Amid Disclosures Of Inflation, Overall Newspaper Circ. Found To Erode

The newspaper business, which was hammered last week by revalations of inflated circulation figures at some major dailies, received more bad news Monday as total newspaper circulation continued its decline, according to a just-released Merrill Lynch analysis of the Audit Bureau of Circulations' (ABC) most recent report for the six-month period ending March 2004.

The circulation news, although less than positive, was hardly cause for great alarm. The report, "The Newspaper Business, A Transition in Circulation Management," found that on average, daily and Sunday circulation dipped just 0.6 percent (the research excludes Wall Street Journal online subscribers) and 0.7 percent, respectively, for Merrill's base of coverage. Merrill's findings concur with the Newspaper Association of America's (NAA) own analysis of 836 newspapers, which recorded a 0.1 percent drop daily and a 0.9 percent decline on Sunday.

Merrill's report referred to the declines as "not unexpected," given newspapers' continuing fight to compete with a cluttered media landscape and a lack of younger readers.

"I expected larger declines," said Merrill CFA, first Vice President Lauren Rich Fine. "In the context of TV audience erosion, the declines are small, but they have been so consistent that they still point in the right direction."

The report also pointed to the implementation of the "Do Not Call" registry as contributing to the lack of subscriber growth.

Of course, given the recent reports of circulation overstatements by Newsday and the Chicago Sun-Times, among others, all circulation figures, positive and negative, are likely be cast into some doubt. Indeed, the report warned that: "Circulation is likely to remain a controversial topic." It also warned that: "The revelation [about circulation overstatements] could dampen enthusiasm for newspaper advertising sales for some time as advertisers frequently buy on circulation."

Fine added: "The declines [in circulation] are modest, although with the two recent overstatement disclosures, [they are] hard to believe."

While most newspapers were down in circulation, some of the biggest papers saw improvement--although also slight in nature. USA Today was up 2.3 percent, benefiting from improved business travel, while the LA Times was up 0.4 percent and the New York Times was up 0.2 percent. These increases, however tiny, could be the first signs of the big newspapers stealing readers from the small papers.

"I think the national papers serve a different need," Fine said. "They are well-edited and more available, and as such keep growing. [They are] likely taking some share from local [papers]."

The Washington Post did not see the same growth as other prominent national papers, posting a decline of 3 percent due to price increases.

The report also touched on a hot topic in the media world with regard to newspaper advertising--that of total audience versus circulation. "There has been an increasing focus on newspaper readership in contrast to just circulation volumes as there are multiple readers for each newspaper subscription," the report says.

The report looked at the NAA's analysis of readership using figures from Scarborough research, which indicates that 53.4 percent of adults read a newspaper each weekday, while 62 percent do so on Sundays.

At the recent ANA print forum, some newspaper executives expressed frustration that newspapers were not measured on total audience, as were other media.

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