Sighted: Faint Encouraging Glimmer For Newspapers

Posted by: Jon Fine on May 15, 2009

People are still paying for the print newspaper. In fact, in almost all cases, people are paying more for the print newspaper: circulation revenues rose, if slightly, at almost all of the remaining publicly traded newspaper companies in the first three months of this year:

McClatchy: circulation rev up 0.9% to $68.5 million
New York Times Co.: circulation revnue up 1%, to $228.9 million
Lee Enterprises: circulation revenue down 4.1%, to $47.1 million
AH Belo: circulation revenue up 8.9%, to $31.7 million
Media General: circulation revenue up 6.2%
Gannett: US circulation revenue up 1%. (These revenues at UK properties were down, and pushed company’s total circulation revenue down 3.1%.)
E.W. Scripps: circulation revenue up 0.4% to $30.6 million.

In dollars, this means little for these companies when ad revenues—which generally make up 80%, or more, of total US newspaper revenue each year—are down more than 20%, and, in some cases, down more than 30%.

It's more illuminating when it comes to the psychology of newspaper readers, by which I mean "people who read a printed newspaper." Overall newspaper circulation declined 7% for the six months ending March 31. Thus, much of these companies' gains are coming from increased prices.

That tiny bit of pricing power indicates there’s a still a decent tie with consumers, which persisted even when backdropped by many newspaper companies declaring bankruptcy and a steep economic turndown. Lots of places that make their money from consumer spending did not show single-digit revenue growth in the first three months of 2009. (Of course, lots of places sell products that cost more than a daily newspaper.)

So, yes, even today, there remains some tenacity in readers’ attachment to print newspapers. If you’re wildly optimistic, you might extrapolate from this data that a decent percentage of readers will tolerate some sort of online pricing to read newspaper content.

Or it might mean that a portion of the readership will still pay up for the physical newspaper,

I’m not wildly optimistic, so my money’s on option #2. Still, that’s something. It ain’t gonna save newspapers, but it’s something.

Reader Comments

Martin Langeveld

May 17, 2009 10:37 AM

I wouldn't be optimistic after the largest-ever drop in circulation figures over the past six months.
I conclude from these facts that newspapers raised prices and as a result lost 7% of their circulation. The fact that they saw increases in circ revenue as a result of price increases doesn't mean there's elasticity or pricing power. In fact, a lot of papers will keep a subscription going through a long grace period, during which they count revenue that's written off later on. Papers continue to increase prices (the Boston Globe has just implemented aggressive increase in both single copy and home delivery), which will result in continued circulation losses.

Emily W. Sussman

May 18, 2009 3:20 PM

Seems statistically insignificant. It's only a matter of time.

David Clark

May 19, 2009 3:04 PM

Interesting post, Jon. I think the fall in circ volume has accelerated partly due to a recognition by many newspapers that the print product is heading towards a premium niche readership, thus while circ will continue to drop, the remaining readership is less price sensitive. I think that is the gist of option #2 in your post, and I agree with you... Read More. I can see a future in which print will stabilize around a much smaller core readership, but will be profitable and have a closer to 50/50 sub/ad rev mix. Kind of like a niche cable channel model.

The Dude

May 20, 2009 5:04 PM

David Clark,

YOU know what you are talking about.

I just hope newspapers go away and we can get our news from Blogger Dudes like Jon Fine.

Like, whoa man!

Billy

May 20, 2009 11:56 PM

raising your paper up 25 cents

On a small town paper which lets say gets 10,000 single copy sales a day.

10,000 x .25 = 2500 a day.
2500 a day x 7 =17,500 week
17,500 x 52 = 910,000 a year.

even if you lost 25%, you're still making more money and saving money on the printed product that you lost.

Shari

May 22, 2009 3:18 PM

"many newspaper companies declaring bankruptcy"? Wickipedia shows 74 newspaper companies in the US; and more than 1,500 daily newspapers. how "many" of them have declared bankruptcy?

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