Rough October Spells 4Q Trouble For Newspapers

October revenue reports from two of the nation's largest newspaper publishers suggest that the newspaper business is in for a dismal fourth quarter. Although only a few companies have posted October figures, McClatchy and Gannett are large and diverse enough in their holdings to serve as bellwethers for the industry overall.

McClatchy reported that total revenues decreased 9.9% in October 2007, compared to the same month last year. This steep decline was due, in part, to the downturn in the real-estate market--especially in Sunbelt areas, including California and Florida, where the slowdown translates into fewer real-estate classified dollars.

A precipitous drop of 29.4% in real-estate classifieds contributed to the overall drop of 19.6% in the classified arena. The slowing real-estate market depresses certain kinds of retail advertising, as fewer people are in the market for appliances and home furnishings. McClatchy's national and retail ad revenues are down 8.9% and 2.5%, respectively. Year-to-date, the company's ad revenues are down 8.5%.



Gannett's October results are similarly grim, with a 6.8% decline in overall revenues compared to October 2006. Newspaper ad revenues in particular fell 5.3%--due in part to a 9.7% drop in classified revenues, which saw real estate fall 13.5%. Gannett's local community newspapers suffered the most, with classifieds down 15.6% and real estate specifically falling 23.6%. Gannett's local and national advertising both dropped 2.3% in October.

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