Publishing Industry Outlook - October 2017

The U.S. newspaper publishing industry has long been grappling with sinking advertising revenues, and the global economic slowdown has only worsened the situation. The downturn in the newspaper publishing industry witnessed over the last few years was aggravated by a decline in print readership. More and more readers started opting for online news, thereby making the print-advertising model increasingly irrelevant.

Changing consumer preferences and the advent of new and innovative technologies have been altering the way news is offered and read. Readers now have myriad choices when it comes to collecting and reading articles or news through devices such as netbooks, tablets or other hand-held devices. Advertisers are now tapping the online video boom to reach their audience.

These factors have been weighing on the print industry, as advertisers now get low-cost avenues to reach their target audience more effectively. We believe that an alternative and stable source of revenues is needed to salvage the dwindling print newspaper industry. To deal with the situation, newspaper companies are trimming their operations, resorting to restructuring, revamping their print editions and investing in digital initiatives.

Declining Newspaper Advertising Revenues

Advertising remains a significant source of revenues for the industry that in turn depends on the health of the economy. Macroeconomic factors such as sluggishness in business spending, high unemployment and falling home sales may affect the level of national, retail and classified advertising revenues, as advertisers cut their budget in response to soft economic conditions.

Advertising volumes remain under pressure as advertisers still deter from making any upfront commitment in an economy under recovery. The McClatchy Company (MNI - Free Report) witnessed a 15.6% drop in print advertising revenues during the second quarter of 2017, preceded by a decline of 17% in the first quarter. Print advertising revenues fell 10.5% in the second quarter, following a decline of 17.9% in the preceding quarter at The New York Times Company (NYT - Free Report) . At Gannett Co., Inc. (GCI - Free Report) , print advertising and circulation revenues declined 16.8% and 7.4%, respectively, on a same-store basis.

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