• by Larry Dobrow , May 28, 2003

Preliminary results released yesterday by the Newspaper Association of America suggest that the newspaper business survived - and even prospered - during what many pundits had expected to be a brutal first quarter.

The organization reported that ad spending in newspapers crept up to $9.9 billion during the quarter, up 1.8% over the year-ago period. Not surprisingly, newspaper stalwart retail advertising saw the biggest surge - 2.5%, to $4.7 billion - while classified ads dipped 0.2% to $3.5 billion. National ad spending in newspapers was up 3.7%, to $1.8 billion.

While a 1.8% overall increase probably won't spur many newspaper publishers to erupt in euphoric glee, NAA president and CEO John Sturm characterized the quarter as a satisfying one for the industry. "I think overall most people are pleased," he says. "The war was a short one and consumer confidence seems to be on the rebound as a result. 'Cautious optimism' seems to be the mantra of the day."

The NAA noted continuing weakness in recruitment classified advertising, which dropped 10.8%, to $932 million, from first-quarter 2002 levels. And Sturm doesn't expect the category to improve anytime soon. "It's definitely the most difficult area for newspapers right now," he acknowledges. "Frankly, I don't think it will rebound until the economy turns around and companies start hiring again."

Outside of recruitment, there were pockets of strength within the classified ad category. Real estate spending jumped 8.6% (to $832 million), while automotive grew 1.9% (to $1.1 billion). Other classified ad categories collectively surged 3.4%, to $565 million.

"So much of this has to do with expectations," Sturm adds. "The threat of war clearly lowered everybody's expectations [for the first quarter], but even with that hanging over peoples' heads, newspaper ad spending went up."

Looking forward, Sturm expects continued incremental increases in newspaper spending by advertisers. "The newspaper business tends to be more of a steady tortoise than a fast rabbit," he says. Pressed for a prediction, Sturm says that the second quarter of 2003 will see about the same level of growth as the first quarter, and that the economy will continue its slow ascent from recession.

"I'm not an economist and this is just a pure guess, but it looks like everything's in place for a recovery," he says. "If we don't have terrorism situation or something similar, the economy has a lot of stimulus built into it, especially with the recent tax bill and low interest rates."