E&P Survey: Circulation Bump Was Modest

By: Lucia Moses

When the latest newspaper circulation figures come out next week, The Union Leader in Manchester, N.H., expects to show solid gains of 1.3% daily and 1.5% Sunday for the six months ended March 31, compared with the same period a year earlier.

That’s hardly a shock. Industry observers expected many papers to report circulation jumps for the period following the Sept. 11 terrorist attacks on America. What’s surprising is that the overall circulation gains for the industry are so modest — or even nonexistent, E&P has learned.

It seems that the historic circulation “bump” of last fall flattened rather quickly, despite a hot news cycle that included the Afghan war, the Enron Corp. debacle, the Winter Olympics, the Roman Catholic priest sex scandal, and the Israeli-Palestinian conflict.

Even at The Union Leader, where there was growth, the most important driver wasn’t Sept. 11 and the war on terrorism. Sure, increased hunger for news last fall helped sell more newsstand copies initially. But President and Publisher Joseph W. McQuaid says the chief reason for the gains was the paper’s 2-year-old effort to improve home-delivery service. While McQuaid says he’s thankful for the occasional buyers, “we’re much more interested in a longer, sustained thing.”

The story is similar elsewhere. While the next Audit Bureau of Circulations (ABC) FAS-FAX report, due out April 30, will likely reflect the post-Sept. 11 single-copy spillover, most of those gains trailed off in the new year, and the impact on home delivery was only minimal.

John Murray, vice president of circulation marketing for the Newspaper Association of America (NAA), predicts that when all the industrywide numbers are out, overall daily circ will be flat to down half a percentage point, continuing the trend of steadily declining daily circulation. Sunday circ, which has been more affected by home-delivery price increases (while being aided less by Sept. 11), might decline as much as 1.5%, he says.

It wasn’t supposed to happen this way. In the weeks after the Sept. 11 attacks, a number of papers, noticing that people were signing up for home delivery at a higher rate, thought that the increased reader zeal could lead to sustained circulation growth for the first time in 40 years.

Indeed, many papers will report gains, ranging from all four of New York’s major dailies to The Sacramento (Calif.) Bee, far from Ground Zero. For the most part, though, increases seem to have been small, E&P found in interviews with dozens of circulation executives willing to disclose their ABC numbers.

At The Sun in Baltimore, for example, March 31 circulation will be up slightly for both daily and Sunday, due, in part, to home-delivery gains, says Gary Olszewski, director of circulation sales and marketing. Olszewski says, however, that single-copy sales have returned to the pre-Sept. 11 level.

At The Buffalo (N.Y.) News, single-copy-sales gains tapered off by the beginning of this year, and failed to carry over to home-delivery sales, says Paul Glaeser, circulation vice president.

And the MediaNews Group Inc. chain felt no significant carry-over from Sept. 11. MediaNews CEO William Dean Singleton doubts that a paper could turn the post-Sept. 11 effect into sustained circulation gains, because single-copy buyers are unlikely to become subscribers. “I think people buy single-copy when they want to know more about a major event, and, when that becomes old news, they don’t continue to pick it up,” Singleton says.

Of course, it didn’t help that newspapers had fewer promotional dollars to spend during the past year. Says NAA’s Murray, “If we don’t keep reminding people of what [we] have to offer, [readership gains] will atrophy.”

Some, however, believe newspapers could have done more with the opportunity presented to them in the wake of Sept. 11.

Going hand-to-hand

Many papers seem resigned to the same pattern that followed the Persian Gulf War, when readership surged, then quickly retreated. But it doesn’t have to be that way, say the people at the Readership Institute at the Media Management Center of Northwestern University. The terrorist-attacks story had many of the angles that drive readership in general, such as human interest and international news, institute Director John Lavine says. Newspapers can capitalize on the increased interest to build more lasting ties with readers by following the recommendations that came out of the institute’s “Impact Study” of consumers, including building the relevance and quality of news coverage.

John Mennenga, a Santa Rosa, Calif.-based newspaper marketing consultant, thinks newspapers didn’t take advantage of the increase in single-copy sales as much as they should have. With so-called “occasional readers” growing as a percentage of overall readers, he says, “you have to give them reasons to read more frequently.”

It doesn’t have to be expensive, either. Simply running more in-paper promotions — one “Impact Study” recommendation — is a relatively inexpensive way to communicate with those readers, he says.

Even when papers do adopt “Impact Study” recommendations, they often leave out circulation directors, charges circulation consultant Rich Randles of Anderson, Randles & Associates. “Publishers haven’t gotten circulation directors involved like they have editorial and marketing,” he says.

John Hollenberger, circulation director at The Free Lance-Star in Fredericksburg, Va., says the paper, which expects to record gains of 3.7% daily and 3.3% Sunday in the March report, offers evidence that it is possible to turn short-term stories into long-term gains. “I really do believe we have good, viable products, and the key to growing circulation is getting them in people’s hands,” he says.

