27 July 2010

Ad Bounce Gives Relief to U.S. Newspapers, for Now


Advertising sales at newspapers finally rebounded in the second quarter, with banks, luxury retailers and automakers once more spending on print campaigns.

Figures released by the Wall Street Journal on Friday should add to the brightening mood in the publishing business, with the largest U.S. paper posting an 11 percent increase in advertising revenue for April, May and June.

Chief Revenue Officer Michael Rooney said that, thanks to healthier spending by finance and consumer companies, the newspaper's print sales rose 9 percent and its digital sales jumped 19 percent.

"We have just concluded our third consecutive quarter with an increase in ad revenue across both print and digital," Rooney said. News Corp, which owns the newspaper, reports quarterly earnings on Aug. 4.

Several key publishers showed similar trends in earnings reports this week, but the better figures still failed to reverse a month-long slide in stock prices. Gannett Co is down 17 percent, McClatchy Co has dropped 24 percent and the New York Times Inc has slid 9 percent over the past four weeks.

One concern among investors is that advertising gains are coming against deeply depressed numbers from a year ago, making for easy comparisons. Newspapers were pummeled by the economic recession, which exacerbated years of declining readership and advertising revenues caused by competition from the Internet and other media.

The biggest question is how newspapers perform in the third and fourth quarters.

"I think they are bouncing along the bottom," said Ken Doctor an affiliate analyst with Outsell Research. Doctor said that comparables will get more difficult during the third and fourth quarters.

The New York Times said this week that total revenue increased 1 percent, a first in nearly three years. Advertising revenue at the flagship and its sister the International Herald Tribune was positive, too, rising just over 1 percent.

Media General, the publisher of the Richmond Times-Dispatch and the operator of several broadcast stations, also said that revenue rose -- also a first in three years.

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