"Low visibility": Newspapers '05 outlook gloomy

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Though most companies presenting to analysts at the UBS and Credit Suisse First Boston conferences last week were optimistic about 2005, some newspaper publishers sounded a different note.

"This was not the recovery year we had looked for," said Denis FitzSimons, CEO of Tribune Co.

This year is ending strong, but not as strong as expected in the summer, when tax refund checks created a "blip" of increased advertising activity, said Gary Watson, president of Gannett Co.'s publishing division. Now, marketers have become wary of launching new campaigns in the fourth quarter, said Craig Moon, publisher of Gannett's flagship, USA Today.

"We're going to remain conservative about 2005 until we see marketers release campaigns," he said.

Indeed, hardly any publishers would give investors guidance for 2005; most trotted out the circa 2001 chestnut, "low visibility." Janet Robinson, New York Times Co.'s chief operating officer, noted national advertisers are showing pent-up ad demand, "but we've seen this before," she added.

Retail Consolidation

Among the factors in flux is a possible wave of marketer consolidation following the announced merger of Kmart Corp. and Sears Roebuck & Co. Several publishers worried about a slowdown in retail advertising, as department stores-big newspaper advertisers-merge. They also fear consolidation will dry up telecom advertising-a fast-growing area in the past two years-as AT&T Wireless and Cingular Wireless prepare to merge.

Do-Not-Call legislation has crimped publishers' efforts to improve subscriptions, a key metric that affects their rate cards. Mr. Watson noted that Gannett's subscriptions acquired via telemarketing were down 33.5% through the third quarter; one of the company's challenges for 2005 is finding a way to replace that subscription source, he said.

Tribune Co. was tarred this year by circulation scandals that revealed significant overstatements at Newsday and Spanish-language Hoy. The company has made progress negotiating reparations with advertisers, Mr. FitzSimon said, and Newsday already has agreements with its top 10 advertisers.

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