• by Michael Shields , August 26, 2004

As if the newspaper industry weren't experiencing enough troubles these days trying to regain advertiser confidence following a series of circulation audit scandals, on Thursday a top Wall Street securities firm downgraded its outlook for newspapers for 2004. Merrill Lynch has expressed concern over the recent slow growth in the newspaper business, calling it "unsatisfying," in the company's annual "Newspaper Primer" report.

In the report, which included a slight downgrade to its 2004 industry ad revenue outlook, Merrill Lynch cites newspaper's 5 percent ad revenue growth year to date (including online) as being "relatively in line with our expectations," yet still disappointing. "We remain a bit concerned momentum could slow a notch in the remaining months," said analyst Lauren Rich Fine in the report.

If momentum does slow, Fine believes it will be driven by volatility in national telecommunications ad spending, plus a slowdown in technology spending. In addition, help wanted advertising will face a tough task in exhibiting growth versus last year's solid fourth quarter.

As a result of these concerns, Merrill Lynch has adjusted its 2004 newspaper industry ad forecast to 5 percent growth from between 5 to 5.5 percent previously. The company's 2005 newspaper industry ad forecast remains unchanged at 5 percent predicted growth.