'WSJ': Newspaper Downturn Goes From Bad to Worse

By: E&P Staff We knew it was bad, but an article in the Wall Street Journal today opens, "The downturn in the newspaper industry is getting worse."

The paper's Emily Steel quotes Ed Atorino, an analyst with financial broker Benchmark Co., saying, "Right now, you've got a perfect storm." He predicts total ad revenue will fall 4.3% this year, one of the steepest in history.

Here is an excerpt from the article. The full piece is at the Journal Online.
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Last fall, newspaper executives and analysts were caught by surprise by the severity of a slump that took hold last summer. Since the beginning of this year, the rate of decline in advertising revenue has accelerated. Total print and online ad revenue was down 4.8% to $10.6 billion in the first quarter from a year earlier, according to the Newspaper Association of America, compared with its full-year decline in 2006 of 0.3%.

Publishers have reported sharply lower ad revenue for April and May. The depth of the downturn is expected to become clearer as many companies report second-quarter earnings in coming days. Gannett Co. plans to report today, and Dow Jones, publisher of The Wall Street Journal, and McClatchy Co. tomorrow.

In the first quarter, revenue for every major ad category -- classified, national and retail advertising -- was down. The sharpest declines were for classifieds, where spending dropped 13.2% -- not so much a result of competition from the Web as of economic woes affecting certain categories of advertisers. Real-estate classifieds, until recently a bright spot for the industry, have plunged along with the property market. Auto and employment classifieds are also sinking. Financial-news outlets such as the Journal are being hurt by a slump in technology advertising....

Newspapers' online ad revenue increased 31.5% in 2006 to $2.7 billion. In the first quarter of 2007, online ad revenue increased 22.3% to $750 million. Still, online represented just 5% of the $49.3 billion in total newspaper ad revenue in 2006.