Report Finds Drop in 'Other-Paid' in FAS-FAX, Lists Gains and Losses

By: Jennifer Saba While newspapers including the San Francisco Chronicle, The Orlando Sentinel, and The Sun of Baltimore reported some of the biggest declines in overall circulation this week, a new report issued Monday by Prudential Equity Research shows these papers are making progress in reducing other-paid circulation.

The research firm analyzed the top 50 newspapers' latest circulation figures released Monday by the Audit Bureau of Circulations. Across those papers, daily circulation dropped 3.5% and Sunday fell 3.6% for the six months ending September 2005 compared to the same period last year.

On the other hand, other-paid circulation is down 2.8% for the same group of papers. In the March 2005 FAS-FAX, Prudential notes, other-paid circ had increased 10%. "The continued decline in this category suggests newspaper companies are becoming less dependent on other-paid circulation to boost their overall circulation numbers," the report stated.

The other-paid circulation category includes hotel, Newspaper-in-Education, employee, and third-party sponsored copies. This type of circulation, the report notes, is widely considered by Prudential and others in the industry to be of lesser quality.

Prudential created a list of the top 50 papers and calculated the percent change in other-paid circulation using September 2005 data compared to September 2004.

The top five papers that shed the most circulation in the other-paid category according to Prudential are The Sun in Baltimore, down 68.8%; the Orlando Sentinel, down 57.2%; The Philadelphia Daily News, down 52.2%; the New York Post, down 51.7%, and The Boston Globe, down 36.6%. The San Francisco Chronicle (the biggest circ loser overall this week) cut other-paid by 33.2 %.

The top five gainers in the other-paid category according to Prudential are: the Los Angeles Times, up 43.9%; the Richmond (Va.) Times-Dispatch, up 40.4%, The Star-Ledger in Newark, N.J., up 30.5%; New York's Daily News, up 29.2%; and the Riverside (Calif.) Press-Enterprise, up 28.7%.

Los Angeles Times Spokeswoman Martha Goldstein disputed the numbers in the Prudential report. For the Times, Prudential used a Monday through Friday average. When a Monday-through-Saturday average is used, the Times' other-paid circulation increased approximately 8%. Hotel and guest copies grew, but third party copies were reduced, she said.

In a statement released on Monday, Times Publisher Jeffrey Johnson said the paper is committed to reducing its reliance on other-paid circulation.

For Tribune, a company that has been under the microscope because of past circulation misstatements, its five newspapers that made the top-50 list showed a decline of 13.1% in other-paid circ. Analysts note that it may take several reporting periods before the category stabilizes.

At the New York Times Co., while circulation slightly increased at its flagship paper, about 13% of the Times' circulation is other-paid and that the category increased 25.6%, Prudential's report notes. New York Times spokeswoman Catherine Mathis attributed the growth to getting more papers into colleges, high schools, and hotels.

Others who made major cuts in other-paid include: Akron Beacon-Journal (-31.5%), St. Petersburg Times (-17.7), St. Paul Pioneer-Press (-12.9), Houston Chronicle (-12.3).

There remains a wide disparity among major papers in the overall percentage of other-paid in their total circ. According to Prudential, USA Today still counts a little more than half of its total as other-paid. The Baltimore Sun, on the other hand, now has only about 5,000 in that category out of a total circ of just over 247,000.

At most top newspapers, other-paid continues to represent 5% to 10% of total circ. Those with far less than that include the Philadelphia Daily News, New York Post, and The Tennessean.

Those with more than 10%, based on the Prudential chart, include The Wall Street Journal, The New York Times, Los Angeles Times, Houston Chronicle, and The Miami Herald.

Meanwhile, looking at overall numbers by size, Merrill Lynch reported that newspapers with a circulation greater than 500,000 posted a dip in daily circ, down 1.4%. Sunday was down 2.7%.

Newspapers with a circulation of 100,000-500,000 showed the biggest drop of the group, with daily down 2.8% and Sunday down 4.2%.

Small papers with circulations between 40,000-100,000 dropped 2.4% daily and 2.8% on Sunday.

By newspaper company, McClatchy posted the smallest daily declines, down 0.8%. Journal Register was down 5.1%. On Sunday, Journal Communications posted the largest decline of 6.9%, while the New York Times Co. reported the smallest, down 2.2%.