100 LEADING MEDIA COS.;RETAIL PANGS SLOW NEWSPAPER GAINS

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Bellwether year for magazines outstrips mail, paper costs

ewspapers boosted ad rates and circulation prices in 1995 to compensate for newsprint costs that soared 40% over prior-year levels.

Advertisers with the exception of most retailers stuck to their ad schedules as newspaper ad revenue grew 5.7% to $36 billion in '95, according to Newspaper Association of America.

The ad portion of newspaper revenue generated by the 41 media companies in this report accounted for an estimated $22 billion out of a total $27.4 billion, up 5.9%.

But the important retail dollar (50% of industry ad revenue), grew only 3.3%. Retail's winter-battered first quarter '96 was even worse for papers, up only 0.8% from the year-earlier period.

WALKING A FINE LINE

The year-end financials of Top 100 companies with newspapers accentuate the fine line between boosting ad and circulation rates to recoup higher expenses (as in paper) and not getting lower ad linage and circulation as a result.

A.H. Belo Corp., typical of many, hiked ad rates and characteristically got linage declines in most major ad categories, though higher revenues. This occurred at its flagship, Dallas Morning News, where a concomitant hike in circulation rates led to a slippage in subscriptions.

Some measures to stimulate growth are brazen. Times Mirror Corp.'s Los Angeles Times earlier this year halved newsstand prices in hopes of gaining larger circulation that would then justify a move to increase ad rates.

MAGAZINES BATTLE HIKES

Not only did magazines face higher paper costs in '95 but higher postal rates as well, loosening the valves on an otherwise steamy ad climate.

Advertising, hot for the third consecutive year, grew 5.1% in ad pages and 12% in revenue for consumer magazines-numbers so strong that publishers are calling '95 the industry's bellwether year.

Magazine operations among Top 100 companies grew 8.7% to $16.74 billion revenue in '95, compared with 6.7% growth in '94%. Computer giants Ziff-Davis Publishing, International Data Group and CMP Publications did better, each scoring double-digit revenue growth.

To hold costs, magazines reduced trim sizes and rate bases. Rate-base adjustments cut print runs, but boosted CPMs. Hearst Corp.'s rate-base cuts were accompanied by ad-rate increases of 5%, fostering CPM growth of nearly 15%. Little wonder Hearst experienced defections among a few advertisers.

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