No one working in the media industry will ever have seen a year as bad as 2009 will be. The sharp slide in advertising began in 2008, and, based on the worsening economy, there is no reason to think that advertising will improve.  Most Wall St. analysts have predicted a harsh year for the ad business.  If the downturn deepens and unemployment rises above 10% most predictions about media, no matter how negative, will have been unexpectedly optimistic.

The most endangered of the media sectors is the newspaper industry. The Seattle Post-Intelligencer and Denver’s Rocky Mountain News have already been slated for closing if they do not find buyers. They won’t. The Miami Herald is on the block. Due to the remarkably poor real estate environment in South Florida, this property is unlikely to find a new home. National newspaper chains Journal Register and Gatehouse have been delisted from the NYSE and are likely to try to auction off their operations. McClatchy (MNI), the third largest chain in the country, will struggle to make its debt service.   Scores of papers, large and small, will fold this year. Newspaper expert Alan Mutter recently wrote that any paper in a major city with two dailies is in tremendous trouble.

The magazine industry is not in much better shape although its very sharp downturn did not begin until last year.  Conde Nast recently closed Men’s Vogue and cut back the frequency and online operations of Portfolio.  Media giant Meredith recently closed Country Home.  Two months ago, PC Magazine said it would close its print edition and operate only online. According to MIN, at least a dozen major magazines had ad page decreases of more than 20% last year including US News & World Report, Rolling Stone, Boating, Gourmet, Ladies Home Journal, More, and Smart Money. A number of these magazines also had sharp page drops in their January editions. With advertising expenditures likely to fall throughout the year, it is hard to imagine how many men’s magazines, car publications, food, and shelter magazines will be able to stay afloat in segments of the industry which are already crowded.

A year ago, most analysts expected that the online marketing business would be largely recession-proof. It is now clear that this is not true. Gawker owner Nick Denton expects online ad revenue to drop by double digits. Even if that does not turn out to be true, web properties which are losing money now won’t all make it to the end of 2009. Denton has already closed ValleyWag.  Retail website eLuxury.com is closing. 8020 Media, started by CNET founder Halsey Minor, has been shuttered.

Public discussion of media property closures is rampant.  The criteria for determining what is meant by the terms “closing or folding” has become complicated in the last three years.  Increasingly, many companies "close" an operation by merging it into something different or killing its "old media" operation and moving that business online.  For example, this was done by The Christian Science Monitor when it closed the print form of the paper and moved all of its content to its website.

For the purposes of this analysis "fold" means that a property no longer exists in its current state. If the Miami Herald becomes part of the Fort Lauderdale Sun-Sentinel, it has folded even if its name survives. If Entertainment Weekly shuts it print edition and keeps only EW.com open, Entertainment Weekly has, in effect, folded

The Miami Herald is already for sale. It is owned by McClatchy, a company which simply may not make it.  McClatchy had operating income of $40 million last quarter, but its debt service was $34 million. In addition, McClatchy revenue dropped 16% for the quarter. Based on the figures the company has posted over the last several months, the top line is dropping more rapidly, especially at its Florida and California properties. Classified sales are down over 30% in these regions. For the six months ending last September, daily circulation at the Miami paper was down 11.8% to 240.000. A large daily newspaper operation that covers a huge metro area is simply too expensive to run with this enormous audience loss. The Herald won’t be sold. There is too much risk here for a buyer. The most likely fate of the paper is that it will be merged with the Ft. Lauderdale paper or some other media in south Florida.

A number of media reports say that the Minneapolis Star-Tribune will file for Chapter 11 early this year. Creditors may take the paper over, but what will they do with it as the industry falls apart? Go online? Maybe, but that would involving firing most of the current staff. The only other realistic arrangement would be a sale of the paper’s assets to the neighboring St. Paul Pioneer Press. The Press could significantly reduce the costs of running two papers which are so geographically close to one another. The Star-Tribune lost 4.3% of its daily circulation in the last measurement period and 8.6% of its Sunday circulation. The numbers for St. Paul were up slightly. A combination of these properties might be a template for mergers in other regions including Dallas/Fort Worth and LA/San Diego. Two years ago,  hardly anyone would have imagined putting two competitors together.

The New York Daily News operates in the most competitive newspaper market in the US and it is not clear that any of the properties in this fight makes a dime. New York City is home to both The New York Post and The New York Times. The Newark Star Ledger is competition from New Jersey and Newsday competes from Long Island. The Daily News is owned by billionaire Mort Zuckerman who also owns the money-losing magazine, US News. Circulation at The Daily News dropped 7.2% in the last measurement period to 762,595. Some newspaper analysts put the annual loss for the paper in 2008 at over $30 million. It does not help that Zuckerman’s main business is real estate and that he is writing checks to keep US News in business as well.  A second NYC paper at risk is The New York Observer. It has carried a very modest amount of advertising over the last three month. It probably employs at least 50 people and has to cover the printing costs of about 60,000 copies a week. An annual subscription is under $30. The paper’s website, observer.com, has a very small audience of 764,000 visitors each month. It is another property with an owner in the real estate business.

