A series of articles in E&P today offered a range of the newspaper industry’s health – and the prognosis went from terrible, with a brief respite, at one end to endless deterioration at the other:
— Ad Revenue Rates Stabilize, For The Moment: Instead a series of uninterrupted declines, newspaper ad revenues might actually be stabilizing, at least temporarily, according to a study of July’s numbers by John Janedis, a senior analyst at Wachovia Equity Research. The investment bank found that last month, ad revenue fell about 7.2 percent – not something to cheer about, but still better than June’s 7.5 percent drop and May’s 8.1 percent decrease. However, lest any feelings of euphoria creep in from this apparent change in ad revenue rates’ trajectory, Janedis warns that “Q4 will likely disappoint the market, suggesting further downside to earnings.”
— Classified Declines Influence Newspaper’s Downward Trends: While Wachovia viewed the newspaper industry as getting a small break from its hapless revenue state, Goldman Sachs sees “no encouraging signs” in July’s ad revenue figures. The company reported that for the newspaper companies it covers, July ad revenue dropped 7.3 percent. Again, while somewhat improved over June’s 7.9 percent fall, expectations were higher.
— Bond Rater Maintains Negative Outlook For Newspaper Sector: Taking a larger look at the newspaper industry’s fortunes, bond rating agency Fitch finds the newspaper industry doing worse than previously thought. At the beginning of 2007, the bond rater said that weakness in newspapers’ high-margin classifieds would lead to soft revenue and downward pressure on profits. Not only has that analysis been confirmed, the agency says, but the industry’s performance has been even more lackluster. Among the industry leaders “causing concern” for Fitch are Gannett, as USA Today’s ad pages slid 17 percent from last year;
Tribune Company, as help-wanted classified falling 19 percent along with real estate’s 24 percent fall-off; McClatchy, which saw real estate decrease 26 percent; and Dow Jones & Co., where ad volume slipped 20 percent. Driving the dark point home, Fitch argues that these declines are “more secular than cyclical,” meaning that the situation is fairly permanent.