New Study Puts Newspaper Growth at 0.7% In Next Five Years

By: Jennifer Saba The newspaper industry in the United States is expected to grow at a compound annual growth rate (CAGR) of 0.7% for 2007-2011, according to latest forecast from PricewaterhouseCoopers. Globally, the industry is expected to expand at a CAGR rate of 2.1% for the same period.

In the U.S. over the same five-year period, advertising spending will grow at CAGR of 1.1% from an estimated $48.5 billion in 2007 to an estimated $51.9 billion in 2011. The principal growth driver over the next five years will be the Internet. The research firm believes the newspaper alliances with portals such as Google and Yahoo! will help boost spending.

Print retail advertising, according to the newspaper chapter in PWC's Global Entertainment and Media Outlook for 2007-2011, is expected to stabilize in 2009. In 2011, retail advertising is expected to total $23 billion, up from $22.1 billion in 2006, a 0.7% CAGR increase.

Print national advertising is forecasted to decline from an estimated $7.1 billion in 2007 to $6.3 billion in 2011. Print classified advertising is expected to fall slightly at a 0.8% CAGR decline from an estimated $16.2 billion in 2007 to $16.3 billion in 2011.

Circulation revenue is expected to decline at a CAGR of 1.1% over the five-year period. Daily unit circulation is forecasted to fall at a CAGR of 2.3% while Sunday is expected to drop 3.8%.

But when online readership is taken into account, newspapers are actually expanding readership. Mila Petrova, entertainment and media assurance partner at PWC, said that in 2006 online readers who do not read the print version of the newspaper increases readership by 8% compared to the prior year. "It's a good trend when you think about advertising now migrating to the Internet," she said.

Online advertising is expected to increase at a CAGR of 18.8% for the 2007-2011 period, pushing up the contribution to the top line. Petrova said that in 2006 total online advertising for newspapers represented about 5.4% of total advertising. In 2011, PWC sees that advancing to 12%.

"We actually see the growth of online advertising more than offsetting the decline in print advertising," Petrova said. She explained that the migration of dollars away from print to online will be gradual -- and that print will hold its own, declining 0.4% annually.