Publishers Face Tough Questions at Mid Year

By: Jennifer Saba Although advertising seems to be on the upturn, that won't stop financial analysts from greeting this summer's Mid-Year Media Review with a battery of hard questions. This is especially true since publishers are expected to make upbeat yet cautious presentations next Tuesday and Wednesday, according to a report from Merrill Lynch.

Classified advertising revenue has ballooned, with most newspaper companies reporting double-digit growth. Help wanted is springing back to life, a positive sign, but questions still loom. For one, there's a concern that newspaper companies are diluting their rates online.

And the overall business conditions at these companies remain shaky. Just look at the lackluster April and May revenue reports. In fact, Merrill Lynch goes so far as to describe advertising growth as "trendless" which it believes is a reflection of advertisers "making their newspaper buying decisions on short lead times."

Retail -- a big part of advertising revenue -- continues to limp along. If there is growth, it's slow. The report also pointed to weak preprint volumes for 2004 and asks if it's due to "tough comparisons, rising newsprint prices, or both?"

There's also a lot of curiosity about the health of new initiatives such as youth and Hispanic-oriented products and if they are starting to add to the bottom line.

Newspaper companies will get a chance to answer all of these tough questions and more next week.