America’s largest newspapers have struggled to recover from what many analysts considered certain extinction. These properties are at the point where they have some chance to continue, although as smaller companies. Circulation numbers from the nation’s ten largest newspapers, provided by the Audit Bureau of Circulations, for the six months that ended in September show that the recent sharp circulation drops have stopped in most cases for these properties. Data on advertising, both online and print, is not nearly as positive.

Publishers claimed that as the last recession deepened, their industry was in a cyclical decline. The industry would right itself financially when the economic trouble had passed. Most industry analysts disagreed. The problem was secular, they said. Online news outlets had taken away too many readers and too much advertising. Major newspapers had only a decade of life, if that.

The success of online subscription sales for some newspapers is the most positive change that has occurred. This is particularly true of the New York Times and the Wall Street Journal. They invest in news coverage that is broad and deep enough to make their content extremely valuable to large numbers of readers. Many subscribers recognize this value for these newspapers and are willing to pay to have access to articles online. This is an important point to consider since most online news is free.

24/7 Wall St. examined the fortunes of the ten largest newspapers in the United States by daily circulation. We have also looked at online visitors based on data from research firm Compete. What we found was that a small number of these properties have good financial prospects. The others are not much better off than they were at the depth of the recession, despite of the significant costs that they have cut from the business.

1. The Wall Street Journal (circulation: 2,096,169) (online: 7 million). This is by far the most financially successful of the newspapers on this list. Parent company, News Corp. (NASDAQ: NWS), does not break out the Journal from the balance of its publishing operations. Most analysts believe it the only highly profitable print operation owned by the conglomerate. The Journal’s primary strength as an advertising vehicle is that, when online and print are combined, the paper is read by millions of well-to-do consumers and business executives. A subscription to the print and online Journal is offered at the site for just under $140 per year.
Prospects for next five years: Excellent

2. USA Today (circulation: 1,784,242) (online: 16.9 million). Gannett’s (NYSE: GCI) national continues to lose ground along with most of the other print properties owned by the media conglomerate. The company’s 10-Q reported that “At USA TODAY, a substantial increase in technology advertising spending, the largest category in the quarter, was more than offset by declines in entertainment, automotive and financial categories.” The digital revenue growth from the online versions of Gannett’s papers was poor for the same quarter. The growth was better than that of online portals. It is not nearly enough to offset weak print sales and the large expense burden of Gannett’s overall newspaper businesses.
Prospects for the next five years: If Gannett admits that the promise of national media is better than local, very good.

3. The New York Times (circulation: 1,150,589) (online: 16.4 million). The improvement in the circulation base of the New York Times  has been attributed to the success of its new paid subscription business. The effects, however, have been modest. The Times had 324,000 paid digital readers at the end of the third quarter. But, overall revenue for the paper in the period was flat at $356 million. Advertising revenue fell 6%. The most negative information from the quarterly earnings report was that the overall online ad income for the newspaper group as a whole declined. “Digital advertising revenues grew 6.2% in the third quarter of 2011, primarily due to growth in retail and national display advertising.” New York Times (NYSE: NYT) will continue to have severe problems because revenue has not recovered at a rapid enough pace to pay for the paper’s huge news operation. And, as the news operation shrinks, so does the value of the content of the company’s flagship.
Prospects for the next five years: Very solid, but news staff will have to be reduced to keep margins.

4. New York Daily News (circulation: 605,677) (online: 5.3 million). The Daily News has lost a quarter of its circulation since 2006. It is considered one of the most troubled big city dailies. It operates in the competitive greater New York City market, which includes the New York Times, New York Post, Newsday, and the Newark Star-Ledger. All of these properties are owned by public companies or have deep-pocket parents. Management of the Daily News continues to be under pressure from owner Mort Zuckerman to keep down costs, which appears to have set in motion another series of layoffs. Zuckerman spent $200 million to add color presses at the paper as part of a plan to attract more advertisers. Crain’s New York wrote in 2010 that the Daily News would lose money for the third year in a row. Almost every industry analyst believes that the company will lose money this year.
Prospects for the next five years: Grim.

5. The Los Angeles Times (circulation: 572,998) (online: 8.7 million). The LA Times is part of the bankrupt Tribune Company. That means the parent company is in no position to support losses at the property. And, the LA Times has done what it can to break even. Dozens of editorial employees have been fired in the past four years, along with similar numbers of employees from the business side. The newspaper’s circulation is about half its 1.2 million level in 2006. Management has done what many other executives at large papers have. It has cut subscribers who pay little or nothing for the paper and focused on those who are willing to pay high subscription rates. The trouble with this is these newspapers have smaller audiences to offer advertisers. Fortunately, latimes.com is one of the largest local news sites in the nation, and certainly the largest one on the West Coast.
Prospects for the next five years: Its prime position within its region will allow the LA Times to maintain staff and circulation at near current levels.

