Earnings season: Newspapers finish 14th straight revenue-losing quarter; some intel from Wall Street filings

When revenue is still seriously down, but profits are up, is that good news? The U.S newspaper companies that have reported fourth quarter 2009 results so far would have you believe it is. But based on their reports, it’s clear the industry as a whole is still in deep trouble, with no strong indication that better days are ahead.

Five of the ten publicly-owned U.S. newspaper companies have reported their fourth-quarter 2009 results; five more to go. (Those reporting so far are Gannett, New York Times Co., Media General, Lee Enterprises and McClatchy. We also have results from News Corp., but News publishes newspapers on four continents, and much of its revenue comes from films, television, cable, and book publishing. Its U.S. newspapers represent perhaps 10 percent of News Corp.’s total revenue and are not broken out for comparison.)

Based on these reports (representing about 42 percent of U.S. daily newspaper circulation), it’s clear that the industry in Q4 2009 saw its 14th consecutive advertising revenue decline; the last nine of those quarters were double-digit declines. And Q1 2010, the one we’re in, won’t be a winner: on the conference calls, nobody reported positive trends for January; a typical positive spin statement was that “we’re seeing a modest improvement in the declines” (Janet Robinson of the New York Times Co.)

Extrapolating from the reported numbers, I’m projecting that the NAA will report (sometime in March) a Q4 2009 ad revenue loss for the industry of about 16 percent (versus 28.3, 29.0 and 27.9 percent declines in the first three quarters), bringing total revenue for 2009 to about $28.4 billion, versus $49.4 billion in the boom year of 2005 — a cumulative decline of 43 percent. The biggest impact continues to be in classified revenue, which will end 2008 at least 66 percent below its peak in 2000.

Based on the releases and statements on earnings calls with analysts, here are the details so far.

Continue reading this post at Nieman Journalism Lab.

Could strategic bankruptcies be needed to transform newspapers?

Continuing on a theme: I’ve been discussing the apparent disconnect between the quality of a news site’s design (as perceived and rated by professionals) and how much time people spend there; as well as the kinds of things that count more than design: reader engagement, interaction, community, personality — real life behind and around the content.

In a comment on the second post, Phil Buckley, whose commentary I had quoted and linked to, asked: “If you were starting a news organization today, where would put your initial efforts?”

I like this, because it’s the key question that all news organizations should be asking themselves. If tackled correctly, it can be a transformative question, a way to self-disrupt the organization, a way to get through the wormhole of reinvention that newspapers are facing, and come out on the other side with a workable business model.

And indeed, forward-thinking news organizations are asking it. But in some news organizations (like Phil, I try to call them that instead of newspapers), the process of dealing with this question leads to an uncomfortable realization: the business model for news in the future is so radically different from today’s legacy newspaper business that there is no way to get from here to there without “a major restructuring event,” which is a euphemism for bankruptcy.

In other words, the viable business model they can glimpse — consisting, perhaps, of a weekend-only or twice-weekly printed byproduct of an online-first publishing operation — represents such a downsizing of the enterprise that it can’t possibly carry the company’s legacy debt load, so the only way to make the transition is first file Chapter 11.

Continue reading this post at Nieman Journalism Lab.