Newspaper Spending Growing at Slower Rate in 2005

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By: Jennifer Saba

Newspaper spending — which accounts for the amount spent on daily and weekly newspaper advertising and circulation — is expected to grow 2.7% to about $65 billion in 2005, according to Veronis Suhler Stevenson (VSS), which released its industry forecast on Monday.

The private equity and capital fund management company estimates that in 2005, however, growth will slow. In 2004, newspaper spending advanced 3.1%. (The report takes only print into account.)

The main drivers for the growth in 2005: a healthy job market. But don’t count on retail and national advertising to boost the numbers; the categories are expected to decelerate. Circulation spending — that is, how much a consumer spends buying a newspaper — is also expected to decline.

?Even as the general advertising market expands,? the report said, ?total newspaper spending will grow at a tepid compound annual rate of 2.8 % in the 2004-2009 period, reaching $72.9 billion in 2009. By comparison, nominal GDP will grow 6.1% over the same period.?

In the circulation category for daily newspapers, VSS points out that the increase in discounted copies — newspapers sold at lower average prices — and other paid copies impacted the numbers. Falling unit circulation combined with a decrease in price led circ spending to fall 0.9% to roughly $11 billion in 2004. According to the report, the average price for a weekday newspaper was flat at $.40 while that of the Sunday editions rose 0.7% to $1.38.

For daily papers only, total spending in 2005 is expected to advance 2.5% to about $59 billion. ?This slowdown in growth stands in stark contrast to the overall advertising market, which is projected to grow 6.1% in 2005.?

Retail advertising, which accounts for roughly 45% of all newspaper advertising expenditures, is estimated to advance 2.1% to $22.5 billion. In 2004, the retail category grew 3.1%.

The spending on classified is forecasted to rise 6.4% to $17.6 billion in 2005 on the strength of the help wanted and real estate categories. National advertising is expected to grow 1.2% to about $8.2 billion.

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