All Circulation Isn't Created Equal

By: Lucia Moses No question, increased circulation and readership is better for the bottom line, with advertisers paying more for more reach. But how much better?

All circulation isn't equal, a new study suggests. An analysis by Merrill Lynch publishing analyst Lauren Rich Fine shows wide variations among public newspaper companies in their revenue and profits per copies sold.

A variety of factors are at work, including company strategies, regional price variations, and operating know-how.

The New York Times, for example, with a $1 cover price, generates $443.1 per average circulation, the most of all 11 peers in the study (it excludes Media General, which Fine doesn't follow). The Times also ranks at the top in ad revenue, generating a whopping $902.9 in ad revenue per copy.

In contrast, the McClatchy Co.'s steady circulation growth, which has been spurred partly by lower prices, has led to a modest average circulation revenue, $114.6 per copy, less than all its peers. McClatchy does, however, generate above-average ad revenue per average circ.

"What this tells you is that no one model is the right model, and the numbers kind of hold up with what you know the company's strategy is," said John Murray, vice president of circulation marketing for the Newspaper Association of America(NAA), who has read the study. He added: "There is room for more discussion of the math behind the theory of figuring ROI."

Fine noted in the report that big-metro owners such as Knight Ridder and the Tribune Co. generate above-average ad revenue per circ while smaller-market operators rank below-average. But as Gannett Co. Inc. and the E.W. Scripps Co. data show, being in small markets is no obstacle to achieving above-average EBITDA per copy.

Also in the report, Fine found total circ for the 12-company group (excluding papers below 50,000-circ) declined 0.4% both daily and Sunday in the six months ended March 31. An NAA analysis that included small papers found circ declined 0.1% daily and Sunday.