Paper Cuts: Big Newspaper Chains Still Hurting
While overall ad spending appears to be on the rebound, newspapers are suffering continuing declines in the first quarter, scuttling any hopes that the medium might enjoy a comeback. While industry-wide figures aren't yet available, first quarter results from major publishers, including the New York Times Co., Gannett, and McClatchy, give little reason for optimism.
The NYTCO saw total revenues fall 3.6% to $566.5 million, reflecting a 4.4% drop in total ad revenues to $298.9 million. That, in turn, reflected a 7.5% decline in print ad revenues. Total circulation revenues fell 3.7% to $228 million, suggesting that the short-term boost from increased newsstand prices has now run its course.
As a result of these declines, NYTCO's operating profit fell from $52.7 million in the first quarter of 2010 to $31.1 million in the first quarter of 2011 -- a 41% drop.
Focusing on specific categories, the NYTCO News Media Group saw national advertising slip 1.6% to $156.3 million, retail fall 8.6% to $58.2 million, and classifieds decline 5.7% to $45.8 million.
Within the classifieds category, automotive was basically flat at $9.7 million, real estate fell 9.5% to $14.9 million, and Help Wanted edged up 1.5% to $9.6 million. Total digital ad revenues at the News Media Group increased 14.9% to $53.9 million, mostly due to national display. However, this growth was not sufficient to offset declines on the print side.
Gannett Co. fared little better, with total revenues sinking 3.7% to $1.25 billion in the first quarter -- reflecting a 7.3% decline in publishing advertising revenues to $602 million, as well as a 3.9% drop in circulation revenues to $268 million.
Even Gannett's broadcasting division (which has helped offset print ad losses in the past) saw revenues decline 2.2% to $163.9 million, due to the lack of political and Olympics advertising. As a result, total operating income fell 17.7% from $217 million to $179 million.
In terms of specific categories, Gannett's total retail ad revenues fell 7%, national slid 10.5%, and classifieds dropped 6.3%. Within classifieds, employment fell 6.7%, real estate was down 13.5%, and automotive edged up 3.4%. Like NYTCO, digital ad revenues were the one area of strength for Gannett, increasing 12.1% to $157.6 million.
McClatchy saw total revenues sink 9.5% to $303.7 million in the first quarter, due in large part to the continuing decline in ad revenues -- which tumbled 11% to $225.1 million over this period, along with a 5% drop in circ revenues to $66.2 million.
McClatchy's national advertising plunged 29.3% to $18.1 million; retail sank 12.5% to $114.4 million; and classifieds slipped 7.8% to $64.8 million. Within the classifieds category, automotive was basically flat at $20.6 million; real estate plummeted 19.4% to $11.6 million; and employment edged down 4% to $13.5 million.
As with NYTCO and Gannett, the one bright spot on the balance sheet was digital advertising, which increased 2.2% to $45.3 million.