There Will Be Blood: Kubas Forecasts Dismal Newspaper Future

The outlook for newspaper ad revenue in 2009 is "terrible," according to a forecast released Tuesday by Kubas Consultants, based on their survey of 400 newspaper executives.

This is not surprising, but the forecast was still striking for its alarming language: the "very negative outlook" is due partly to the "next disaster area," employment classifieds, which are suffering a sharp downturn like real estate did two years ago. Indeed, the Kubas report ventures that "the severity of expected declines is remarkable."

Overall, executives surveyed by Kubas expect overall revenues to fall 9.1% in 2009, making it the fourth consecutive year to see revenues decline. According to the Newspaper Association of America, total ad revenues (including print and online) slipped 0.3% in 2006 and 7.9% in 2007. In the first three quarters of 2008, they are down 15.5% compared to the same period in 2007, falling from $32.8 billion to $27.8 billion.

If Kubas' predictions for 2009 come to pass, by the end of next year, newspapers will have lost about 30% of their total revenues in four years.



Classified revenues will be "hit particularly hard" in 2009, says Kubas, compounding previous losses. Kubas has real-estate classified revenues down 13.9%, automotive down 15.5% and employment down 16%. Thus, employment is expected to pass real estate and the loss leader in this category, reflecting the steady contraction of the labor market, which is expected to continue well into 2009. National and retail ad revenues will bring no relief, however, with the former expected to fall 10.8% and the latter 7.5% next year.

Kubas also noted the troubling slowdown in the growth of online ad revenues, clouding the sole bright spot on newspapers' ledgers. In fact, the report points out, online revenues actually contracted in the third quarter of 2008; the NAA has them contracting in both the second and third quarters.

Newspapers hobbled their prospects for future growth by tying online ad revenues to upsells from print classifieds. As print listings collapse, there are fewer opportunities for these upsells.

In fairness, online was never much of a bright spot; it's "still a small percentage of total newspaper ad revenue. The pennies gained in online will not replace the dollars lost in print."

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