Newspaper Outlook For 2002

By: Seth Sutel, AP Business Writer (AP) Newspaper publishers remain hopeful the economy will turn around by the middle of next year, but given the cloudy economic situation many decline to give specific earnings forecasts.

Despite the tough advertising climate, some companies making presentations to investors at the annual Credit Suisse First Boston media conference said they were pressing ahead with plans for new products.

The Wall Street Journal, one of the newspapers hardest hit by the advertising downturn, is planning to unveil a redesign next April that will include a new section, and E.W. Scripps Co. is going ahead with the launch of another cable network in March.

The New York Times warned investors that its earnings for the fourth quarter would come in below analysts' expectations because of the poor advertising climate.

Dow Jones & Co.

Chairman Peter Kann said the company would unveil a long-awaited redesign of The Wall Street Journal on April 9.

The new design will feature the first overhaul of the paper's front page since World War II and will incorporate the use of color. The Journal now uses some color graphics and photos in other parts of the paper, and Dow Jones declined to specify in detail how color would be used in the new front page design.

The paper will also carry a new section called "Personal Journal" every Tuesday, Wednesday, and Thursday, featuring articles on personal investing, travel, health, and family.

Dow Jones did not release a sample of the new design, but said it would be "cleaner and clearer" and would include fewer typefaces and more aids to navigating the paper. Kann said the company has shown portions of the redesign to advertisers, and the reaction was "extremely positive."

The changes are the result of four years of planning and more than $225 million in investments to increase the page and color-printing capacity of the newspaper.

The Wall Street Journal's Web site, wsj.com, will also unveil a new design on Jan. 28, Kann said.

Kann also said Dow Jones would make some purchases, sales, or swaps to adjust its portfolio of community newspapers, the Ottaway group.

The Washington Post Co.

Chief executive Donald Graham opened his remarks by reminding investors that his company did not issue specific forecasts for earnings. "If you are interested in what we're going to earn next quarter, you should probably not own our stock," he said.

That said, Graham did say that next year could be "pretty good" for the Post, compared with poor earnings per share this year, due mainly to improved performances in two of the company's businesses, cable television and Kaplan, its educational services division.

Graham called 2001 a terrible year for advertising, noting that January-through-October ad revenues at the Post were down 13%, led by a drop of 37% in recruitment advertising.

Regarding Newsweek, Graham said the terrorist attacks and subsequent conflict in Afghanistan proved that newsweeklies are "alive, well, and vitally important to our readers," though the advertising situation remained "dreadful."

Knight Ridder

Chairman and chief executive Tony Ridder said he expects advertising revenue to be flat or down in the mid-single digits next year. He did not give specific guidance for earnings in 2002.

As part of a wide-ranging cost-cutting program, Ridder said his company has cut 2,200 staff this year and does not anticipate adding staff back when times get better unless the hires can be directly tied to revenue growth.

Ridder noted that the company had a hiring freeze in place, that no bonuses would be given this year to corporate executives and that there would be a salary freeze in 2002 for those making more than $200,000.

Steve Rossi, president of the newspaper division, said the company's advertising revenues were down 8.2%. He said the San Jose Mercury News was "our most disappointing story," with ad revenues down 24% in the year to date through October, led by a 52.4% decline in employment advertising.

Ridder also said the company's "highest priority" next year was to increase circulation.

The New York Times Co.

September newsstand sales of The New York Times surged 37% daily and 15% on Sunday in the wake of the terrorist attacks, said Janet L. Robinson, senior vice president of newspaper operations.

Chairman Arthur Sulzberger Jr. said the paper had received a large amount of feedback about its coverage of the attacks and their aftermath, especially from a series of short profiles of people killed. "I have never, ever received so much positive response from anything we've run in our paper," Sulzberger said.

Russell T. Lewis, president and chief executive, said circulation rate increases this year at The New York Times and The Boston Globe have added $32 million in revenues.

Len Forman, the incoming chief financial officer, said the poor advertising climate, which was worsened by the events of Sept. 11, would cause the company's fourth-quarter earnings to come in below previous estimates.

Forman said the company now expected to earn between 48 cents and 52 cents per share in the fourth quarter. Analysts surveyed by Thomson Financial/First Call had expected earnings of 59 cents per share.

Forman said the company was putting in place emergency facilities that would allow the Times to put out the newspaper even if its headquarters building were damaged. Forman said the events of Sept. 11 "taught us to think the unthinkable."

Tribune Co.

Speaking shortly after a presentation from executives from Monster.com, the leading online recruitment agency, Tribune chief executive John Madigan vowed to "take on Monster.com and win."

Tribune, together with Knight Ridder, has been mounting a challenge to Monster with CareerBuilder, an online recruitment agency that recently solidified its No. 2 position in the field with the purchase of the No. 3 player, Headhunter.

Don Grenesko, chief financial officer, said the outlook for next year was still not clear enough to offer specific forecasts, though he said cash flow and earnings should grow "modestly," even with flat revenues, due to lower costs and smaller losses in the company's online business.

Grenesko said he expected a 10% to 15% decline in the average price per ton in newsprint, though he added that Tribune's average price per ton was likely to be 6% below the industry since the company is the second-largest user of the commodity.

Grenesko said Tribune expected its online business to be profitable on a cash flow basis by the end of 2002, despite the efforts to build up and promote CareerBuilder.

He said Tribune expects to earn between 16 cents and 21 cents in the fourth quarter.

E.W. Scripps Co.

Chief executive Ken Lowe said the company would go ahead with its planned launch of its latest cable channel, Fine Living, in March 2002 despite a difficult advertising climate.

Fine Living would join several other cable properties held by Scripps, including the Food Network, HGTV, and DIY. Scripps executives have long maintained that expanding the cable networks was the Cincinnati-based company's top priority.

Daniel Castellini, chief financial officer, said the company's newspaper businesses were likely to have a challenging first half, with some improvement in the second half of the year.

In Denver, where Scripps' Rocky Mountain News entered into a joint operating agreement with its rival, The Denver Post, Castellini said operating losses narrowed by $10 million in 2001. Head count was down there by 22% since January, and newsprint use has been reduced by 105,000 tons.

Gannett Co. Inc.

Chairman and chief executive Douglas H. McCorkindale said he expects the economy to turn around in the second half of the year. But, he added, "We're planning conservatively and we won't spend money until we get it."

McCorkindale said Gannett expects advertising revenues to be flat to up slightly next year, and circulation revenues to be "flattish."

The company expects newsprint consumption to be flat to down a few percent, and newsprint prices to be down 12% to 15%.

Tom Curley, president and publisher of USA Today, said paper consumption was down by one-fourth this year, and expenses were off by double digits.

McCorkindale said the company expects to report 2001 revenues of $6.3 billion, up about 2%, and earnings per share to be between $3.09 and $3.12 for 2001, compared with $3.63 in 2000.

At the company's British operations, Newsquest, McCorkindale said he expects total revenues to rise 5% to 6% this year. Next year, he expects both advertising and revenues to rise in the low single digits.