Ad Revenue Eludes Newspapers
Newspaper publishers are running out of costs to cut, and they need to show some real ad-revenue gains soon.
Executives from major publishing chains have clung to a slight moderation in their ad revenue’s year-over-year rate of decline from quarter to quarter this year as a sign of improvement.
But that probably has more to do with the mathematics of easing comparisons to last year’s economic decline than it does with any actual improvements in this year’s ad performance.
The reality is that newspapers are suffering severe declines in ad revenue this year on top of the double-digit percentage declines they suffered last year.
Compared with the first half of 2009, their recent performance doesn’t appear to be getting much worse, but it has yet to show any real recovery.
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Click for interactive map of pressures facing the newspaper industry.
As newspapers continue to lose business to digital ad rivals, betting on whatever rebound remains for newspapers is a long shot for investors, given the myriad of issues facing the industry.
If newspapers don’t see a print advertising pickup in the fourth quarter, Wachovia analyst John Janedis said “it’s increasingly likely that expense cuts, while significant, won’t be enough to drive upside to earnings.”
Mr. Janedis said he sees newspaper earnings estimates moving lower next year. He forecasts that Gannett Co. , publisher of USA Today, will see its newspaper ad revenue drop an additional 14% in 2010 after a 30% decline this year.
In recent quarters, many publishers have soothed near-term credit concerns and largely outperformed expectations on Wall Street by boosting their profits with aggressive cost-cutting measures, like layoffs and pay cuts.
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(Excerpt) Read more at online.wsj.com …
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