Moody's Downgrades Newspaper Biz

Newspapers Down

The economy may have emerged from a recession last year, and ad forecasts may be moving up -- but none of this is helping the newspaper industry, according to Moody's Investors Service, which downgraded its outlook for the medium from stable to negative.

Overall, Moody's sees annual revenue declines of 5% to 6% for newspapers in 2010 and 2011, raising the prospect that publishers -- having cut other parts of their businesses to the bone -- will be forced to start making deeper cuts in newsroom staffs. In addition to reducing the amount of content available for monetization, this will raise severance costs.

Moody's cited the continuing decline in print circulation and advertising sales and increasing competition from digital news sources and distribution platforms.

John Puchalla, Moody's vice president, stated that the medium's "longer-term secular deterioration is returning to the forefront ... as readers embrace free and low-cost content on the Web and mobile devices."

advertisement

advertisement

The only hope for the newspaper industry, according to the company, lies in "further development of user fees and advertising in new distribution channels through pay walls or other means that would not overly cannibalize traditional print volumes or pricing."

Some newspaper publishers are moving toward charging for online content -- most notably at The New York Times, where an online pay wall is supposed to debut sometime in the first part of 2011.

The Moody's downgrade comes close on the heels of a similarly gloomy forecast from ZenithOptimedia, which upgraded its U.S. ad-spending forecast for 2010 to 2.2% growth -- but maintained its projection of a 10% decline for newspapers.

3 comments about "Moody's Downgrades Newspaper Biz".
Check to receive email when comments are posted.
  1. Joe Jacobs, October 19, 2010 at 11:45 a.m.

    Well, people... as long as we pay our reporters and photographers and columnists to generate the news and then publish it for FREE on our web sites, we will continue our downward revenue spiral.

    There isn't enough of it happening; the setting up of the paywall for content.

    Your popularity goes with how good a job you do at being the conscience of the community you practice in and that will eventually dictate the price you can charge for a subscription. When your content is lackluster, expect your revenues to follow suit.

    And lastly, thank you, Beancounters... for the shrunken pages and font sizes that aggravate our prime demographic readers and advertisers. Making our product difficult to read and shrinking the physical ad sizes were some really good ideas on your part. (Did you really think our readers and clients were that dumb?)

  2. Jonathan Mirow from BroadbandVideo, Inc., October 19, 2010 at 12:22 p.m.

    Re: Jacobs - quit whining. Your industry could've dominated in the online world - but your management teams made a concious effort to ignore the tremendous change occuring around them. When they decided thay had to do something or look completely stupid - they chose a "build it" rather then buy it off the shelf strategy that cost millions and did nothing but waste time - time they didn't have. Where are the folks who made those decisions today? Oh, they retired. With pensions. The demise of the American Newspaper is one of the most clear examples of EPIC FAIL in the face of changing technology ever recorded. The only thing that will surmount THAT event is the eventual fail of the network / broadcast industry - but hey, at least they're building facebook pages. Paywalls? Do you really think that will do anything except alienate readers even further (see "Newsday") - I would continue, but I've decided to erect a paywall and charge for this rant.

  3. Paula Lynn from Who Else Unlimited, October 19, 2010 at 7:52 p.m.

    Joe, Joe, Joe. Subscriptions do not pay the salaries. It barely pays the electric bills. Advertising and only advertising is the rudder and mast of the newspaper business profitability. Add in the journalistic (good editors and publishers) integrity (most) and relevant stories - now you have a business.

Next story loading loading..