Monday, August 02, 2010

Q2 newspaper sales: Less bad but not good

Advertising sales for most newspaper publishers were less bad in the second quarter of this year than they were in the first three months.

But less bad is not the same as good – and the outlook for the remainder of the year is decidedly murky.

Based on the performance reported to date by the publicly traded publishing companies, it appears that sales for the industry on average will be down about 7% to 8% in the second quarter, making for the least-bad sales spell since the fall of 2007.

Assuming that’s where the second-quarter numbers come in, the period will be an improvement from the 9.7% drop in print and online sales for the industry in the first three months of the year.

And it will be far, far better than the 29.0% sales plunge in the second quarter of 2009, which represented the worst quarter in an unprecedented year when revenues dropped 27.2% for the full 12 months.

Of the seven publicly held U.S. publishers who have released second-quarter earnings statements to date, sales were better in the second period for all but one.

The exception, as you can see from the table at left, is A.H. Belo, where ad sales fell 15.6% after dropping 12.0% in the first quarter. The strongest performer was the New York Times Co., where a 1.1% gain at the flagship paper helped offset declines 0f 9.1% at the Boston Globe and 7.1% at its properties in the South and California.

While the decelerating sales erosion in the first half of the year understandably cheered publishers and editors, it is not clear that the trend will continue, given an apparent slowdown in the recovery of the economy.

As reported Friday by the U.S. Department of Commerce, the gross domestic product slipped to 2.4% in the second quarter of this year from 3.7% in the first period and 5.0% in the last three months of 2009.

Some economists viewed the second-quarter decline in the measure of the nation’s production of goods and services as evidence that the economy could be headed toward a double-dip recession. While not subscribing to the idea of a double dip, economists at the Conference Board, a private research organization, issued this warning last week after observing declines in June and July in their index of consumer confidence:

“Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves. Given consumers’ heightened level of anxiety, along with their pessimistic income outlook and lackluster job growth, retailers are very likely to face a challenging back-to-school season.”

With classified advertising all but moribund at most newspapers, retail advertising is without question the most vital revenue source.

If retail sales falter in the second half of the year – especially in the crucial fourth quarter when ad budgets traditionally peak for the holidays – the modest progress achieved by the industry in the first part of the year – assuming you call less-bad sales “progress” – could become a distant memory.


Blogger enigma said...

It might pay not to count out local newspaper classified advertising. While obviously not competitive with online in appearance and versatility, it still offers saturation coverage that websites can't hope to match.

I suspect that, ultimately, local classifieds will be used to send people to the website...and the website will be used to generate leads.

8:03 AM  
Blogger Unknown said...

But even if the economic recovery doesn't slow down, it ultimately won't matter. Newspapers still need to find a new way to generate revenue.

After all, the worst enemy to newspapers is not the economy. It's technology. The digital revolution can't be stopped. So unless newspapers--and hyperlocal newspapers especially--can learn to use dynamic revenue models, these numbers are destined to turn down for the worse, economic improvement or not.

This is what is currently advocating.

5:59 PM  

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