poorly informed and prone to political manipulation.

Internet: a ally or a foe for Mass Media?

Although internet is a powerful tool for disseminating information, the crisis in the media in Cyprus is also connected to the diffusion of the Internet. The internet, as a cheap and omnipresent tool able to convey news and information rapidly around the world, has challenged the traditional media that have enjoyed the monopolies on communication information to the public. Media organizations in Cyprus were late to encompass internet and new technologies into their strategic plans and as a result they were not able to fit in the changing marketplace that relies more and more on technology and instantly available information.

As a result, the media outlets have become increasingly deferred with the public’s expectations regarding online experience and thus they have lost market in online advertising. Moreover, the public has started getting news from social networks and international news from websites of foreign media organizations.

In combination with the public’s increasing interest to read the news “between the lines” of what the established media offered, the Internet offered the opportunity to the alienated members of the public to bypass established media outlets and on the other hand it offered the possibility to bloggers, various opinion holders, as well as new outlets exclusively based on the web to “fill the gap” – phenomena particularly among the middle classes and younger citizens (See also World Association of Newspapers, 2012 on how young persons turn to online media).

More active members of the public have turned to alternative media on the internet for news and analyses, gaining greater diversity of opinions and thus enabling them to form a more balanced opinion on a matter, as compared of getting information from a single established media news outlet. Active citizens seek news online from sources beyond established media, as certain news and analyses fall outside the purview of the monitoring of established media and news state agencies (that are more concerned with monitoring traditional mass media outlets). Also, members of the public can access news and information that could not be published by established media, due to controversy or censorship (self-imposed, or state-regulated) (See also an interesting case on how radio offered alternative news perspectives and shaped public opinion by Stromberg, David, 2004).

Online Opportunities exploited

“When one door closes another door opens”, at the same time, beyond the negative effects, the financial crisis has also had certain positive effects on media organizations. It forced outlets to increase efficiency and invest in online presence. It has also increased resourcefulness among audiences with people consuming more sources in order to form their opinion. When comparing with the impact on “traditional media” -e.g. newspapers that rely on expensive printers in order to print daily and TV stations that rely on expensive terrestrial broadcasting- the crisis, has affected media that are exclusively web-based much less and has brought new audiences to the internet.

The rapid rise of Twitter and Facebook coincided with the crisis and -combined with the drop in consumers’ disposable income and the need for traditional media to find new audiences- has led to an explosion of online communities of consumers.

An explosion of blogging, micro-blogging and social networks coincided with the financial crisis constitute one of the biggest recent changes in the media landscape. Some traditional outlets have turned this trend to their advantage, expanding their presence on Facebook and Twitter – some using those social media not as just another way to dispense their information, but to create an online interactive community with the public. The financial crisis has also greatly influenced internet users’ behaviour and preferences especially among the young generation. Generally there is a trend of increasingly turning to the internet as their primary (and many times exclusive) source of news.

Another impact of the financial crisis is that although it has made it difficult for new entrants to enter the news media industry, new technologies, however, can enable much wider new participants in the news media. This could be one of the few overall biggest changes in recent developments in the media sector.

Indeed, not only independent new websites acting as online news portals have emerged, but also blogs, forums and online communities in social media have been established that provide the public with alternative news sources other than the established mass media.

However, apart from some efforts of establishment of quality online news portals that are important to provide alternative options to the public, this increase in amount of information on the internet has not translated into a higher quality of content (supporting this view: PJ Boczkowski, M De Santos, 2007). This is because most of these blogs, forums or portals are ran or managed, for the most part, by inexperienced or non-professionals, and this may lead to misinterpretation and misrepresentation of facts. There is not much original news produced by online portals, sometimes acting as mere news aggregators, or relying a lot on translations from other outlets. That is why most news consumers would rather search for confirmation in the mainstream media, if they have any special topics of interest in the news.

Sources and further reading:

Footprint of Financial Crisis in the Media - Open Society institute - Media Program - January 2010 - http://www.opensocietyfoundations.org/reports/footprint-financial-crisis-media

Panayiotou Andreas 2013, Οι Τράπεζες, τα ΜΜΕ και οι προσπάθειες Συγκάλυψης, Μετατόπισης και Λογοκρισίας των σκανδάλων - (Η εισαγωγή, η εξέλιξη και οι αναπαραστάσεις της οικονομικής κρίσης στην Κύπρο), Αντρέας Παναγιώτου

Politeia, 2013: Round table discussion “Crisis, Media and Democracy” organized by Politeia a Civic Organization ( www.politeia-cyprus.eu ), 19 June 2013.

Westlund O. 2008: From Mobile Phone to Mobile Device: News Consumption on the Go. Canadian Journal of Communication, Vol 33, No 3 (2008)

Brad, and Terrance Odean (2008) .The effect of attention and news on the buying behavior of individual and institutional investors, Review of Financial Studies 21, 785–818.

Cranberg, Gilbert, Bezanson, Randall, & Soloski, John. (2001). Taking Stock: Journalism & the Publicly Traded Newspaper Company. Ames, IA: Iowa State University Press.

Casey, Joseph E. Diego G. and Christopher P. (2010). The power of rhetoric in financial journalism, Working paper, University of North Carolina.

Reuter, Jonathan, and Eric Zitzewitz, (2006) Advertising and bias in the financial media, Quarterly Journal of Economics 121, 197–227.

Stromberg, David, 2004, Radio's impact on public spending, Quarterly Journal of Economics 119, 189–221.

PJ Boczkowski, M De Santos (2007) “When more media equals less news: Patterns of content homogenization in Argentina's leading print and online newspapers” - Political Communication, 2007 - Taylor & Francis, Volume 24, Issue 2, 2007

World Association of Newspapers. 2012. World Press Trends 2012, Paris: World Association of Newspapers. http://www.wan-ifra.org/microsites/world-press-trends

Brant Houston, 2012. “The future of investigative journalism” Daedalus, Spring 2010, Vol. 139, No. 2, Pages 45-56, (doi:10.1162/daed.2010.139.2.45), American Academy of Arts & Sciences.

State of the News Media 2013: Pew Research Center’s Project for Excellence in Journalism - http://stateofthemedia.org/2013/overview-5/key-findings/