Broker: Small- to Mid-Circ Papers At, or Nearing, Economic Bottom

By: Mark Fitzgerald As a group, smaller newspapers were the last to be brought down by the Great Recession, and now a report from a brokerage firm specializing in community papers suggests they may be the first to find the bottom to the industry?s misery.

?The industry may not have hit the bottom in revenue decline, but it appears it may be getting close,? says the current issue of the Cribb, Greene & Associates newsletter.

Bozeman, Mont.-based Cribb Greene surveyed dozens of owners or top executives of mid-sized and small newspapers and shoppers in May, and went back to them in July, asking if conditions had improved or worsened.

?Most say revenues are down 10%-15%, and are making expense cuts to compensate,? the report says. ?EBITDA (earnings before interest, taxes, depreciation and amortization) margins can still be in the 15%-25% range, although 5%-15% is closer to the norm. ... Certainly, these are ugly numbers compared to what newspapers are used to, but they are not disastrous.?

The report includes verbatim responses from some of the newspapers that, taken as a whole, suggest the faintest optimism mixed with fear that things could get worse. None of the papers is identified by name or market.

Among the more optimistic is this owner of a mid/small daily "I am pleased to say that we have seen a significant turnaround in business in 2009 as compared to 2008. We actually have seen a slight increase in revenue and experienced a modest profit in the second quarter of '09 as a result of focusing intensely on both revenue generation and cost control, like never before.?

A company president of a similarly sized daily told Cribb Greene: "Nothing really new to add other than we are seeing some positive signs in housing advertising in western markets. However I still believe we are in for a slow recovery.?

On the other hand, the owner of a standalone group of suburban weeklies said in July that things ?got worse, not better -- almost nothing left to cut." In May, the owner had lamented a steep fall-off in its commercial printing as some customers went out of business and the rest cut back on the size of publications.