Circ: Doing More with Less?

By: Jennifer Saba Judging from the quarterly earnings calls from two of the largest chains, another dreadful day looms this fall for newspapers when the Audit Bureau of Circulations releases data for the six months ending Sept. 30. On the other hand, publishers are implementing circulation price increases ? and, to their delight, they're sticking. Circ revenue is going up for many papers, even as some readers have been driven away by the price hikes.

Let's look at McClatchy. In Q2, the Sacramento, Calif.-based company announced that circ revenue was up 5.0%, while daily circ for the quarter actually fell 12.4% and Sunday was down 8.5% year-over-year. McClatchy attributed some of that decline to shucking of unprofitable circulation.

McClatchy Chairman/CEO Gary Pruitt said during the call that 26 of the chain's 30 newspapers raised circ rates. The cost of acquiring new subscribers is a drain on budgets, so it's no surprise newspapers would rather opt to raise prices. Pruitt said McClatchy needs that revenue to pay off its debt, and it can trim costs by continuously eliminating unprofitable circ. He also noted: "The readership decline is a fraction of the circulation decline," a sign that newspapers are targeting the right kinds of subscribers. "And then when you look at total audience with online," he added, "it's actually growing ... and reaching about 70% of the adults in our markets."

At Gannett, daily circ was down in the 13% to 14% range during Q2 and Sunday fell in the 7% to 8% range. "We've had some aggressive price increases, and our daily volumes are about 3% softer than we'd like," Robert Dickey, president of U.S. Community Publishing, explained during an earnings call.

Some of those circ losses include the impact from the Tucson (Ariz.) Citizen's closing and the Detroit Free Press eliminating home delivery four days of the week. "We aggressively went after unprofitable routes and extended circulation routes in outer parts of some of our larger newspapers that were not supported by our advertisers," said Dickey. So while most of Gannett's decrease in volume was self-inflicted, if all goes as planned the company intends to get "aggressive" in the second half of this year, he added.