For newspapers, the news has swiftly gone from bad to worse. This year is taking shape as their worst on record, with a double-digit drop in advertising revenue, raising serious questions about the survival of some newspapers and the solvency of their parent companies.
Ad revenue, the primary source of newspaper income, began sliding two years ago, and as hiring freezes turned to buyouts and then to layoffs, the decline has only accelerated.
On top of long-term changes in the industry, the weak economy is also hurting ad sales, especially in Florida and California, where the severe contraction of the housing markets has cut deeply into real estate ads.
Executives at the Hearst Corp. say that one of their biggest papers, The San Francisco Chronicle, is losing $1 million a week.
Overall, ad revenue fell almost 8% last year. This year, it is running about 12% below that dismal performance, and company reports issued last week suggested a 14 to 15% decline in May.
“Never in my most bearish dreams six months ago did I think we’d be talking about negative 15% numbers against weak companies,” said Peter S. Appert, an analyst at Goldman Sachs Group Inc.
“I think the probability is very high that there will be a number of examples of individual newspapers and newspaper companies that fall into a loss position. And I think it’s inevitable that there will be closures in this industry, and maybe bankruptcies,” he said.
©2008/The New York Times