• by Paul Gough , October 14, 2003

The Wall Street Journal and USA Today showed surprising strength in the third quarter, particularly in September, giving rise to the hope that national newspapers are continuing their way back to recovery.

USA Today's ad revenues rose 15 percent in September with a 12 percent increase in ad pages to 386 for the month. Ad revenues rose 5 percent in the third quarter, with paid ad pages rising to 1,023 from 1,017 a year ago. Gannett said travel, telecommunications, retail and pharmaceutical advertising were bright spots.

For the Wall Street Journal, it's been a tough road. Today was the first time in three years that its publisher Dow Jones & Co., could report positive monthly ad results in the four categories it attracts and the first quarterly gain in ad volume since 2000.

Ad revenues rose 6.7 percent in the third quarter to $375.9 million, including a 7.1 percent rise in linage at The Wall Street Journal. Increases were reported in technology, finance, classified and general advertising. The Journal's ad linage was particularly strong in September, with a 29.4 percent increase for the month and 23 percent per issue. September's linage offset decreases in July and August.

"A quarter like this feels good but we need to keep these results in context," said Peter Kann, chairman and chief executive officer of Dow Jones. "While we're encouraged by what we believe are incipient indications of a business-to-business advertising recovery, we're still below what we consider to be a normal year in terms of advertising levels and profits."

Finance and technology make up about 37 percent of the Journal's ad linage, and there was a mixed bag in these key areas. Technology jump-started in September, with a 61 percent increase that erased double-digit declines in July and August to finish up 12 percent. Dow Jones credited more software and communications spending in September. Yet financial advertising continued to lag, with a 13 percent decline during the quarter that included a 9.5 percent increase in September and double-digit declines in July and August. Wholesale financial ads from top institutions but less impressive are retail financial. Tombstone ads that arise out of initial public offerings and other dealings were also anemic.

General advertising rose 12.5 percent in the third quarter, led by gains in travel, professional services, insurance and health care. Declines were registered in apparel, office products and automotive. July was down slightly, August up slightly and a 30 percent increase in September. General advertising is about 41 percent of the Journal's total linage. Classified, the last major category, rose 10.5 percent on the strength of real estate.

Dow Jones and Gannett were cautiously optimistic about their prospects in the national newspapers during the fourth quarter, which is traditionally the heaviest time of the publishing year. Dow Jones predicted the Journal's linage to be up low to mid-single digits in the fourth quarter and said that the positive trends are continuing in October. It's flat so far in November and December but it's too early to tell how those months will end up.

"Many advertisers are still evaluating and deciding their spending on a month- to-month basis, which does not give us much visibility beyond a month or so," said Rich Zannino, executive vice president and chief operating officer at Dow Jones.

The other national newspaper, The New York Times, hasn't reported its third quarter earnings yet. That will come with a conference call with Wall Street analysts on Thursday morning.