Small-market papers go up as big guys go down

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Amid the endless schmooze and cocktails of last week's annual Newspaper Association of America publishers' conference in San Francisco, one storyline emerged: There are currently two newspaper economies. There's one for smaller and midsize markets, which is generally very good, the other for big metros, which is not.

One needs only to look at the earnings results for The New York Times Co., which shows flat ad revenue at its flagship and a 4.2% decrease for the Boston Globe, while its smaller regional dailies-like the Santa Rosa (Ca.) Press Democrat and the Wilmington (N.C.) Star-News-posted a 7% increase.

"We feel good about the ad environment," said Chris Anderson, president of the Metro division of Freedom Newspapers, whose dailies (which include the Orange County Register and the Colorado Springs Gazette), he said, are currently posting ad revenue gains of 7% year-to-date.

But big-city metros "are attractive targets for competition," said Jay Smith, the incoming chairman of the NAA and president of Cox Newspapers, which publishes 16 dailies including the Atlanta Journal Constitution. "They've got a lot of overhead. ... It's a big battleship," and therefore cannot maneuver quickly. Additionally, national advertising, which lands disproportionately in big metros, was the slowest-growing major category for newspapers last year. And the coming wave of serious circulation declines at newspapers is expected to be felt most keenly at major metros.

Major metro markets are also at the leading edge of two key factors that threaten to significantly reshape newspapering: free daily newspapers, and mostly free classifieds sites like craigslist.org. "Free dailies are a fact of life," said Donald Graham, chairman-CEO of the Washington Post Co., which publishes a free daily and has a free competitor in the Philip Anschutz-owned DC Examiner.

At a conference panel, Steve Pope, publisher of the free daily Vail (Colo.) Daily News, made an aggressive case for free distribution, citing extremely bullish revenue and profit figures and tossing off aphorisms like "I'm saying when you have 90% readership, an advertiser has a hard time saying no." (Mr. Pope said Wal-Mart regularly advertises in his paper, and took great pride in cracking the notoriously newspaper-unfriendly advertiser.)

HARD TO HOLD

Free dailies like the News continue to skew consumer perceptions towards paid content, which outgoing NAA Chairman Gregg K. Jones of the decidedly non-big-city-metro Greeneville (Tenn.) Sun. "Our customers today are a slippery bunch, hard to find, and harder to hold onto."

Likely the darkest scenario was painted by two McKinsey & Co. executives, who warned in one presentation the industry could lose $4 billion in highly-profitable classifieds revenue by 2007 should trendlines afflicting the help-wanted segment-thanks to "Net providers like monster.com and craigslist"-spread to other classified categories.

"It's not too late" for newspapers to recover, said NAA VP-Advertising Mort Goldstrom, "but the door of opportunity is closing quickly."

Mr. Goldstrom was more optimistic than another key industry executive, who, when asked at the opening reception how newspapers could compete against free and low-priced classifieds sites, had a quick answer: "I don't know."

(For more conference coverage: AdAge.com QwikFIND aaq49z, aaq49v)

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