WEB WILL BOLSTER TRADITIONAL MEDIA, FORECAST SAYS

By: Joe Nicholson

Report Says Net Isn’t Cannibalizing Traditional Media

The Internet is saving Americans so much time that many will increase their consumption of traditional media, according to a new five-year forecast by media investment bank and brokerage Veronis, Suhler & Associates. Consumers are saving time by shopping and conducting research online, the study says.

‘Is the Internet cannibalizing traditional media?’ asks a statement issued by the New York-based firm. ‘The answer is an emphatic no.’

‘Americans will spend just under 10 hours per day consuming various forms of media – almost a half an hour more per day than in 1998,’ said the statement. ‘The Internet, while accounting for just 5.4% of the total, is projected to stimulate media use and spending in a wide range of categories, form books and recorded music to television and business publishing.

‘We believe that as the Internet gains penetration, its impact will be to free up more time for traditional media, as occurred in 1998,’ said the firm’s 13th annual Communications Industry Forecast. ‘By 2003, although the average person will spend 192 hours online, 118 more than in 1998, the average person will also spend an additional 43 hours with traditional media.’

Suhler: Newspapers must be aggressive

The forecast went on to report newspapers are making fistfuls of dollars, and it looks like they will continue to pull plenty of cash from the till. Daily and weekly newspapers raked in more than $60 billion last year, including about $49.3 billion in advertising sales and $10.7 billion or so in circulation revenue, said the forecast.

But increased competition, especially in proliferating media industries, means newspapers must manage their businesses more aggressively, explained John S. Suhler, the firm’s partner, president, and co-chief executive.

In an interview with Editor & Publisher, Suhler said, ‘The pressure has increased over the last 15 to 20 years.’ A successful publisher must confront ‘a harsher [competitive] environment’ by making the right calculations to maintain ‘a delicate balance’ in his or her editorial-
advertising ratio, circulation, prices, and expenses, said Suhler, adding the publisher must also keep in mind the risk that forecasters underestimate competition, such as Web sites trying to lure classified ads, or fail to foresee an economic downturn, a postal rate increase, or a newsprint price spike.

‘Everybody in media is having to work harder to do more with less because that’s the reality of business overall today, and in media particularly,’ said Suhler, who has analyzed media for three decades and who advises many of the world’s leading media companies.

Still, Suhler had little time for publishers who complain about the increased competition, predicting they will continue to outpace the growth of the national economy and adding, ‘There is no reason for them to feel sorry for themselves, except those who live in the past.’

Newspaper owners learned the importance of ‘watching their pennies’ during the 1991-1992 recession, Suhler said. But even through that rough period, the newspaper industry ‘was never down on its haunches,’ said Suhler, who called newspapers ‘one of the highly profitable segments of the media industry and the overall economy.’

As for editors who fear penny-pinching publishers are hamstringing their ability to put out high-quality products and maybe win a Pulitzer Prize, Suhler said, ‘Good editors are still fighting for news hole, staff, and news resources.’

Over the last two years the growth of spending by newspaper advertisers and readers has significantly exceeded the growth of the nation’s economy, pointed out Suhler, who added, ‘That’s just a great accomplishment because the average Wall Streeter wouldn’t have guessed that.’

Publishers will be delighted to hear the firm predicts the price of a metric ton of newsprint, which cost $587 last year, is expected to be $590 in 2003, an increase of a mere $3.

Daily newspapers’ longest enduring headache – 12 consecutive years of weekday circulation decline – is expected to ease next year with total weekday circulation edging up 0.1%, followed by three more years of incremental movements upward, with circulation growing 0.4% in 2001, 0.7% in 2002, and 0.8% in 2003.

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Joe Nicholson (joen@mediainfo.com) is associate editor for Editor & Publisher magazine.


(c) Copyright 1999, Editor & Publisher

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