Publishers Struggle With Recruitment Category

By: Lucia Moses With newspapers suffering from what observers call the worst advertising climate since World War II, one could have gotten dizzy from the spin at two annual investor conferences in New York last week. Some company executives, in a departure from their usual display of fraternity, used slides to pound home the point that no matter how rotten their results have been, many of their peers are doing even worse. Others presented 2002 earnings estimates that were lifted with the help of new accounting rules regarding acquisitions, a change analysts say actually has no impact on a company's value.

Still, no one denied that the ad environment is, as Washington Post Co. Chairman and CEO Donald E. Graham said, "simply dreadful." Newspaper ad spending was down 7.8% for the first nine months of the year, according to the Newspaper Association of America (NAA). While forecasters expect better days for newspaper ad revenue in 2002, growth is expected to be modest at best: Zenith Optimedia CEO John Perriss predicted a 4% decrease; the Barry Group's Miles E. Groves predicted a 2.3% increase.

Of chief concern to newspapers is their large and highly profitable help-wanted print classified advertising category, which sank 30%, to $4.4 billion, in the first nine months of the year, the NAA reported. Confusing matters is that the industry help-wanted ad figures are down from a high that was pumped up by ads from the fleeting dot-com industry. "All of this stuff is very clouded right now because we're going through the downside of dot-com falloff," said Thomas Russo, an investor in newspaper companies who attended the company presentations.

Newspaper publishers are sticking to their belief that despite the growth of online job sites, recruitment will bounce back when the economy improves, as it historically has. But even the relatively optimistic Groves said, "I don't think it'll ever be as robust in the next five years as it was in the last five years."

While maintaining that newspapers are essential to employment advertising because most hiring is done locally, publishers have formed national networks in response to the proliferation of online job sites, most notably market-leading Monster.com. Knight Ridder and the Tribune Co. said their co-owned recruitment Web site CareerBuilder Inc. is gaining on Monster, and they intend to overtake it. "When you cut through all the rhetoric, Monster is a national job board, plain and simple," asserted Tribune CEO John W. Madigan.

Monster CEO Jeff Taylor, meanwhile, predicted that more and more hiring will migrate to the Web as job seekers increasingly post their resumes on sites such as Monster. "We are actually very strong in 300 markets," Taylor said at one of the conferences.

Continued cost-cutting and low newsprint prices should help newspapers offset weak ad revenue next year. On top of this year's cuts, companies said they would continue to keep a lid on spending next year, with Gannett Co. Inc., Knight Ridder, and Tribune pledging more head-count reductions in 2002.

The economic uncertainty has touched all areas of operations. Most publishers have stretched out the completion of their 2002 budget processes, while Gannett switched from an annual to a semiannual budget process. Explained CEO Douglas H. McCorkindale, "We don't believe it makes sense for our managers to plan more than six months out."