Newspapers’ 2Q advertising sales plummet 29 percent, reducing revenue by $2.8B from last year

By Michael Liedtke, AP
Friday, August 28, 2009

Newspaper slump deepens as 2Q ad sales fall 29 pct

SAN FRANCISCO — Newspapers’ financial woes worsened in the second quarter as advertising sales shrank by 29 percent, leaving publishers with $2.8 billion less revenue than they had at the same time last year.

It’s the deepest downturn yet during a three-year free fall in advertising revenue — newspapers’ main source of income. The magnitude of the industry’s advertising losses have intensified in each of the last 12 quarters.

The numbers released Thursday by the Newspaper Association of America weren’t a shock, given the advertising losses that the largest U.S. newspaper publishers already had reported for the April-June period.

Still, the statistics served as a stark reminder of the crisis facing newspapers as they try to cope with a brutal recession and advertising trends that have shifted more marketing dollars to the Internet.

“This data represents a rearview-mirror perspective on what we all know was a terrible stretch of bad road,” said John Sturm, chief executive for the newspaper association that serves as the industry’s largest trade group.

The latest turbulence left U.S. newspapers with ad sales of $6.8 billion in this year’s second quarter compared to $9.6 billion in the same period last year.

Through the first half of the year, newspaper ad revenue plunged 29 percent to $13.4 billion.

Some newspaper industry executives are hoping the slide bottomed out in the second quarter. That optimism is largely grounded in the belief that the recession will end soon — if it hasn’t already — and will encourage advertisers to loosen their pursestrings, particularly toward the end of the year as they try to persuade consumers to spend more over the holidays.

“When the economy eventually begins its recovery, advertisers will return to spending, and newspapers will find themselves extremely well positioned to harness the strength of their print and digital platforms to build a brighter future,” Sturm predicted.

Industry analyst Ken Doctor of Outsell Inc. isn’t as confident. In a report released earlier this week, Doctor predicted newspapers won’t recover all the advertising revenue that has evaporated during the past three years because he believes the recession accounted for only half of the decline. The other half of the equation represents ad spending that has permanently migrated to less expensive options on the Internet, Doctor said.

Newspapers have been getting more of their revenue online, but it hasn’t been nearly enough to offset the ad sales that have gravitated away from their print editions.

Even newspapers’ Internet advertising suffered in the second quarter. The industry’s online ad revenue totaled $653 million, a 16 percent drop from last year.

Print advertising fell 30 percent to $6.16 billion, with the biggest trouble in the classified section. Classified ads dropped 40 percent in the second quarter, reflecting less demand because of the economy and competition from free or cheaper alternatives offered by Web sites like Craigslist.

will not be displayed