What’s the Future of Legals?

The darling of small weekly newspapers and medium circulation dailies traditionally has been the steady flow of linage from legal notice advertising.  Legals represent a reliably, steady revenue source that typically is low maintenance — meaning no sales commission and minimal composition, so margins are strong!  However, reality points to the possibility that legal linage could be the victim of tight government budgets and politicians’ animosity toward the media.

New Jersey’s legislature — prodded by an angry Governor —  in late 2016 seriously considered a bill that would have allowed local governments to eliminate publishing budgets, bids for services and other public records in newspapers, and instead post them exclusively online.  Proponents promoted the legislation as a cost-saving measure for taxpayers.  For many taxpayers that’s a persuasive argument.  The New Jersey Press Association estimated that local governments spend approximately $20 million annually on legal notice advertising in newspapers.  This was the second time the New Jersey state legislature has seriously considered a bill intended to cut government costs by way of forgoing legal notices in print.

In 2017 the Washington State legislature considered HB 1315 that would have allowed local governments to do an end run around weekly newspapers in counties without a daily newspaper — opening the door to publishing legal notices online.

In South Dakota if HB 1167 would have passed it would have allowed that state’s 17 largest cities to publish their public notices (meeting minutes) online instead of in a local newspaper.  Proponents claimed the requirement to publish in print was a $2 million subsidy for newspapers.  Thankfully it was defeated THIS TIME.

California is not left out of the mix.  State Senator John Moorlach (R-Cost Mesa) in February 2017 delivered on his promise to introduce a bill substantially rolling back legal notice advertising in print.  AB 1957 fortunately failed primarily because of an overwhelming number of letters from California Newspaper Publishers Association (CNPA) members.  But CNPA is running scared — providing member newspapers with professionally designed “house ads” supporting continued publication of legal notice advertising.

Michigan, Texas, Kentucky, Wisconsin and Florida represent a partial list of states revisiting public notice advertising in newspapers.  Today it’s difficult to boast with confidence about the indefinite revenue continuation from legal notice print advertising.  Its loss could knock the bottom out of small newspaper operations heavily dependent on legals.

There is greater safety in a broad book of business — advertising that includes all forms of  retail, service and professional providers, classifieds as well as legal notices — and all delivered by way of multi-media platforms.  So it is that ad count is king!  It’s better to have your ad linage composed of 100 smaller advertisers than that same revenue from six large merchants.  The broader the mix of your book of business the safer is your revenue base.  And the loss of revenue from legal linage would reduce that critical mix.

The brutal reality is that heavy dependence of legal notice linage reduces the value of your publishing business because this profitable source of revenue has a doubtful future.  And this “doubt” spawns uncertainty, thus diminishing value.

Comments and questions are welcome and may be directed to Dave via email: dave@gaugermedia.com or at (360) 942-3560