6. San Jose Mercury News (circulation: 527,568) (online: 1.6 million). The rise of the Mercury News has a great deal with the shift of area’s population center, wealth and businesses from San Francisco to the region called the Silicon Alley. In 2006, the San Francisco Chronicle had a circulation of 432,000. Today that figure is 220,515. The Mercury News faces the challenge that it has to compete with both what is left of the Chronicle and a handful of small dailies and weeklies that operate in Oakland, San Mateo and Fremont. The Mercury News is flanked by to the south by papers in Santa Cruz, Watsonville and Salinas. The Mercury News is owned by the financially troubled Media New Group, the second largest paper chain in the U.S. That means it cannot afford to be a financial drain on its parent. The Mercury News also has to contend with the Chronicle’s SFGate.com site, which has more than 3.2 million monthly visitors. This gives this northern competitor an edge with regional advertisers.
Prospects for the next five years: Pressure from Media General and its modest online presences will force the Mercury News to cut more people. The growth and prosperity of the region will allow its print business to survive in close to its current form

7. The New York Post (circulation: 512,067) (online: 3.2 million). The Post, owned by Rupert Murdoch’s News Corp., has been cutting costs and retrenching since before the recession. Circulation has dropped from more than 672,000 to current levels in less than four years. The Post competes with two larger papers: the Times and the Daily News. The Post’s online presence is much smaller than its rivals. Competition is not restricted to New York City. Long Island’s largest paper, Newsday, and New Jersey’s largest, the Star-Ledger, make the opportunity to gain market share in those regions nearly impossible. The Post has not only cut staff, it has also cut the size of the paper in terms of number of pages most days.
Prospects for the next five years: Rupert Murdoch loves newspapers. As long as he runs the company, the New York Post is likely to exist. Once he leaves, the chances of its survival are low.

8. The Washington Post (circulation: 507,465) (online: 7.8 million). The Washington Post has the best editorial reputation of any urban newspaper in the U.S., with the possible exception of the New York Times. The necessity of a large newsroom staff goes with that. The Post hired former Wall Street Journal news chief Marcus Brauchli to be its executive editor in July 2008. He and publisher Katharine Weymouth have consolidated much of the online and print editorial staffs to save money. But, the Washington Post losses money. In the third quarter, the company’s newspaper revenues, almost all of which come from the Post, were off 9% to $149.3 million. The division reported an operating loss of $9.9 million. The parent reported ad sales revenue at the Post itself declined 20% in the third quarter of 2011 to $57.6 million. The Washington Post Company (NYSE: WPO) has been fortunate that its education group has been highly profitable since the newspaper operations began to lose money. That success has nearly disappeared as the government has begun to question the business practices of the company’s paid education operations and those of its competitors.
Prospects for the next five years: The Post, both the online and print editions, will remain the primary news sources of the nation’s capital. But, the advertising revenue at the print property will continue to drop. Unlike the New York Times, the Post does not charge for much content online. The Post’s newsroom staff will be cut by larger and larger amounts.

9. The Chicago Tribune (circulation: 425,370) (online 3.1 million). The largest paper in Chicago is the flagship of the bankrupt Tribune Company. The paper has fallen on hard times. It remains the largest in the Midwest, but its circulation was more than double its current level in 2006. The Tribune’s most direct competitor is the much smaller Chicago Sun-Times. The greatest threat to the Tribune may be the much smaller papers and news websites based in neighboring Naperville, Aurora and Arlington Heights. The Tribune retains the advantage of its large audience online. This allows the Tribune to get a fairly large amount of national advertising. It is nearly impossible to forecast the newspaper’s future. Its parent has been in Chapter 11 for almost three years. A recent reorganization plan was rejected by a U.S. Bankruptcy Court. The paper could remain part of a larger organization, or could be auctioned off.
Prospects for the next five years: The Tribune is likely to be a much, much smaller paper soon. It may also become a news operation that exists only online. It has too much print competition in the Chicago region.

10. Dallas Morning News (circulation: 409,642) (online: 1.3 million). The paper is owned by A. H. Belo (NYSE: AHC), which lost $136,000 on revenue of $110 million in the third quarter. Advertising revenue at the company’s papers, which include the Providence Journal, fell 12.3%. Digital revenue declined in the quarter, a particularly bad sign. The parent company is in a nose dive. The Morning News has plenty of competitors. The largest among them is the Fort Worth Star-Telegram. There are also small papers and websites in surrounding areas, which include Denton, Weatherford and McKinney. The paper’s financial situation is serious enough that it cut 38 newsroom jobs two months ago.
Prospects for the next five years: Very poor. A. H. Belo does not have the financial resources to maintain current staff at the paper. The Morning News will continue its circulation and staff reduction. The property could easily be “online” only by 2015.

Douglas A. McIntyre

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