$4.7B ad drop feared for newspapers
Print newspaper sales this year appear to be on track to drop by some $4.7 billion to less than $37.5 billion, a level not seen since the mid-1990s.
The prediction comes from Paul Ginocchio of Deutsche Bank at a time of growing dismay among media executives who, for the most part, have watched sales weaken every month this year.
“We keep throwing more and more rope into the well, but we never seem to hit bottom,” said one sales executive.
With sales declining more deeply than publishers had expected when preparing their budgets for this year, repeated emergency cost cuts have become commonplace as newspapers attempt to shore up their battered margins.
“Every few weeks, I have to bring in a few more people to tell them they don’t have jobs,” said one publisher. “When is this going to end?”
If Paul’s prediction of a record 11.2% drop in print sales in 2008 proves correct, then the tumble would far surpass the unprecedented 9.4% revenue decline in 2007. The only comparable drop since World War II was a 9% swoon in sales in 2001.
A $4.7 billion drop in sales would be equivalent to wiping out the entire combined annual revenues of GateHouse Media (GHS), Lee Enterprises (LEE), McClatchy (MNI) and Media General (MEG).
The forecast annual print sales of $37.5 billion would put the industry back to a level not seen 1996, when sales totaled $38 billion. The 1996 sales were worth $53 billion in today’s dollars, according to the U.S. Bureau of Labor Statistics. So, it could be argued that newspaper sales are only 70% today of what they were a dozen years ago.
On the plus side, Paul believes interactive sales this year may climb some 20% to nearly $3.8 billion. But he cautions that his forecast for print sales could be overtaken by accelerating circulation declines, below-expectation job growth, weaker than hoped-for retail sales and higher than anticipated increases in newsprint prices.
While the year so far has not been kind to companies like CBS and Time Warner (TWX), newspapers, by far, are faring the worst, as illustrated in the comparison below from Fresearch.Com of the first-quarter sales growth of the top media companies and the largest newspaper publishers.
When you compare the drop in newspaper revenues with the positive performance of companies involved in other types of media, it becomes painfully clear that newspapers are suffering from a sea change in advertiser behavior, not merely a bad patch in the economy (though the poor economy certainly is contributing to the downturn in recruitment, auto and real estate advertising).
The only newspaper publishers reporting positive sales in the period were News Corp. (NWS), Scripps (SSP) and Washington Post (WPO), the three that have diversified most aggressively away from their traditional roots in the newspaper business. Coincidence? Nope.
The prediction comes from Paul Ginocchio of Deutsche Bank at a time of growing dismay among media executives who, for the most part, have watched sales weaken every month this year.
“We keep throwing more and more rope into the well, but we never seem to hit bottom,” said one sales executive.
With sales declining more deeply than publishers had expected when preparing their budgets for this year, repeated emergency cost cuts have become commonplace as newspapers attempt to shore up their battered margins.
“Every few weeks, I have to bring in a few more people to tell them they don’t have jobs,” said one publisher. “When is this going to end?”
If Paul’s prediction of a record 11.2% drop in print sales in 2008 proves correct, then the tumble would far surpass the unprecedented 9.4% revenue decline in 2007. The only comparable drop since World War II was a 9% swoon in sales in 2001.
A $4.7 billion drop in sales would be equivalent to wiping out the entire combined annual revenues of GateHouse Media (GHS), Lee Enterprises (LEE), McClatchy (MNI) and Media General (MEG).
The forecast annual print sales of $37.5 billion would put the industry back to a level not seen 1996, when sales totaled $38 billion. The 1996 sales were worth $53 billion in today’s dollars, according to the U.S. Bureau of Labor Statistics. So, it could be argued that newspaper sales are only 70% today of what they were a dozen years ago.
On the plus side, Paul believes interactive sales this year may climb some 20% to nearly $3.8 billion. But he cautions that his forecast for print sales could be overtaken by accelerating circulation declines, below-expectation job growth, weaker than hoped-for retail sales and higher than anticipated increases in newsprint prices.
While the year so far has not been kind to companies like CBS and Time Warner (TWX), newspapers, by far, are faring the worst, as illustrated in the comparison below from Fresearch.Com of the first-quarter sales growth of the top media companies and the largest newspaper publishers.
When you compare the drop in newspaper revenues with the positive performance of companies involved in other types of media, it becomes painfully clear that newspapers are suffering from a sea change in advertiser behavior, not merely a bad patch in the economy (though the poor economy certainly is contributing to the downturn in recruitment, auto and real estate advertising).
The only newspaper publishers reporting positive sales in the period were News Corp. (NWS), Scripps (SSP) and Washington Post (WPO), the three that have diversified most aggressively away from their traditional roots in the newspaper business. Coincidence? Nope.
posted by Newsosaur at 6:54 PM
0 Comments:
Post a Comment
<< Home