The Future of Print

Newspaper circulation down 10.6 percent

Posted in Doom by futureofprint on October 26, 2009

NEW YORK (AP) — The decline in U.S. newspaper circulation is accelerating as the industry continues to struggle with reader defections to the Internet and tumbling ad revenue.

New figures from the Audit Bureau of Circulations show that average daily circulation dropped 10.6 percent in the April-September period from the same six-month span in 2008.

That’s greater than the 7.1 percent decline in the October-March period.

Sunday circulation fell 7.5 percent.

As expected, The Wall Street Journal has surpassed USA Today as the top-selling newspaper in the United States.

Newspaper sales have been declining since the early 1990s, but the drop has accelerated in recent years. Circulation revenue has largely held up, though, because of price increases.

via Newspaper circulation down 10.6 percent – Yahoo! Finance.

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The Future of Newspapers in an Era of ‘Unprecedented Plenty’

Posted in Boom by futureofprint on October 26, 2009

Mr. Knee’s article in Barron’s is entitled “This Dying Medium Has Plenty of Life”. In the article, he points out that newspapers are still more profitable than other types of consumer media. Although profit margins have fallen from levels exceeding 30% to the mid-teens today, this still exceeds margins for movies, music, and books which have often struggled to reach 10%. Ultimately, he believes that “news junkies should anticipate an era of unprecedented plenty”.

Inappropriate Capital Structures

One of the main arguments presented in the article is the idea that newspapers remain good businesses but many are encumbered with high levels of debt that are no longer appropriate based on lower levels of profitability:

Even good businesses can have bad capital structures. Many newspaper companies took on debt that could have been easily supported if profitability had been maintained. The problem is that current earnings, even if superior relative to those of other media businesses, are far below what anyone had anticipated.

Mr. Knee goes on to discuss how companies such as McClatchy MNI still had margins of 20% in 2008 but debt service consumed all profits. During earlier times when margins were 30%, this debt was serviceable but ceased to be appropriate as profitability fell. Eventually, the capital structure issues will be worked out one way or another:

One way or another, the capital structure crises at newspaper companies will be resolved, by paying back the debt over time, negotiating with creditors, or by bankruptcy.

Via Seeking Alpha

MediaPost Publications Newspapers Rally Stock Prices, Will It Hold? 10/07/2009

Posted in Boom by futureofprint on October 7, 2009

The last few years have had precious little good news for the newspaper business, but there may be some positive trends at last.

After hitting all-time lows earlier this year, newspaper stocks are rebounding — slightly. While these small gains are no cause for celebration, they do confirm that the precipitous drop over the last couple of years was partly an effect of the cyclical economic downturn, rather than investors writing off newspaper stocks forever. The question is: how far will the rebound go?

There’s no question that big newspaper publishers suffered a spectacular fall from grace beginning in the middle part of this decade. Between the second quarter of 2006 and the second quarter of 2009, total industry ad revenues fell 45%, from $12.36 billion to $6.82 billion.

Meanwhile, between April 2004 and April 2009, the New York Times Co.’s stock price fell from over $47 to under $7 — and this was a relatively strong performance. Over the same period, Gannett Co.’s stock fell from $91 to under $4, McClatchy tumbled from almost $74 to under $1, and Media General fell from over $72 to just over $2.50.

Via Mediapost