• by Erik Sass  @eriksass1, October 14, 2009

As expected, The Wall Street Journal has passed USA Today in daily circulation to become the largest newspaper in the country, according to forthcoming figures from the Audit Bureau of Circulations. The change-up is the result of a steep decline in circulation at USA Today and a small increase at the Journal, which continues to defy gravity in the sinking newspaper business. The news follows an initial third-quarter earnings report from Gannett, which has total revenues down 20%.

According to ABC figures cited by the WSJ, its average daily circulation in the six-month period ending September 2009 increased 0.6% compared to the same period in 2008, to 2,024,269. USA Today's circulation fell 17%, from an average of about 2.27 million in the six-month period ending September 2008 to 1.88 million in the six-month period ending September 2009.

Part of the increase at WSJ -- and the decrease at USA Today -- was attributable to changes in their distribution agreements with hotels. The Marriot hotel chain, in particular, dropped exclusive distribution of USA Today and instituted a new, more flexible system where guests could choose which newspaper they wanted delivered --USA Today, WSJ, the local newspaper or none. On the heels of this switch, WSJ's sales in Marriott hotels grew 20%.

In an interview with Editor & Publisher, USA Today's publisher David Hunke blamed that paper's decline on cutbacks in its distribution agreements with Marriott hotel guests and an increase in the newsstand price. These drops continue a trend already in evidence earlier this year: Average circulation in the six-month period ending March 2009 was 2,113,725 -- down 7.5% from 2,284,219 in the six-month period ending March 2008.

The decrease in circulation is another blow for USA Today publisher Gannett, which recently issued an initial report of its third-quarter earnings showing an anticipated 20% drop in overall revenues, from about $1.64 billion to $1.31 billion. This resulted in an anticipated 18% drop in net income for the third quarter, from $74 million to $61 million.

In their statement about these anticipated results, Gannett executives attributed the drops to the continuing decline in newspaper advertising revenue, coupled with an absence of political and Olympics advertising revenue at its broadcast TV properties.