‘Quality’ Circ Still Slipping, Says New Deutsche Bank Report

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By: Jennifer Saba

High-quality circulation continues to erode rapidly, though not as badly as anticipated, according to a new report released today from Deutsche Bank’s Paul Ginocchio.

In a follow-up to his analysis over the summer, Ginocchio found that for the six-month period ending September 2004, more-than-50%-paid circulation for the industry declined 4.9%, versus 4.7% in March 2004 and 3.3% in September 2003.

The “other paid” category, which represents employee, educational, and third-party copies, is rising fast. It now represents 10.3% of all circulation, as opposed to 4.8% two years ago.

In “Circulation Uncensored II,” Ginocchio examined 57 of the largest U.S. newspapers and broke out the numbers by category according to ABC reports.

The study shows that while overall circulation is decreasing only slightly, it’s being propped up by lesser quality circ, considered in the industry to be less-than-50% paid.

But even though this lesser quality category is legitimate, it’s not quite equal. “Advertisers are already well aware of the underlying shifts in circulation and are not going to ‘buy’ or pay for this increase in paid circulation,” the report said.

Three companies in particular are vulnerable to this trend and may not see the typical 2% to 4% ad rate increase in 2005. Knight Ridder, Tribune, and Dow Jones “struggle the most with the highest-paid category of circulation, with declines much greater than the 57-paper average,” the report said.

Knight Ridder’s more-than-50% paid circulation declined 9.6% for the period ending September 2004; Tribune’s decreased 6.9%, and Dow Jones’ dropped 7.3%.

Ginocchio surmises that the problem lies with Knight Ridder and Tribune’s large market exposure in addition to the impact of the hurricanes. For Dow Jones, many subscribers are migrating online.

The companies that faired the best: E.W. Scripps, with a decline of 1.3%, Media General, with a drop of 1.6%, and McClatchy, with a decrease of 0.9%.

The newspapers with the top-five biggest declines in quality circ are: San Francisco Chronicle, at 13.1%; the Denver Post/Rocky Mountain News, at 12.9%; the Orlando Sentinel, at 12.9%; San Jose Mercury News, at 12.3%, and the Ft. Worth Star-Telegram at 11.4%.

The best-performing papers: The North County (Calif.) Times, with an increase of 4.1%; the Sarasota Herald-Tribune, with an increase of 3.2%; the New York Post, with an increase of 2.4%; The Sacramento Bee, with an increase of 1%; and The Des Moines Register, with a decrease of 0.1%.

For a copy of the report, contanct Ginocchio at paul.ginocchio@db.com.

Correction: The original version of this story said the Ft. Lauderdale Sun-Sentinel was the paper with the worst decline in more-than 50% paid circulation. Deutsche Bank had incorrectly analyzed the paper.

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