At daily newspapers, some clipping...
Average daily reader now 55. "Newspaper readers have been dying off faster than they are being replaced with new ones." - John Morton
The New York Times devoted most of the front page of its Business Section and half of page five on Monday to a shocking description of the collapse of the daily newspaper industry. The story explains a lot about why Cape Cod Times bought the cape's oldest weekly newspaper last week.
The Times bought two Nantucket weeklies (the Inquirer & Mirror and the Beacon) a decade ago and then closed the latter to consolidate that market only to have a new upstart (the Nantucket Independent) challenge that monoply last year.
If your buy print advertising or read a newspaper, it is worth the minute it will take you to register once at The New York Times to read this report. If that's too much trouble this print-friendly version in the International Herald Tribune does not require registering. Here are just a few points;
- In the past 25 years the percentage of people aged 30 to 39 who read a paper every day plunged from 73% to 30%. That's down over 60% , and these consumersare the most sought by advertisers. On an average weekday, about 55 million newspapers are sold nationally, down from 63 million in 1985.Daily newspaper circulation has also failed to keep up with population growth. Total daily newspaper circulation as a percentage of all U.S. households ("penetration") has been falling sharply since its all-time high of 123% in 1950 to its current 51%.
- The NY Times has laid off 700 workers since May, and most dailies are cutting expenses by laying off the reporters who write the local news, which for mosr subscribers is the reason they buy the newspaper in the first place.
- Pessimism about the industry ... continues to drive down the price of newspaper stocks (see chart below). Wall Street has revised its third-quarter earnings estimates downward for most newspaper companies.
- The turmoil is largely confined to big dailies, not small community weeklies. Do you still wonder why our local daily bought the Barnstable Patriot last week?
- 66% of US households are expected to have broadband connections by 2010, double the number today.
- Ford Motor Company has decided to move 30% of its $1 billion a year ad budget to nontraditional media, with 15% going to online advertising.
- These trends are likely to accelerate. Over the next three years, advertisers are expected to increase online budget from 5 to 8% to 15 to 20%.
- Daily newspaper ad revenue has stalled for several reasons: a decline in local auto ads, the consolidation of department stores, especially the merger of Federated and May (this will hit our own daily hard while the weeklies never got this budget), and a march to the Internet by travel advertisers, hotels and car rental agencies.
- Ottaway Newspapers, Dow’s unit of smaller dailies which include Cape Cod Times, also hit a funk in August, with total linage down 3.2% because of decreases in auto and other classified advertising, as well as retail and non-daily advertising. Dow Jones said the declines were partially offset by gains in real estate classified and national advertising.
- The Wall Street Journal’s advertising woes continued in August, with total linage down 1.9% compared with the same month in 2004. Once again, the decline was led by a plunge in the financial advertising category, which was down 20.2%, parent Dow Jones & Company said. Year-to-date linage at the Journal was down 5.9%.
- The 12 major public newspaper companies in the United States (including Dow Jones the parent of our own daily) posted an average operating margin last year for their newspapers ofalmost 21%. Much of this profit was obtained by reducinglocal news coverage which eventually will destroy the daily medium. As the bottom chart show, the NY Times and the Cape Cod Times parent Dow Jones have been the biggest losers in the past five years.
Whistling past the newspaper graveyard
Despite this hardwriting on the wall, many large chains are still making major capital improvements like new presses, etc. "Don't cry for the newspaper industry," said Dean Singleton, chief executive of MediaNews Group, which publishes The Denver Post and The Salt Lake Tribune and who presided over the shutdown of The Houston Post. "They're making a lot of money, and many are reinvesting it in a dynamic online future."
But some detect a bit of whistling past the graveyard among those who predict a rosy future. John S. Carroll recently resigned as editor of The Los Angeles Times, saying the reason was largely the relentless cycle of cuts demanded by the Tribune Company, his paper's parent.
Remember, this is the New York Times writing it's own "print obit", but you must read the entire article to appreciate the imminent death the daily newspaper industry faces.
For further insight into how this affected us here on Cape Cod, read Greg O'Brien's most recent article about selling The Cape Codder and other weeklies to CNC a decade ago.