Summer Blues: Newspapers Plunge As Online Stalls

NYTimes HomepageThe print story in July should be familiar by now, with double-digit losses across the board at New York Times Company, McClatchy, Gannett and Media General. But the new bad news in these companies' results for the first month of the third quarter is the drastic slowdown in online revenue growth, which has basically flat-lined at three of the four (McClatchy is the exception).

At NYTCO, total ad revenues tumbled 16.2% to $129.4 million in comparison to July 2007, while the year-to-date figure is down 10.8% to $1.04 billion. As in previous months, the New England Media Group contributed significantly to the decline, with regional revenues down 24.5%. This makes July the tenth straight month that NYTCO has seen total ad revenues decline, since the trend turned negative in October of last year.

This bad news only got worse with anemic online revenue growth--just 0.9% in July. Like other newspaper publishers over the last few years, NYTCO relied heavily on upsells from print classifieds to power online revenue growth in the 20% to 30% range. But as print classifieds dwindle (down 30.1% in July), there are fewer opportunities for upsells to online listings. Online display advertising, while continuing to show strong growth, remains a small part of newspaper revenues.



Indeed, the same basic dynamic could be seen at other big newspaper publishers. Gannett's total publishing ad revenues were down 16.7%, due in large part to a 25.4% drop in classifieds. The company does not release separate online revenue figures in its monthly reports, but it seems likely that the results were in line with the second quarter, when online publishing revenues grew just 3% and total operating revenues 10%.

Media General's interactive division saw revenues grow just 5.7% in July as total revenues fell 13.8%. Again, the drop is due mostly to losses in print and online classifieds.

McClatchy posted relatively good results for online, which grew 12.8% in July, thanks to display advertising. Chief Financial Officer Pat Talamantes noted that online advertising is "up in all categories except employment advertising. In fact, when employment advertising, which has declined nationally both in print and online, is excluded our online advertising was up 58.5% in July."

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