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How Does “Yesterday Was The Worst Single Day I’ve Ever Seen At The Star Tribune” Meld With The World Association of Newspapers Telling Financial Analysts In London The Newspaper Business Has Never Been So Good?

In some parts of the world the newspaper business is thriving; in other parts it is not, but add all the circulation numbers and how many newspapers there are today and the good news outweighs the bad, according to the World Association of Newspapers (WAN).

That means that growth in the developing countries, particularly in China and India, outweighs the bad news coming from the more developed world. It’s also in the more developed world that the Internet has its greatest penetration and consequently provides more competition for the advertising spend.

New York Post
It was one of the very few to go up

If you were a media trade group with the world “World” in your title it makes sense to take a global look at the newspaper industry from a global perspective, but that really does not show a true financial picture of the huge differences in the geographic areas. In North America and Europe newspapers are struggling to combat declining advertising and circulation revenue, with advertisers increasingly diverting their spend to the Internet, and fragmentation is already affecting the hoped-for web revenues. In India, on the other hand, it seems hardly a week goes by that a new newspaper doesn’t hit the streets.

ftm has said on more than one occasion that the true bottom line determining how well the newspaper business is doing is the bottom line. The financials. Not just revenue, but margin. Employment numbers and the like. Then you really get the truth about the health of the newspaper business. And while it is all well and good to throw the whole world together that really doesn’t give an accurate account for what’s going on where the real money is.

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Newspaper Web Sites Had A Banner 2006, Increasing Revenue 31.5%, But Their Print Revenue Was Down 1.7% And There’s The Problem -- That 1.7% Drop Is More Money Than That 31.5% Gain
US newspaper advertising figures for 2006 tell the tale better than words. Print advertising was down by some $800,000 which is 1.7% less than the year before, and Online continues fantastic growth with 31.5%, about $637,000 more than the year before, but the end of the day the Internet’s gains failed to surpass print’s losses.

It’s Official, At Least In France: Newspapers Are Charity Cases
France has always had a tradition of very heavily subsidizing its newspaper industry -- in the 2007 budget €274 million is allocated, a 22% increase over two years ago – but the French Culture Minister is worried that newspapers need even more help and so he has come up with a novel idea for reader tax deductible financial support.

More than 439 Million People Buy A Daily Newspaper With Average Readership Estimated In Excess Of 1 Billion, But The Asia Growth Rate Is Slowing And It Is Still On The Decline In Europe And North America
The good news coming from this year’s annual World Press Trends Report is that global newspaper sales still eked out some growth last year, and advertising sales continued strong in some areas, but the surge of readers to the Internet continues to have its affect, even in market-leader Asia.

How Come 90% of Japanese Read Newspapers Daily Even Though They Spend More Time Watching Television and Accessing the Internet Than They Do With Their Newspaper?
Newly released figures show that 90% of Japanese read newspapers on a daily basis, about the same as two years ago when the Japan Newspaper Publishers and Editors Association carried out a similar survey.

How to Maintain Readership Loyalty
Many European newspapers continue to suffer circulation declines but there is one solid way of not only stopping the trend but reversing it, too.

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The State of the Print Media in the World

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In Asia the newspaper business is booming, but in North America, as Craig Newmark of Craigslist fame told the Newspaper Association of America convention in New York this week, “ People who run printing presses are screwed.”

With all that in mind let’s examine the great divide between what WAN says and what life is like on the ground in the developed newspaper world. WAN says paid-for circulation globally is up 1.9% year-on-year; the number of paid-for newspapers grew to more than 11,000 for the first time in history; free newspaper circulation has more than doubled in the past five years; advertising revenues rose 4% in the past 12 months and 15.6% over the past five years; more than $6 billion has been invested in newspaper printing and production equipment in the last 18 months; and print remains the biggest advertising medium in the world with a 42% share with newspapers alone the second largest at 29.4% of the global advertising spend.

