There’s no let up in the revenue slump for America’s battered newspaper sector.
For the third quarter in a row, US newspaper ad revenues have fallen by nearly 30%, and coupled with the miserable six-month circulation figures for the September half year, the industry seems to be taking a further step downwards.
Figures from the Newspaper Association of America show that total ad revenue plunged 27.9% to $US6.44 billion ($A7 billion) as print and online revenues again suffered drains.
The 27.94% drop in revenues was better than the 29% and 28.3% falls experienced in the second and first quarters respectively, but not by much.
The industry’s aggregate revenue has now fallen for the past 13 quarters, and the September quarter was the eighth in a row in which the industry suffered double-digit drops.
Just as the falls for the first two quarters were the steepest recorded for those periods (and combined, for the first six months of 2009), the latest fall was largest ever for a third quarter.
The figures confirm that the rise in the share prices of US newspapers since March is largely based on an illusion.
Cost cuts have helped soften the slide and from next year papers and their owners will have to cut deeper and harder if they are to keep afloat. The easy gains have been made.
Of the total advertising revenue generated in the third quarter, $US5.8 billion came from print, the lowest quarterly amount this year, and the lowest since 1985.
The $US623 million in online advertising sold by America’s newspapers was also 2009’s lowest.
Both are down substantially from the same quarter in 2008, when the newspapers posted print ad revenue of $US8.2 billion and online ad revenue of $US750 million.
The print ad revenue trend is not unexpected, but problems are now showing up in the worsening online ad revenue performance.
The newspapers still can’t figure out how to make online revenue a meaningful portion of their total ad revenues … and they can’t figure out how to make this category grow, especially during a time of slow economic conditions.
Online ad revenue hasn’t increased since the end of 2007 and the fall in the third quarter of 19.9% was the largest so far, while the weakness in print ad revenues seems to have peaked in the second quarter.
Online ad revenues were the lowest since the first quarter of 2006 when the category was expanding. Now its contracting.
One thing is sure, than when it comes to reporting the movements in 2010, there will be an improvement, even if there are more falls in the actual amounts.
The stuttering online performance will increase pressures on papers to follow Rupert Murdoch and try and get visitors to websites to pay.
But if that leads to less visits and lower online ad revenues, it will prove to be self-defeating.
All forms of advertising: national, retail and classified, were all very weak in the third quarter, but not as miserable as in the three months to June.
Retail ads “only” fell 23%, compared to near 25% in the second quarter; classified ads “improved” to be down nearly 38%, against the more than 42% plunge in the March quarter.
All things are relative, but if any media group can take heart from improvements such as that, then they are grasping at straws.
Print ad revenues were down $US2 billion in the September quarter from the same quarter in 2008.
National ads fell under $US1 billion for the quarter for the first time since the third quarter of 1995.
Online ad revenues fell by about $US130 million.
Charging users will not regain that lost revenue. Only economic growth, and especially growth in consumer demand and in employment, can do that.
Car and real estate classified ads were down more than 40% in the quarter, job ads were again off more than 60%.
That’s the crux of the problem: they are indicators of the broader economy and with unemployment at 10.2% and looking to go higher, recruitment won’t be an improvement any time soon.
For a growing number of US newspaper groups, charging website news users will not be the answer: they do not have enough time and resources to survive if ad revenues don’t soon start improving.
While the economic downturn has undoubtedly hurt ad based revenue another important factor is declining readership levels. these have plummeted for major newspapers in recent years and there is a major reason for this. People are heartily sick and tired of being lied to by newspapers that have become nothing more than cheerleaders for the military industrial complex. This latter factor is hardly surprising given the degree of cross ownership between the so-called “defence” industries and various media companies.
Where the mainstream media does not lie by commission, it lies by omission. Alternative media outlets and in particular the internet have enabled people to realise that what they don’t read in the american media (or hear on radio or see on tv) is often the main story. Rather tha continue to be deprived in this way, readership has let their subscriptions lapse at an accelerating rate.
It is unlikely that they will return given that the mainstream media shows no insight at all as to why their readers are deserting in droves, continuing to lay off experienced columnists and slash investigative reporting budgets.
I for one will not be sorry to see their demise. After all, they have only themselves to blame.