NEWSPAPER EXECS SAY INDUSTRY READY FOR UPTURN

Modest Revenues Still Point to Unsteady Recovery

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NEW YORK (AdAge.com) -- Newspaper advertising appears to be ready for an upturn in the second half, but the recovery is still unsteady, according to executives from two major newspaper companies.

Advertising revenue in the second quarter was still below last year's totals, but it showed improvement every month and comparisons may turn positive next quarter, Leonard Foreman, chief financial officer of The New York Times Co. on Tuesday.

His company

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posted $772.2 million in revenue, up 1.6%, and net income of $78.8 million, far below the $265.5 million reported a year ago. However, after factoring out a $241.3 million gain from the sale of its magazine group in 2001, net income for this quarter rose 225%.

Revenue for the company's newspaper group rose 1.4%, reflecting gains in circulation revenue and improving advertising revenue, particularly at the flagship paper, The New York Times.

Advertising categories
Mr. Foreman said that while the key help-wanted advertising category was down 21% for the quarter, monthly comparisons had eased from April, which was down 23%, to June, down 19%. He also noted real estate, the paper's largest classified advertising category, rose 13% and entertainment advertising, the largest national category, rose 27%.

"If you connect all the dots ... you can see the arrow pointing upward," said Russell T. Lewis, the Times Co.' president-CEO. But he warned of "squishiness" in the economic climate due to the weak financial markets.

Those sentiments were echoed by Douglas McCorkindale, chairman, president and CEO of Gannett Co. Second-quarter numbers reinforce the view that newspapers have hit bottom, but the recovery will be uneven, he said.

Gannett reported net income of $303.9 million, up 30.2% on flat revenue of $1.62 billion, thanks to cost-cutting efforts and strong results from its TV station group. Newspaper revenue dropped 1.1% while TV revenues rose 7.1% for the quarter. Mr. McCorkindale said Gannett's employment advertising, while low, is improving, from a drop of 15% in April to a drop of 11% in June.

Automotive and real estate advertising remain strong, while retail is mixed, but flat overall, he said. TV benefited from strong automotive advertising and unexpectedly strong political advertising, Mr. McCorkindale said.

'USA Today' woes
National advertising, led by Gannett's USA Today, was down 4% for the quarter, but forecasting would be difficult as advertisers book ads close at the last possible moment, he said. Travel and entertainment -- two leading categories for the newspaper -- were down but showed improvement during the quarter.

"Things are bouncing around on the national basis," Mr. McCorkindale said. "It's week to week, month to month."

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