Moody’s: U.S. Newspaper Industry Looks Good ? For Now

By: Mark Fitzgerald

Moody’s believes U.S. newspaper revenues could finally turn positive next year — although it warns that a “cyclical snapback” in advertising in 2012 could put the industry back on its long-term decline.

In a report issued Thursday, Moody’s said it believes newspaper ad revenues, which fell 22% in 2009, are on track to decline in the 10% to 15% range this year. In 2011, the firm said, revenues could decline another 3% or increase as much as 2%.

“Our 2010-2011 forecasts assume continued improvement in nominal U.S. GDP (gross domestic product) growth,” Moody’s senior credit officer John Puchalla said. “The stable outlook is also supported by expectations that operating leverage from aggressive cost cuts will lift earnings for the next 12 to 18 months.”

But that improving picture could subside in 2012, Moody’s said, as a long-term trend in advertising decline reasserts itself.

“The strong earnings gains expected in the first half of 2010 willslow in the second half as the tailwind from last year’s drop in
newsprint prices subsides, the aggressive cost cuts of 2009 are fully realized, and temporary cost actions like job furloughs and cuts in retirement benefits and incentive compensation are restored,” the report said.

Moody’s expects that even as newspaper ad revenues improve, they will never recover to a pre-recession level because of the shift from print to the Web, and  because aggressive competition from traditional media such as broadcast and outdoor will put pricing pressure on newspaper ads.

The full report, “Revenues Set to Stabilize in 2010-11, But Long-Term Outlook Is Still Negative,” is available at

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