S&P: Newspaper Industry Nearing the Bottom in 2010, Will Likely Stay There

By: E&P Staff

The financial outlook for Q4 of 2009 and beyond is not looking so sharp as traditional media — especially newspapers — are expected to suffer from an economic downturn despite easing comparisons.

Standard & Poor’s latest media and entertainment scorecard, courtsey of Seeking Alpha, forecasts newspapers may be nearing the bottom, but will likely stay there. Local media as well as national magazines will experience further EBITDA declines though at decelerating rates.

S&P notes that while the last part of 2009 should “bring easier year-over-year financial comparisons … the credit outlook is still grim for these issuers, and we think that even the first quarter of 2010 could still see lower revenues and earnings.”

Online media keeps grabbing advertising share from traditional media. Search related advertising will keep growing while total online ad spend will be likely flat to down. Mobile and online video advertising is anticipated to “sprout vigorously,” according to S&P.

Meanwhile, last week MAGNA released its 2010 ad forecast and concluded that Q1 of this year will represent the last quarter of decline for the U.S. advertising economy this recession. MAGNA revised its advertising outlook for 2010 to flat (down 0.1%) from a decline of 1.3%.

This year, advertising spending direct online is anticipated to grow 12.2%, while local online is forecast to increase 3.7%. National newspapers (excluding online advertising) are expected to loose 11.2% in ad revenue in 2010. Ad spending at local newspapers (also excluding online revenue) should drop 10.7%.

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