“There is no shortage of statistical data on circulation, on readership, on viewership, on time spent online – and while there are doubtless pluses and minuses in the details for newspapers, the indisputable fact is that newspapers increasingly represent the mass market media channel of the future and not the past, delivering a large, broadly stable, reliable and definable demographic,” said Gavin O’Reilly, WAN President and chief operating officer of Ireland’s Independent News & Media Ltd.

“The prognosis for newspapers is actually quite different to conventional wisdom,” O’Reilly told financial analysts at WAN’s Capital Markets Day in London. “Those of us in the newspaper business are very confident in the future – a future that is built on doing what we do best – producing relevant and compelling products for our local markets, aggregating growing audiences and showcasing them to advertisers,” he said in an effort to rectify, as WAN puts it, “some of the absurd and damaging claims being made about newspapers’ imminent demise.”

Now if O’Reilly had not been making that speech in London but instead he was in New York attending the Newspaper Association of America annual convention then he would have heard a very different story. Major advertisers like Macy’s and General Motors savaged publishers telling them their product was not keeping up with the times and if they did not shape up their offerings then the advertising spend would continue to be fragmented elsewhere. The advertisers are not enamored by declining circulations for any reason, and they don’t believe a newspaper’s web site can take the place of the print product to deliver their commercial messages.

And then onto Minneapolis where the Star Tribune is undergoing a wrenching cost cutting exercise. Yes, this is the same Star Tribune that McClatchy sold in a fire sale last  December and the new publishers said they didn’t see making any dramatic changes. Getting rid of 7% of the workforce – 145 jobs including 50 in the newsroom dramatic enough?

Doug Grow, a columnist, told Minnesota Public Radio, “I’ve been there since 1979. Yesterday was the worst single day I’ve ever seen at the Star Tribune. They’re calling in various people, some with special expertise and telling them their beats are no longer going to exist.”

So, Star Tribune is trying to entice back lost readers, and ensure others don’t leave too, by cutting back on local beats?

Managing editor Scott Gillespie explained, “The business model that we came to know and be comfortable with in the 90s changed dramatically in the last four to five years and none of us can really predict where that’s headed.”

This in the same week that the Wall Street Journal reported its April advertising revenue sank 12.2% on a 12.7% decrease in advertising revenue. The Local Media Group, the former Ottaway newspapers, or what’s left after a DJ sell-off last year, saw advertising revenues drop 10.5% on a 15.4% volume decline. The only good print news came from the European and Asian versions of the Journal that saw an overall 19.7% revenue increase, mostly from financial advertising. 

With results like that Rupert Murdoch’s $60 bid looks all the more generous!

And then over at McClatchy, where the shares are down some 40% over the past 12 months, Fitch Ratings downgraded the group’s debt to junk status because of an advertising revenue decline and weaker-than-expected operating performance. The move followed a similar one by Standard & Poors in April.

Switch to the UK and Trinity-Mirror, the country’s largest newspaper publisher, announced that group advertising revenues were down 3% for the first four months of the year. It was more pronounced with the national titles dropping 5.8% and the regionals  down 3.3%. News Corp announced in its Q3 figures just released that its UK newspapers saw declining advertising and circulation revenue.

So, back to WAN’s pitch and its great to hear how well things are going in the less developed world, but those overall figures should not be allowed to mask that there are some very real fundamental problems that newspaper publishers are trying to overcome in the more developed world and their very existence depends on their getting it right. There is no doubt the newspaper business in the developed world is still very profitable – it’s just not as profitable as it once was. But every financial quarter, no matter how much the cost-cutting, the numbers are still down with no light at the end of the proverbial tunnel.

That’s a real worry and one that the investment world should also be told about – truth be told they know it already – just take a look at newspaper share prices in the developed world as opposed to soaring newspaper share prices in India.

It’s not by chance that Rupert Murdoch is in discussions to start an Indian version of The Sun.


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