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MediaBuyerPlanner: The struggle newspapers are currently engaged in may be one for their very existence: consumers are getting their news from a variety of new sources, mostly online, so readership of the printed product is declining, and advertisers are following the migration, shifting dollars away from print newspapers and opting instead to spend that money online where they can take a more targeted approach. Meanwhile, costs of publishing a print edition are rising.
Disappearing ad dollars
As ad dollars move online, newspapers are seeing their online ad revenue surge. But even a predicted growth rate online of 30 percent may not be enough to make up for losses in print revenue, and the newspaper industry could face a revenue shortfall of $20 billion by 2010, according to a report released by media research firm Outsell, in August.
Merrill Lynch said in May that although newspaper publishers are adapting their business models to adjust to the migration of advertising and readership online, these papers are "being too aggressive with their online pricing," pointing out that some competitors such as classified sites don't charge at all, while others charge lower prices.
Yet in the face of such competition, some major newspapers such as The New York Times and the Wall Street Journal plan to increase ad rates in 2007.
Newspaper strategies
To deal with such challenges, newspapers are cutting costs by trimming the size of their pages, offering new ad space such as on front pages and section fronts, reducing staff, and eliminating such content that, said Seattle Times editor in chief Mike Fancher of his decision to stop publishing stock tables, readers can find elsewhere.
Newspaper groups such as The Tribune Co. are also selling off non-core assets, while others such as Knight Ridder have been sold following pressure from stock holders to increase shareholder value.
Some newspapers are also forming partnerships with online entities. Seven newspaper chains - representing some 176 daily papers nationwide - partnered with Yahoo to share content, advertising and technology, for example. The newspaper consortium's deal with Yahoo initially consists of the newspaper chains' posting employment classifieds on Yahoo's HotJobs classified jobs site as well as using HotJobs technology for their own jobs ads online.
The Los Angeles Times drama
A recent, highly publicized drama taking place between the Los Angeles Times and parent The Tribune Company brought the struggle newspapers are facing into the public eye. When corporate headquarters ordered the LA Times to eliminate jobs in the newsroom, editor Dean Baquet refused to do so, claiming the cuts would undermine the quality of reporting. Publisher Jeffrey M. Johnson agreed with Baquet, saying, "Newspapers can't cut their way into the future."
Johnson was eventually required to leave the paper, while Baquet remained. The outcome of the newsroom cuts remains unclear.
The number of cuts requested was undisclosed, but the paper has eliminated more than 200 positions over the last five years.
Local business people step in
Some newspapers are considering selling to local business people, believing that local owners could have more luck than large newspaper groups. McClatchy, for example, sold the Philadelphia Inquirer along with its sister paper, the Daily News, to a group of local investors in May. Former GE executive Jack Welch has expressed interest in purchasing the Boston Globe, but owner The New York Times Co. has said it has no interest in selling.
Welch and adman Jack Connors reportedly see the purchase of the Globe as a civic, as well as a financial, investment, hoping to return the paper to its community roots and to stem the tide of cutbacks in editorial budgets and losses in advertising and circulation.
Newspaper industry analyst John Morton has said, however, that when local business people own a newspaper, conflicts of interest become a concern that "may be aggravated by the fact that these new owners don't come out of a newspaper culture."
Readers still love 'em
In the midst of these developments, a number of surveys have been released showing that readers still value the ads in newspapers. A Scarborough survey released last summer, for example, showed that newspapers are ranked by readers as a top media choice when making purchasing decisions on products and services. The study was sponsored by the Newspaper Association of America as part of the industry's multi-million dollar advertising campaign designed to "surprise advertisers with the truth" about consumer engagement with newspaper advertising.
Despite such surveys, some analysts are predicting a miserable year for newspapers. Based on declines in national, retail and real estate advertising, which may continue for some time, Citigroup analyst William Bird wrote in a note to investors in October that, "A key risk for the group is that 2007 newspaper growth could be worse than expected."