The San Francisco Chronicle is owned by the privately-held Hearst Corporation which has said it will sell or close its paper in Seattle within the next 60 days. Media experts say that the Chronicle has lost money for several years. The faltering California economy will only make this worse. Because of the digital culture of northern California, there is a small chance that the paper could move completely online. More likely, it would be merged into the local MediaNews Group papers which include the dailies in San Jose and Oakland. It is not out of the question that print papers around SF will become multiple geographic editions of one newspaper. It may be what they have to do to survive.

According to MIN, Playboy has lost advertising pages each of the last four years, falling from 685 pages in 2004 to 463 pages last year. In the September quarter, Playboy’s parent company lost $2.7 million on revenue of just over $70 million. This revenue figure was down from almost $83 million in the same period the year before. The firm has a modest cash position of $25 million. Playboy’s publishing operations do not make money. Its entertainment and licensing businesses do. Playboy’s comment about print emphasized falling sales: "Advertising revenues decreased $1.0 million, or 16%, for the quarter and $3.5 million, or 19%, for the nine-month period." Playboy’s major enemy is the amount of adult material that is available online, most of it much more provocative than what the magazine can publish and still keep its advertising. But, Playboy is still one of the most recognized brands in the world. Moving completely online with both ad supported and subscription servers gives it a more realistic chance of success than most magazines would have.

Entertainment Weekly made only $10 million last year according to The New York Post. That number has decreased rapidly. Last year the magazine lost 20% of its advertising pages compared with the year before.  This year will be a remarkably hard year for any recovery of this lost income. Time, Inc. the magazine’s owner, is under tremendous pressure to make money. Many analysts believe that Time Warner’s share price is being held down by weak results at Time and AOL. The magazine operations are not in a position to keep troubled publications in a "turnaround" mode. Entertainment Weekly’s website, EW.com, is one of the most complete online operations of its kind, with broad and strong coverage of music, TV, film, and music. Quantcast shows it having 5.7 million unique visitors and 65 million pageviews last month. If the entire operation were moved online, it could have large profit margins again.

SmartMoney is the personal finance magazine which is jointly owned by Hearst and Dow Jones. It is unlikely that either company wants to support the losses at the publication which are almost certain to grow substantially over the next year. The property is in a crowded field which includes Money, Kiplinger’s, and the personal finance sections of several large publications and newspapers from BusinessWeek to The Wall Street Journal. Smart Money’s ad pages fell 30% last year to 503 compared with the year before. In 2004, the figure was 784 pages. The January 2009 issues were down another 24%. This magazine will close.

Gourmet will probably not see the end of the year. Its parent company, Conde Nast, can no longer rely on the huge profits of the newspaper portion of the Newhouse family business. The magazine operation needs to go on a diet.  Conde Nast reaches the "food" market several ways. It owns Gourmet, Bon Appetite, and epicurious.com.  Conde Nast simply owns too many titles in this category.  From 2004 to 2008, Gourmet’s ad pages have dropped from 1,364 to 955, with a 24% drop last year.  January’s ad pages were down another 32% according to MIN. Gourmet can survive since it has a competitive audience of web visitors to its food site, but it will have to migrate totally to its website.

For this analysis there is not enough access to data to say whether all four major car magazines (Automobile, Motor Trend, Car & Driver, and Road & Track) will make it through the year. The troubles of the automobile industry will surely affect them all. 

Answers.com is a very large web property that many people haven’t heard of. According to comScore, the answers.com websites had almost 25 million unique visitors in October, making it No. 34 among the top 50 websites in the US. But, the company makes little if any money on all of that traffic. In the third quarter, Answers Corp, which is a public company, had revenue of only $3.6 million and an operating loss of $112,000. That is a astonishingly low revenue-yield-per-visitor. Most of the firm’s revenue comes from online advertising. Answers Corp has $9 million in cash. The company calls itself a "leading answers engine."

Eons.com is a social network and information website for baby boomers. Unfortunately, it is not growing the way most social networks are. Quantcast shows its audience is currently well below where it was in the late summer of last year. In March 2007, the company raised $22 million lead by led by Charles River Ventures. Recently, it has become clear that social networks are poor media for advertising. The valuations of very large properties, particularly Facebook, have crumbled. Eons runs a tremendous amount or remnant display advertising which means that its revenue is certainly very modest. Even in a better economic climate social networks would be struggling to bring in advertising revenue with the smaller one would be fighting to survive.

PlanetOut has been one of the premiere sites for gays and lesbians for years. Its parent company, which has the same name, has been struggling to sell its businesses. The firm’s shares have dropped from a 52-week high of $6.20 to $.50. PlanetOut’s market cap is down to $2 million. Last week the company was sold to Here Media. The deal is too late to save the website. Compete.com shows that its audience has declined 25% over the last year to a fairly small 61,000 unique visitors. That is not enough traffic to keep a media and ecommerce site alive.

Douglas A. McIntyre began his career at Time, Inc. He was the president of Financial World Magazine for twelve years. He was also the president of Switchboard.com when it was the No.10 website in the US according to MediaMetrix. His father was in the newspaper industry for 50 years.

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