Zacks Industry Outlook Highlights: New York Times, Gannett, McClatchy, Washington Post and Journal Communications

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Sep 19, 2012, 09:30 ET

CHICAGO, Sept. 19, 2012 /PRNewswire/ -- Today, Zacks Equity Research discusses the U.S. Publishing, including The New York Times Company (NYSE:NYT), Gannett Co. Inc. (NYSE:GCI), The McClatchy Company (NYSE:MNI), The Washington Post Company (NYSE:WPO) and Journal Communications, Inc. (NYSE:JRN).

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A synopsis of today's Industry Outlook is presented below. The full article can be read at

Link: http://www.zacks.com/stock/news/83135/publishing-stock-review-outlook-sept-2012

The U.S. publishing industry has long been grappling with sinking advertising revenue, and the global economic meltdown has only worsened the situation. The downturn in the publishing industry, which has been going on for the last few years now, came in the wake of declining print readership as more readers choose to get free online news, thereby making the print-advertising model increasingly irrelevant.

Changing consumer preferences and the advent of new and innovative technologies have been altering the way news is read and offered. Readers now have more choices to collect and read articles and news through devices such as netbooks, tablets or other hand-held devices.

These have been weighing upon the print newspaper industry, as advertisers now get low-cost avenues through which they can reach their target audience more effectively. We believe that an alternative and a stable source of revenue is the demand of time to salvage the dwindling print newspaper industry.

Let's have a look at what is happening in the publishing industry and how newspaper companies are adapting with the changing scenarios to keep themselves alive in the race for survival.

Circulation Falling Prey to Internet

Newspapers have fared far worse than magazines, as web-based news options have gotten the better hand in recent years. The two-decade-long erosion in newspaper circulation reinforced the decline in advertising revenue. Circulation has also fallen prey to budget cuts with newspaper companies reducing the number of print pages and newsroom staff to combat the downturn.

Despite the fall in newspaper circulation, some companies are reporting improved revenue from circulation due to the increase in subscription and newsstand prices. On the flip side, while the increase in prices for print editions is generating more circulation revenue, it is also resulting in subscriber losses due to the shift in preference for free online content.

Newspaper Advertising Revenue Still in Red

Advertising volumes are still under pressure as advertisers keep shying away from making any upfront commitments in an economy which is still not completely awoken from a state of hibernation.

According to the data released by the Newspaper Association of America, total advertising revenue for U.S. newspapers slipped 6.4% year over year in the second quarter of 2012 (April to June) to $5.61 billion, after falling 6.9% in the previous quarter, marking the 24th consecutive quarter of decline. The last time the Industry witnessed an increase in revenue was in the second quarter of 2006, when advertising revenue grew 1.1%.

Print advertising declined 7.9% to $4.78 billion in the second quarter 2012, after declining 8.2% in the first quarter of 2012, and 8.0%, 10.8%, 8.9% and 9.5% in the fourth, third, second and first quarters of 2011, respectively. National advertising sales declined 9.7% to $889.2 million, retail dropped 7.0% to $2.75 billion and classified plunged 8.4% to $1.14 billion during the second quarter.

Print advertising revenue at The New York Times Company (NYSE:NYT) dropped 8% in the second quarter of 2012. At Gannett Co. Inc. (NYSE:GCI), publishing advertising revenue fell 8.1% in the second quarter.

Print advertising revenue tumbled 8.4% at The McClatchy Company (NYSE:MNI) and 15.0% at The Washington Post Company (NYSE:WPO) during the second quarter of 2012. Publishing advertising revenue dropped approximately 12.6% atJournal Communications, Inc. (NYSE:JRN) during the second quarter.

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