Newspapermen disagree with evil predictions
Not surprisingly, some top newspaper executives disagree with the doom and gloom surrounding newspaper industry news. McClatchy CEO Gary Pruitt, for example, has pointed out the fact that 54 percent of adults read newspapers, while nearly 60 percent do on Sundays.
He acknowledged the fact that subscriptions and ad revenues are dropping - but he added that in each of the communities in which newspapers compete, most papers have the largest news staff, the largest sales force, the biggest audience, and the greatest share of advertising in its market. "Whether it's on the internet or off the presses, we are capturing that business," he wrote in the Wall Street Journal last March.
Below, see lists of related stories on: newspapers (general), studies, sales/acquisitions, new editions/ad formats/launches/initiatives, lay offs/cost-cutting, Los Angeles Times kerfuffle, and predictions.
Newspapers general:
- Newspapers, Despite Falling Circ., Raising Ad Rates
- Philly Strike Temporarily Averted
- Monster Partners with Newspapers for Job Sites, Listings
- Yahoo, 176 Newspapers in Ad and Content Partnership
- WaPo to 'Shrink Newsroom,' Increase Readership
- MediaNews Group Outsources, Eliminates Jobs
- Gannett Shifts to '24-Hour Converged' Newsrooms
- 'NY Post' Soars Past 'Daily News'; Other Papers Struggle
- Small Daily Papers Post Small Circ. Gains
- Print Help-Wanted Ads Flat, Online Dip
- Scripps, McClatchy Post Q3 Results
- 'El Nuevo Dia Orlando' Going Free, Increasing Circ.
- 'St. Petersburg Times' Satisfied with 20 Percent Margin
- Mindshare Finds Teens, Tweens Watching TV Online
- Tribune Co. Hires Consultants to Explore Options
- NYT Co. CEO: Print Ad Market 'Very Challenging'
- Report: Realtors to Curtail Newspaper Ad Spending
- Wachovia: Newspaper Auto Ads Down
- Media Buyers Seek Online Integration from Newspapers
- NY Times to Reduce Page Size
- Gannett Reports 8.3 Percent Decline in Q2
- Daily Paper in Santa Barbara Increases Circ., Shows Promise
- Online to Surpass Newspapers in Real Estate Advertising
- U.K. Newspapers Suffer in May
- News Corp. to Integrate Newspapers, MySpace
- 'Boston Herald' Faces Need for Change
- Ad Network Helps National Advertisers Reach Local Markets
- MediaNews, Hearst Consider Sharing Distribution
- New e-Paper Devices Gain Support
- Newspapers Cash in on Blogs
- NY Times Co. Online Ad Revs Soar in February
- NAA Breaks $50MM Ad Campaign to Reach Advertisers
- Newspaper Online Ad Spend Soars, Print Ad Spend Trickles
- Free Newspapers Worry Traditional Publishers
- 'Absolute Explosion' of New Media Pushes Seattle Newspaper to Close
- Internet Gaining on Newspapers for Morning Sports Content
- 'Financial Times' Turns Profit, Sees Ad Revenue, Circ Growth
- Tabloid-Size Papers Fail to Sustain Circ Increases
- U.K. Newspapers: 'Buy Me, Get a Free DVD'
- Ad Shift from Newspapers to Internet Slower Than Some Think
- Tabloids Fare Well Financially, Struggle with Advertisers
- Monster Boosts Local Ads, Goes Head-to-Head with Newspapers
- Revenue Down at Gannett
- Print Media Vulnerable, Internet Impervious to Increased Oil Prices
- U.S. Online Newspaper Revenue Surges
- Craigslist Soars, Local Classifieds Slump
- Newspapers See Slight Ad Gains
Studies:
Sales/acquisitions:
New editions, ad formats, launches and initiatives:
Layoffs, cost-cutting:
Los Angeles Times kerfuffle:
Predictions:
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