Newspaper Revenue May Have Dropped 10% in Q1

By Douglas A. McIntyre Updated Jan 12, 12:19AM EST · Published Apr 30, 6:45AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Newspaper Revenue May Have Dropped 10% in Q1 — © Thinkstock

Several large newspaper chains have laid off employees in the past several months. Evidence suggests that higher newsprint prices are undermining margins as well. And a growing body of evidence indicates that newspaper revenue dropped as much as 10% in the first quarter.

The first large newspaper chain to report earnings for the first quarter was McClatchy Co. (NYSEAMERICAN: MNI). These results followed a similar pattern for numbers posted over the past several years. Revenue fell 10.1% to $199 million. The primary culprit for the decline was advertising, which was down 16.7% to $100 million. Digital and audience revenue, as well as online traffic, grew impressively, but the drag of print advertising was not nearly offset.

A very small number of newspaper properties have been able to offset ad declines with online subscriptions. First among these is New York Times Co. (NYSE: NYT). It had over 2.6 million digital-only subscribers at the end of 2017 and is expected to have added to that in the first quarter. This number is several times what it is at other publicly traded companies in the sector.

[nativounit]

The large newspaper chains continue to be pressured by revenue attrition, and many of their options to cut costs have been exhausted. Most print far fewer pages than they did in the past. Some no longer print a paper every day of the week. Most also have cut the trim size of their papers, making them physically stronger. Some have grouped newspapers in geographic clusters so they can share services, particularly printing. Others have moved a portion of their editing and pay layouts to a central location.

Most tactics to cut costs have been implemented by most papers. That leaves them with only the costs of employees as the primary way to lower expenses. The industry believes that having fewer employees negatively affects editorial quality. That in turn cuts the appeal of papers to their readers. It is not a cycle the industry has been able to reverse.

It appears newspaper revenue dropped 10% in the first quarter, an intractable problem that continues to vex publishers.

[recirclink id=459370]

[wallst_email_signup]

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.