By: Lucia Moses Newspaper advertising trends have been improving, but will stock-market ups and downs lead whipsawed consumers to curb their spending, postponing the recovery?
With "market volatility, consumers being shaky -- I can't see that being good for advertising," said Morgan Stanley Dean Witter newspaper analyst Doug Arthur, who predicts a weak start to the third quarter.
Others aren't so sure. "I don't think recent stock-market volatility or issues of corporate accountability should impact consumer spending," said Frank S. Gristina, who follows newspapers for SunTrust Robinson Humphrey Capital Markets in Atlanta.
Media merchant bank Veronis Suhler Stevenson was more bullish than other forecasters when it predicted last week in its annual Communications Industry Report that daily newspaper advertising would grow 2.4% this year. However, Managing Director Robert J. Broadwater told
E&P that, while he's sticking to his forecast, he's a "little less confident than I was in May. ... Clearly, I think we're going to have to have a stronger year-end." Long term, though, the industry is fundamentally healthy, he said.
Veronis' report forecasts newspaper ad spending will grow at a compound annual rate of 5.7% the next five years. But with no new advertising streams on the horizon to replace the tech and Internet ads that drove spending in the late 1990s, Veronis predicts media properties won't recover as quickly as they did from the last recession.
After years of publishers curtailing outlying circulation and shuttering evening editions, Broadwater said he is glad to see publishers' recent commitment to turning around circulation declines, a move crucial to their survival: "In a world of increasingly targeted advertising media, there are very few truly mass media left. If you start losing that mass audience, you're not targeted -- and you're not truly mass."
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