Seven Reasons Newspapers Are Not Rebounding Financially

By: E&P Staff

Rick Edmonds | Poynter

This was to be a year of convalescence for newspapers, not a total recovery but a dramatic improvement on the dismal results of 2008 and 2009. However, with third-quarter earnings in and just seven weeks left in 2010, the industry’s vital signs are distinctly mixed.

The good news first. Newspapers are solvent and profitable, often quite profitable on an operating basis. Only a handful went out of business during the great recession. Newspaper companies now are generating enough cash to pay down debt and finance robust exploration of potential new digital revenue streams.

But I see at least seven signs of continuing trouble in the near term and a bumpy path to the mythical “new business model.”

1. Advertising revenues are still falling. The declines are no longer 20 percent-plus year-to-year as in 2009. But the progression toward slower losses stalled in the third quarter, with advertising falling about 5 to 6 percent at most public companies, about the same as the second quarter. September was a down month, and a tepid holiday season looms with online shopping gaining share against the brick-and-mortar stores newspapers count on. Some companies with local broadcast properties had results buoyed by the boom in political advertising, but that ended the day after the midterm elections.

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