Newspaper implosion | Blogads

Newspaper implosion

by henrycopeland
Thursday, September 22nd, 2005

As a newspaper reader, I’m saddened, but as a prognosticator, I have to ask: why has it taken this long? From the WSJ:

Merrill Lynch analyst Lauren Rich Fine says Federated Department Stores Inc., a big newspaper advertiser, has started to shift spending from newspapers to direct mail and electronic media, such as television. Two early forecasts predict a small increase in holiday retail sales this year, as spending could be hurt by high gasoline prices, lingering effects of Hurricane Katrina and a lackluster job market.

Movie studios, long a mainstay advertiser, have been cutting back, as well. Through July, motion-picture advertising in the top 60 newspaper markets was down 9.3%, compared with the same period a year ago, according to TNS Media Intelligence, an ad-tracking service.

Ad revenue accounts for about three-fourths of total revenue for newspaper publishers. As a result, even small changes in ad revenue can produce big changes to the bottom line.

The twin blows to retail and movie ads are sapping third-quarter results for newspapers across the industry. “I keep referring to it as carnage,” Ms. Fine said. “All we’ve done for the last week and a half is lower [earnings] estimates.”

And she doesn’t mention the soon-to-vanish real-estate ads or the impact of the coming recession. At 50,000 bloggers need to become self-sufficient fast to fill the hole left when the newspaper industry spontaneously combusts.

Some prior thoughts on the financial viability of the newspaper industry.

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