Carnage continued in Q3 newspaper sales
Contrary to disingenuous happy talk from industry leaders, the third quarter brought absolutely no relief to the relentless dive in newspaper advertising, as total sales fell $2.5 billion to bring the year-to-date decline to nearly $7.9 billion.
With three months to go in the worst year ever for newspapers, the drop in sales in the first three quarters of 2009 is roughly equal to the combined revenues for the last 12 months of Gannett and McClatchy Co. In other words, it’s as though two of the largest publicly owned publishers in the land just fell off the face of the earth.
Sales plunged deeply in every category in the third quarter, according to statistics posted last week by the Newspaper Association of America, the industry-funded trade group. “The broad consensus is that the worst has passed,” said NAA chief executive John Sturm in a statement to Bloomberg News accompanying the grim numbers.
Based on the excellent industry data provided by the NAA itself (which we will explore further in a moment), it is difficult to come to a remotely similar conclusion.
While there is no denying that advertising sales are suffering in part as a result of the worst economic calamity since the 1930s, the long-running plunge in print sales illustrated below demonstrates that newspaper sales were in trouble well before the economy collapsed.
Based on the trend, it would be decidedly unrealistic to believe that newspaper sales will return to anything close to their former strength when the economy rebounds, whenever that might be. Let's go to the numbers:
Continuing 14 straight quarters of mostly accelerating declines, total print advertising in the third period fell a bit less than 29% to $5.8 billion. Interactive advertising sales, which the industry once hoped would be its salvation, dropped nearly 17% in the third quarter to $623 million, marking the sixth quarter in a row of declines in this crucial category.
The only good news in the unremittingly ugly figures reported last week is that the rate of decay in the third quarter was “only” 28.95%, as compared with the all-time record sales plunge of 30.15% in the prior period. Here are the details of the third-quarter debacle:
:: Classified advertising led the declines, falling 37.9% from the comparable period in 2008 to $1.47 billion.
:: For the first time since 1995, national advertising sales dropped to less than $1 billion. They were $956 million, or 29.8% lower than a year ago.
:: Retail sales slid a bit less than 24% to just under $3.4 billion. They haven’t been this low since the first quarter of 1987, when they were $3.3 billion. Adjusting for inflation, the 1987 performance would be equivalent to $6.3 billion today, according to the Bureau of Labor Statistics.
Among the classified categories, automotive and real estate advertising, two long-time pillars of the newspaper advertising model, each was down by 43% in the third quarter, compounding drastic declines in recent years.
Auto sales, which nearly hit $1 billion in the third quarter two years ago, were $321 million in the same period in 2009. Realty advertising, which topped $1 billion per quarter as recently as two years ago, declined to $358.6 million in the third quarter. It will take a long time for either vertical to return to its former strength, assuming they ever will.
Recruitment advertising, which surpassed $2 billion per quarter at the peak of the Internet bubble in 2000, all but dried up in the third quarter of this year, falling nearly 64.7% to a mere $175 million. Employment advertising is not simply at its lowest point in history, it is all but gone.
With major categories like employment, auto and real estate reduced to being shadows of their former selves, it is hard to see how anyone can say the worst is over.