US Newspaper Online Readership Gains Fail To Offset Print’s Declines

Philip M. Stone April 29, 2008

Two damning reports within days of one another tell the story of the US newspaper business – official circulation numbers shows print’s rate of decline is increasing (dailies down 3.6%, Sundays down 4.6%) and new research says the integrated print and online newspaper audience is losing market share.

They don't have so many newspapers to deliver these days

The official Audit Bureau of Circulation (ABC) numbers for the six months ending March 31 spell really bad news because the declines in the previous six-month period -- until September 30, 2007-- showed dailies declining 2.6% and Sundays by 3.5% so the situation is only growing worse. Newspapers and their trade organizations saw that writing on the wall for some time, so the spin now is not to look at just circulation but rather to combine print and online readership, but even there Scarborough Research has some bad news.

“In general, print [readership] is in a steady decline, and online readership is growing but the declines in print are not being offset by the increases in online readership," Gary Meo, senior vice president of print and digital media services at Scarborough Research told Editor & Publisher.  "The integrated newspaper audience is declining."

The Scarborough Report specifies that it is looking at the newspaper print product and its primary online site. Thus, you need to read newspaper media releases very carefully. Take the lead of The Chicago Tribune’s news release boasting that readership for its print and interactive media properties have never been higher – but that’s including all its interactive properties and not just its main newspaper web site.  And it is only in the second paragraph that we learn there were decreases in the Tribune’s daily and Sunday print circulation (given as current circulation and not divulging percentage declines – both actually dropped 4.4%). It gleefully says in its third paragraph that page views are up for all its interactive sites by 25% this year – but how big or small was the base to begin with? – and how much did unique visitors grow?  What were the readership figures just for print and chicagotribune.com?

Most newspapers with steep print circulation decline say they are embarked on programs to restrict the geographic distribution of print only to those geographic areas that show a profit to do so, and they are cutting back on bulk sales, promotions and the like. The New York Times, for instance, reported its Sunday circulation fell 9.3% but said two-third of those losses were from dropped bulk sales, eliminating some promotions, and also because of a price increase that took effect last July.

If there is any consolation in the audit numbers, it is the average decline percentages are far less than the average 9.4% decline in US newspaper print ad revenue for 2007, but where does it all end?  Not going to do the newspaper industry any good is a series that started Monday in Advertising Age – read by those people who buy newspaper advertising  space -- with the its headline Monday setting the  tone, “The Newspaper Death Watch”.

Sift through the numbers and one can find good news and bad. Last October there was great joy in Los Angeles and Philadelphia because those metropolitan newspapers actually showed a slight circulation increase. Were the bad days over? Afraid not -- this time around the Los Angeles Times was down 5.1% daily and 6.1% on Sundays, so that its daily circulation now stands at 773,884. Hard to comprehend that it wasn’t that many years ago when circulation stood at more than 1.2 million and the Los Angeles area is still growing in population. In Philadelphia the Inquirer which was buoyed by a 2.3% increase in September lost all of that and then some this time around with circulation down 5.1% and Sunday down 6.3%.

But in California the San Jose Mercury-News owned by MediaNews Group showed that you can fool some of the people all of the time. Its editorial operation is a shadow of its former self, yet this time around circulation rose 1.7%!

Perhaps the most telling result comes from AH Belo, publisher of four daily newspapers including its flagship Dallas Morning News where circulation fell 10.6%, the largest decrease among the 25 biggest US newspapers. AH Belo announced it lost $8.7 million in Q1, equal to 43 cents a share.

It was the Belo company that came up with what was seen last year as the panacea to fix low newspaper share prices – separate newspapers into a separate company leaving the rest of the company to get on with things without being weighed down by print.The stock market liked the Oct.1, 2007 announcement so much that the shares got a massive 18.7% boost on the day. Investors seem to think it was a great initiative, never before done, to boost shareholder value. But time has shown it was the smart investor who actually saw that October day as a selling opportunity who really cleaned up.

The shares closed that day at $20.61. On February 8, the last day Belo existed before splitting itself in two the shares stood at $16.36, down 20% from the announcement day. Since the two companies AH Belo (newspapers) and Belo (everything else) started trading February 10 both have continued their downhill slides.

An investor who held 100 shares of Belo on the last day the company was whole had a valuation of $1,636. When trade started the following Monday that trader then held 100 shares of Belo (everything else) and 20 shares of the new AH Belo (newspapers). At Monday’s close the 100 Belo shares were worth $1,042 and the 20 AH Belo shares were worth $204, so the total value of comparable holdings is $1,246, meaning total valuation is down 24% since February when both companies started trading separately and down 40% from the day the reorganization was announced.  Not exactly what Belo management must have had in mind.

One newspaper that did particularly well in the March results was the Wall Street Journal. Circulation rose slightly by 0.3% to 2,069,463, the second high US circulation next to USAToday (which also rose slightly). And wsj.com subscriptions rose 11% to now stand at more than 1 million (and that explains why Murdoch did an about-face and did not open up wsj.com to just the advertising model). .And publisher Robert Thomson who is now taking charge of the daily editorial production for a (long) while now that Marcus Brauchli has walked after just four months has told staff there’ll be another $6 million investment this year to add four pages of international news daily. Rupert Murdoch really does seem intent in giving the NYT a run for its money. And now looks like a particularly good time to do that.

Remember the hue and cry when Murdoch first made his pitch for Dow Jones? Compare what the Journal is up to today with its circulation numbers and editorial investment against what is going on at the NYT where daily circulation fell 3.85% to 1,077,256, almost half that of the WSJ, and where management has warned the newsroom there could be redundancies – the figure floating around is about 30 -- because not enough people took buyouts.

Since the NYT claims to be a national newspaper, and Murdoch is attacking on general news, political news and international maybe it would behoove NYT journalists not to camp out in Metro these days!