Newspaper Readership Continues Decline; More Newspapers on the Ropes

The Newark Star-Ledger, New Jersey's largest newspaper, expects to loose $30 million to $40 million this year, while its sister newspaper, the Trenton Times expects to loose $5 million. Both papers are properties of Advance Publications, owned by the Newhouse family. The Star-Ledger is attempting to negotiate voluntary buy-outs of 225 non-union workers, which would leave its workforce with 500 employees. The Trenton Times is attempting to achieve 25 voluntary buy-outs. The Star-Ledger's circulation has shrunk to fewer than 300,000 subscribers.

The Pew Research Center for the People and the Press has released its Biennial News Consumption Survey. The survey shows that all old media news viewership and readership has been steadily loosing ground since 1993.

News Readership Trends: Newspaper, Radio, Cable TV, Nightly Network News, Morning Network News, Online/Internet News

Source: Pew Research

Only network morning news has held fairly steady at around 20%, while Internet news readership and viewership has grown smartly from 2 percent in 1996 to 37 percent in 2008.

Newspaper Readership Declines
Internet News Increases

Source: Pew Research

This morning (Sept. 22, 2008) Internet entrepreneur Mark Cuban told newspaper executives to give up and declare bankruptcy. It's not that people won't continue reading newspapers, its that they won't continue reading them in the numbers they have. The handwriting is on the wall and newspapers need to start over again. Some, such as the Wall Street Journal, have made yeoman efforts to reinvent themselves on line. A few, with such herculean efforts, will probably survive. But for the most part, newspaper online sites are disappointing at best, hard to use, and merely repurpose their print editions with an online edition.

Newspaper Advertising Expenditures Continue Falling

The Newspaper Association of America (NAA) today reported Q2 2008 advertising expenditures for newspapers. The results were not good. Total print expenditures were down 16.07% to $8.8 billion from $10.5 B in Q2 2007. Total online expenditures, showing declining growth for the past 5 quarters, shrunk for the first time quarter over quarter from $795 million in Q2 2007 to $776 million in Q2 2008, a growth rate of -2.4 percent. The combined quarter-over-quarter growth rate for newspaper advertising expenditures is now -18.47%.

Newspaper Advertising Trend: Total Print and Total Online 2000 - Q2 2008

Classified advertising expenditures continued showing the greatest loss, down 27% from Q2 2007. Classified advertising has shown the deepest losses for newspapers starting in Q2 2006. Retial and national advertising expenditures were down 9.56% and 13.90%, respectively. The Internet has done a job on classified newspaper advertising with sites like eBay (revenue model: auction) and Craig's List (revenue model: free) having taken a big bite out of this important newspaper advertising category. The undeclared recession of 2007-2008 has also not been kind to advertising expenditures.

Newspaper Advertising Trend: Classified, Retail and National 2000 - Q2 2008

Newspaper Advertising Revenue Trends

July was a bad month for newspapers: 3,500 newspaper jobs were cut in the last two months, and $3.9 billion in stock capitalization was wiped out in the past two weeks. In other developments, the Newhouse family said it may have to sell one of its largest papers, the Start-Ledger of Newark, NJ. The paper has been loosing money for 3-4 years and Donald Newhouse, president of Advance Publications and the newspaper's owner, said he expects the paper to loose $40 million - $45 million in 2008. "This was a very difficult decision to make," Mr. Newhouse said in an interview. "We have never sold a newspaper, from my father's time to my time."

Here are the numbers behind the stories:

Newspaper advertising revenue, print and online:

Percent change in newspaper advertising revenue, year-over-year:

Newspaper Association of America Newspaper Advertising Expenditures Excel Spreadsheet

In inflation adjusted terms, the fall in newspaper advertising revenue has been 31% from 2000 - 2007.


Newspaper circulation is down an average of 2.4 percent from 2006 to 2007, although some papers, like the Star-Ledger of Newark, the 15th-largest newspaper in the country by weekday circulation, has seen weekday circulation fall 15.4% in the past five years to 345,130.

US Daily Newspaper Circulation 1990 - 2005

A shift of readership from print to online cuts several ways for newspapers. The commitment of time and attention is so much less that online readers do not command the premium rates print can charge. Paul Ginocchio, a Deutsche Bank analyst, estimates that a print reader is worth $350 a year to a newspaper, an online reader 10% to 15% of that. (Source: "State of the Media 2007")

Newspapers have been trying to make up for their advertising shortfalls by focusing on their bread-and-butter local advertising and shifting it online, but their initial modest successes seem to have fallen on hard times lately. In Q2 2008 total online newspaper advertising expenditures turned negative for the first time, falling by -2.4% to $776 million from $795 million in Q2 2007:

Source: The Wall Street Journal

From Borrell Associates Report, "Say Goodbye to Yellow Pages"

Number of local online sales reps across all media types: 34,100

Media share of local online ad reps:

Size of local online advertising market (2008E): $14.1 billion dollars

Year-over-year growth in local online advertising (2007-2008E): 61%