Bear Stearns Warns of Turbulent ’08

By: Jennifer Saba

Bear Stearns’ Alexia Quadrani is the latest analyst to warn that 2008 will be even more troubling to newspaper publishers than ’07. The research firm notes the dramatic change newspapers are undergoing including alarming margin declines from what may be “peak” levels of 25% to 27% in the early part of the decade to a forecasted 23% in 2008.

In a research note to investors, Quadrani estimates that advertising revenue will plunge about 7% for the companies in Bear Stearns’ coverage universe.

National is expected to be down 4% following a 3.7% decline in 2007. The uptick that some newspapers experienced in the category late last year won’t last, predicts Quadrani. National was lifted thanks to foreign fashion, entertainment, and a “short-term” shift in spending out of TV due to the writer’s strike.

Retail is anticipated to fall roughly 6% this year as advertisers in this category are expected to experiment more with online advertising. The overall decline in circulation will also put pressure on preprints — once a booming piece of business — warns Bear Stearns.

Classified should continue to yield double digit decreases, after the roughly huge drop-off in 2007. The research firm predicts the housing slump has “yet to see the bottom,” suggesting that real estate classified will decline an additional 10% to 13% in 2008 compared with a 20% decrease in 2007.

Auto won’t see any pick up: For a third straight year Bear Stearns thinks the category will be down around 12% to 14%.

Overall, classified is forecasted to be down another 15% in 2008.

On the upside, Bear Stearns does detect some growth opportunities for publishers this year including online revenue, which is predicted to be up around 20%. And publishers will launch or acquire more niche publications.

Follow by Email
Visit Us

Leave a Reply

Your email address will not be published. Required fields are marked *