Through The Fly's Eyes: Newspapers

from Larry Ramer of Theflyonthewall.com

Election Year Advertising Won’t Save Newspapers

Second quarter results from two of the nation’s largest newspaper publishing companies confirm that the industry is in trouble. There is a little bit of good news ahead for the industry, though, as newspapers will get a modest shot in the arm from the 2008 political campaigns. But true salvation for newspapers may lie in their online editions, and possible Spanish language and other international acquisitions.

Both the New York Times Co. (NYT) and Tribune Co (TRB), two of the country’s largest newspaper companies, saw their circulation drop substantially last quarter, continuing an industry-wide trend. Ad revenues dropped 5.7% at The New York Times Company, while The Tribune Company reported that ad revenues fell 11%. Classified advertising contributed a great deal to the drop, as the Times Company’s classified revenues sank 13.4% and the Tribune’s classified revenues plunged 18%.

Newspapers do have something to look forward to -- the 2008 election season. Candidates do still use print newspapers to reach voters, since newspaper readers are more likely to vote than the average American, as an article in today’s Wall Street Journal points out. Also, newspapers in some markets will benefit from the hotly contested presidential nomination fights in both parties.

But the election season is unlikely to be a panacea for the newspaper industry. Overall spending by campaigns on newspapers was only $104M in the midterm election year of 2006, according to PQ Media, as quoted by the Journal. That’s hardly a huge amount of money for the entire country. Also, the 2006 elections did not prevent newspapers’ ad revenue from falling in 2006, as newspapers’ advertising revenue slipped 3.7% last year, according to the National Association of Newspapers. And that was when the real estate boom was still in full swing.

Newspapers can save themselves by launching more interactive “Web 2.0” applications on their websites. Many of these websites are already profitable, but newspapers have to milk them for all they are worth. The newspapers should put more video offerings on their sites, and possibly even let readers post their own videos on some pages of their sites, a la YouTube. Online video advertising could be a big hit. The newspapers could publish readers’ blogs, and even hold interactive votes to determine the best blog on a certain issue. The winners could receive free subscriptions or other prizes. In fact, newspapers are already starting to team with TV stations to share audio and video news coverage, but publishers must accelerate this trend.

Newspaper publishers should also consider buying newspapers in other countries. According to ZenithOptimedia, newspaper ad revenue worldwide is expected to rise by a few percentage points between now and 2009, powered by increased revenues from Chinese and Indian newspapers. Publishers may also want to look at buying American Spanish-language newspapers, whose ad revenue is expected to continue growing steadily.