Newspaper Publishers Expecting Further Job Cuts in 2006

By: Jennifer Saba Newspaper publishers are expected to keep the axe out in the second half of 2006.

Bear Stearns analyst Alexia Quadrani noted that in her coverage universe, ad revenue barely budged -- up 0.5% year-to-date -- and circulation revenue continues to decline in the low single digit range. Given the challenging environment, she anticipates newspaper publishers will resort to the ?popular? means of cost cutting by eliminating jobs.

No matter that in 2005 roughly 2,500 jobs were shed. Bear Stearns approximates that through June of this year, roughly 950 jobs had been cut, compared with 450 in the same period a year ago.

Though annual revenue growth is supposed to pick up in the second half (based on easy comparisons) and despite expected gains from online, ?we may once again see the publishers announce another round of significant staff reductions before year end in an effort to bolster 2007 financial performance,? she wrote in a note released today.

The majority of pink slips will most likely be handed out in the metro markets where ad revenue inched up a slight 0.2% compared with 0.6% in small to mid-sized properties. About 60% of announced job cuts in 2006 have been at newspapers in the top 50 markets, according to Bear Stearns.

Still those in smaller markets won?t be totally protected. Quadrani thinks that because of projected lackluster results and higher newsprint costs, small to mid-sized papers will resort to slashing jobs as well.