Tuesday, May 03, 2005

Circulation slide slams metros

The daily circulation of the nation's largest newspapers dropped an average of 3.3% in the six-month period ended March 31, as compared with the widely reported 1.9% drop for the industry over-all.

As demonstrated in the table below, almost every large metro newspaper lost substantially more circulation in the period than the industry average. The information was assembled by CS First Boston from the Fas-Fax statistics released Monday by the Audit Bureau of Circulations, an industry-funded watchdog.

"We were expecting the average circulation declines to fall in a relatively broad range of -2% to -3% and the over-all group decline was right in the middle of that at -1.9%," said William B. Drewry of the CSFB research team analyzing the numbers. "The majority of Wall Street will likely continue to view any decline in newspaper circulation as negative and we continue to stress that any proper analysis has to be relative to other local media trends -- particularly TV nets/stations and radio."

Noting that TV audiences are down by 1.8% and radio audiences are essentially flat, CSFB concludes that newspapers continue to "maintain their audience share" in local markets.

Fair enough. But the long-term decline in newspaper readership (see graph below) is not going to please the increasingly sophisticated advertisers seeking out media where they can measure the bang produced by their bucks. This is truer than ever in the aftermath of the high-profile circulation scandals that recently wounded the credibility of the industry.

Speaking of the recent circulation scandals, you would think the industry would have gone out of its way this time to openly present clear and easily comparable circulation information. But you would be wrong.

It shouldn't have to be that way. Can we fix that?

Notwithstanding the challenges and limitations of data gathering, it is clear that readership at major metros is declining more dramatically than at smaller dailies. The primary reasons are competition from other media and, increasingly, a variety of free print products produced either by or against the ensconced dailies. As if to underscore the disintermediation of the print audience, CSFB reports that traffic at the 25 largest newspaper websites grew a sturdy 11.4% in March.

Only time will tell whether the "accelrating decline" in metro circulation "reflects a temportary 'adjustment' or an intensifying shift of readers to digital media," says Paul Ginnochio, a securities analyst at Deutsche Bank.

The worst print circulation drop among the major metros was at the Baltimore Sun, where sales fell 11.3% for daily and 8.5% for Sunday. The news was nasty for two other Tribune Co. properties. The Los Angeles Times fell by 6.5% daily and 7.9% Sunday and the Chicago Tribune slid 6.5% daily and 4.7% Sunday.

On the plus side, the Minneapolis Star Tribune and New York Times eked out modest daily circulation gains of 0.3% and 0.2% respectively. Sunday sales at the Star Tribune slid 2.3%, while the N.Y. Times gained 0.2% on Sunday.

Despite dropping half a percentage point in daily sales, the New York Daily News increased Sunday circulation by 4.1%, the best Sunday performance in the group. Average Sunday circulation for the metros fell 3.2% vs. 2.5% for the industry as a whole.

Circulation figures were not reported for the three prominent dailies censured last year for falsely inflating their circulation figures. Audits remain to be completed for Newsday, the Chicago Sun-Times and the Dallas Morning News. (The Milwaukee Journal recently was accused in a lawsuit with inflating its numbers, which the paper has denied.)

Seeking to put the circulation swoon in the best possible light, the leader of the industry's trade association said publishers nowadays are turning away from "short-term circulation sales programs toward longer-term marketing initiatives, such as investments in subscriber retention and new products that increase readership."

In the future, said John F. Sturm, CEO of the Newspaper Association of America, "the conversations that publishers and advertisers have about newspaper audiences will cover a much wider scope than net paid circulation."

It's a good thing for the sales guys in Baltimore that the Orioles are having the best season since 1997. As an alternative to discussing the Sun's squishy circulation, they can talk baseball instead.


Blogger Matthew said...

This comment has been removed by a blog administrator.

8:28 AM  
Anonymous Anonymous said...

That graphic is a tad too small for my screen

8:31 AM  

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