By: E&P Staff
The Federated/May merger will make an already soft advertising environment worse, according to a report released today by Goldman Sachs.
“The wave of consolidation … brings further bad news to newspaper companies, exacerbating already weak trends in advertising growth rates,” the report said. The investment firm says the Federated/May merger is “particularly troubling” since the department stores contribute so much towards the retail category.
Goldman said that in a worst-case scenario the newly combined company could cut its newspaper advertising spending by 50% — especially if Federated/May aims to become a national rather than local brand as indicated — reducing retail ad revenue by 2%.
Though national newspapers like The New York Times, USA Today, and The Wall Street Journal could see an upside from this, Goldman points out that these papers skew towards a male-demographic somewhat “reducing their appeal.”