By: Jennifer Saba
Circulation “quality” has “improved dramatically” lately, according to a new report released by Prudential Equity Research.
The key factor: publishers are cutting back on other paid copies — the type of circulation that includes hotel, employee, Newspapers in Education, and third party sponsored papers.
The report is the third edition of Prudential’s close-up study on circulation. As in the past two volumes, the research firm based its findings on 50 newspapers — including some of the largest in the country (however, Prudential notes it looked at a greater number of papers within its coverage universe). The study compares Publisher’s Statements from the six-months ending September 2005 to the same period ending September 2004.
In this report, other paid circulation declined 3.4%. For the report that looked at the March 2005 Publisher’s Statements, other paid circulation had increased 6.9%; in the September 2004 study it had jumped 32.4%. “This trend obviously reflects well on the industry, as publishers are starting to rely less on lower-quality circulation,” analysts wrote.
As in the past reports, Prudential analysts used the “circulation quality screener” based on 10 criteria in order “to score” the papers. If a paper met a benchmark — such as decline in total average paid circulation or that full paid single copies declined 10% or more – the paper would get one point. The CQ score represents the total amount of points.
The higher the CQ score means the circulation is of “lower quality” according to Prudential. The papers with the highest CQ scores are the following: the Los Angeles Times, 6; The Tampa Tribune, 6; The Seattle Times, 5; the Denver Post, 4; the Houston Chronicle, 4; The New York Times, 4; The San Diego Union-Tribune, 4.
It should be noted that some papers have complained in the past about the CQ scores, raising various objections.
The papers with the lowest CQ scores with a score of 1: The Providence Journal, the Orlando Sentinel, the Plain Dealer in Cleveland, the Knoxville News-Sentinel, the St. Louis Post-Dispatch, and the Sacramento Bee.
The report looks in depth at 10 “key newspapers” including the Los Angeles Times — one of the papers with the highest CQ scores. Prudential also includes the scores for the paper from the prior two reports.
In this study, analysts note that the Los Angeles Times declined in six out of the ten categories. “The standout category representing poor circulation quality for the Los Angeles Times was discounted copies” which increased by 150% and represents 12% of total circ. “With circulation down in all major categories and an increase in discounted copies, we think the Los Angeles Times may be trying to plug the leaking circulation hole.”
The report also covers the Los Angeles Times’ sister pub, the Chicago Tribune, which has improved its circulation quality with a score of 2 (in the last report the Tribune had a CQ score of 4). The paper is hailed for its improvements especially in the home delivery category. Yet, analysts end on this stinging rebuke: “We understand that the markets for newspapers are different. However, if Tribune can earn a CQ score of 2 in Chicago, a CQ Score of 6 in Los Angeles is unacceptable.”
The New York Times gets praise for boosting its circulation as it continues to be a “leader.” Bucking trends, total circ at the New York Times grew 0.6%. Still, the report notes that other-paid at the New York Times was up 25% versus the same period last year and full paid single copies was down 9.4%. Analysts are concerned about the other paid category: “If other paid remained at the same level in 2005 as in 2004, the total circulation would have fallen 2.7% in the September 2005 period.”
The Washington Post was also included and Prudential says that it’s doing well with circulation quality, with a CQ score of 3. While home deliver and single copy were both down 2.6% and 10.1% respectively, discounted copies dropped 22.3%. Other paid circ was up 8.6% — mostly due to an increase in Newspapers in Education copies, up 20.7%.
The study mentioned that it does not seem that the Washington Examiner–the free daily launched in March 2005 — is cutting into the Post’s circulation.
While Prudential is upbeat that the trend in lower quality circulation is reversing, analysts are worried about the decline of single-copy sales. It fell 6.6% this period. In March 2005 and September 2004 it dropped 7.1% and 6.4% respectively: “We think full-paid single [copies] provides a better indication of the health of the printed newspaper as a media of choice, as it’s the most basic example of a consumer actively seeking out the newspaper.”