Every number tells a story

If Sept. 11 didn’t help circulation long term, it’s possible that newspapers’ readership numbers will tell a different story. Lavine says more papers are putting “Impact Study” findings into action, which will show up in readership gains that will eventually fuel circulation growth. “I feel pretty strongly that what you may have is the same number of home-delivery subscribers but a higher percentage of them reading more often,” Randles says.

And one reason for the loss of “bump” is that some dailies wanted it that way. Scrambling to offset falling ad revenue in the past year, many papers cut back unprofitable distribution and reduced the use of deep discounts to hook new subscribers.

The Milwaukee Journal Sentinel, for example, expects to report decreases of about 7% daily, 2.6% Sunday, after eliminating its state edition in January and reducing home delivery by about 14,000 daily, 20,000 Sunday. The decline follows a 8.5% falloff in the six months ended Sept. 30, due in large part to a decision to stop offering a 50% discount to new subscribers.

Workin’ at the car wash

Some of the nation’s largest dailies, however, are reporting significant gains for the recent six-month period (see table below).

The Arizona Republic in Phoenix plans to report a jump of 2.8% daily, 0.4% Sunday, as a result of new single-copy-sales partnerships with Osco Drug stores, McDonald’s, and corporate cafeterias. The addition of single-copy-sales locations also will help The Sacramento Bee‘s daily sales grow by almost 4%, according to Circulation Sales Director Mike Gannon. “The publisher’s statement is going to be way up because we did have this incredible fourth quarter, and I think, above anything else, 9/11 played a big role in that,” he says.

Another circulation driver in the past six months has been newspapers’ aggressive and unconventional use of ABC’s third-party-sales rule to get more copies into people’s hands. The rule, which lets papers count as paid copies sold for as much as 75% off the cover price to third parties, got little notice when it first took effect during the six months ended Sept. 30. Today, NAA’s Murray estimates that third-party deals will boost single-copy numbers by 2% in the coming FAS-FAX — making the overall flat circ numbers all the more troubling.

In one creative arrangement, the Times-News in Burlington, N.C., has boosted its circulation by 100 copies a day through a deal with Wheels and Bumpers, a local car wash. The car wash buys the papers at 25% of the cover price and lays a copy on the front seat of each customer’s freshly washed car. Third-party deals will help the Times-News report total gains of more than 1% daily and 2% Sunday in the March FAS-FAX, Circulation Director Jim Purdon says.

Critics of the third-party rule had worried that advertisers would question the wantedness of papers that readers don’t pay for. But, Purdon says, “I think it can add value from an advertising standpoint, because newspapers are getting out there … and hopefully they’re drawing subscribers.”

Nontraditional third-party sales also are under way in Charleston, W.Va., where Charleston Newspapers, the business arm of the jointly operated Charleston Gazette and Charleston Daily Mail, found a captive reading audience in hospital patients. Under a third-party deal with the Charleston Area Medical Center, the hospital distributes 60 copies of the morning Gazette to patients with their lunches. Andy Malinoski, circulation director for Charleston Newspapers, expects the arrangement to pay off in the publisher’s statement Sept. 30, when he anticipates having the program expanded to 500 beds a day. “Those people in the hospital will read it more thoroughly,” he says.

And, after shunning it at first, a few circulation directors, mainly in competitive markets, are starting to experiment with the year-old ABC rule that allows papers to count as paid subscriptions sold at as much as 75% off the regular price. Knight Ridder is encouraging its papers to take advantage of the so-called 25% rule to meet the company’s stated goal of growing daily and Sunday circulation at most of its 32 dailies this calendar year.

Still, the rule’s use remains limited by the economy. As Randles says, “I still see the vast majority of newspapers building circulation slowly.”

For most papers, after all, the goal is to decrease their use of discounting in favor of methods that better retain customers and lower acquisition costs. Technology will help as more papers construct data warehouses that let them learn more about their readers, and market more effectively to them. But it will be a long time before this technology helps circulation growth. “If the adoption curve continues to grow and improve, then we ought to be telling some really good stories in three to five years,” says technology and marketing consultant Miles Groves. Maybe then the next “bump” will not disappear but continue to grow.

New York Post+15.5%
The Sacramento (Calif.) Bee+4%
The New York Times+3.8%
The Free Lance-Star, Fredericksburg, Va.+3.7%
The Arizona Republic, Phoenix+2.8%
Daily News, New York+2.4%
Pittsburgh Post-Gazette+1.7%
Akron (Ohio) Beacon Journal+1.6%
Chicago Tribune+1.6%
Orlando (Fla.) Sentinel+1.5%
The Dallas Morning News+1%
Houston Chronicle+0.25%
Newsday, Melville, N.Y.+0.20%
Times Union, Albany, N.Y.+0.01%
San Francisco Chronicle-1.2%
The Buffalo (N.Y.) News-1.5%
The San Diego Union Tribune-1.8%
South Florida Sun-Sentinel, Fort Lauderdale-2.2%
Milwaukee Journal Sentinel-7%
Numbers refer to estimated percentage changes for daily circulation for the six months ended March 31, compared with the same period a year earlier. Source: E&P interviews

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