By Lukas I. Alpert
Facebook Inc. is pledging $100 million in grant money and promised ad spending to help struggling news outlets weather the financial blow of the coronavirus outbreak.
News outlets -- particularly smaller, local newspapers -- face substantial advertising revenue declines as shuttered or disrupted businesses pull back spending. While readership has spiked and some media companies have enjoyed increases in online subscriptions, the advertising drop is already forcing many outlets to reduce pay or lay off workers.
The tech giant said it wanted to help news outlets avoid such cuts. "This is a time when we need this reporting the most," Campbell Brown, Facebook's head of news partnerships, said in an interview. "Advertising money is shrinking fast and even though news consumption is up, it is not making up for those losses, so we are trying to help bridge that gap."
Facebook's offering falls into two categories: $25 million in emergency grant funding to help smaller news outlets with immediate needs related to coronavirus coverage, and $75 million in ad spending to help news outlets of all sizes -- both in the U.S. and abroad -- make up for the expected revenue shortfall.
"Every business is suffering right now, but the news industry has really been struggling, and we are in a privileged position to be able to help, " Ms. Brown said. She said Facebook Chief Executive Mark Zuckerberg "feels that getting accurate news about the virus is vital and that he has a real responsibility here."
The aid from Facebook likely would still leave the industry with an enormous gap in advertising money. Gordon Borrell, an advertising market analyst, estimates that local advertising will drop by 25% this year, amounting to a decline of roughly $30 billion.
Earlier this month, Facebook announced a separate program to offer $100 million in cash grants and advertising credits to up to 30,000 eligible small businesses.
News publishers have a tense and complicated relationship with Facebook and Alphabet Inc.'s Google. The tech giants drive a large share of traffic to many news sites, but also compete with them in digital advertising sales. Facebook and Google were expected to earn 61% of all digital ad revenue in the U.S. this year, according to estimates from eMarketer before the crisis.
Many news outlets have argued that the tech platforms should pay licensing fees. Late last year, Facebook agreed to begin paying some publishers whose headlines appear in Facebook's news tab, which launched to a test audience in October. The Wall Street Journal is among the publications Facebook is paying to license news. Google has been in early talks with publishers to pay for the use of their content, people familiar with the matter have said.
Last week, Facebook warned that while it has seen substantial boosts in user engagement during the crisis, it will be hit by declines in digital ad spending.
Facebook's grant funding will be an extension of a $1 million pilot program the company launched earlier in March as the outbreak began picking up steam in the U.S. The company says it received more than a thousand applications within days.
With the grant's backing, the Post and Courier in Charleston, S.C., was able to take down its paywall on coronavirus stories and set up remote workstations in rural parts of the state, Facebook said. El Paso Matters, a digital news outlet in El Paso, Texas, used the money to hire freelancers and translators to extend its coverage in the city and across the border in Ciudad Juárez, Mexico.