Washington Post: the latest example of print ad plunge
Just when you think things can’t possibly get any worse for newspapers, it somehow manages to get even bleaker. Today’s example is provided by the Washington Post Co and its flagship paper (and the online site Slate). The company reported third quarter earnings including results from its newspaper division today.
Print advertising revenue fell 20 percent to $57.6 million — quite a stunning plunge even as newspapers across the U.S. manage to post quarter after quarter of print ad revenue declines. Even more disturbing is that online revenue, which includes washingtonpost.com and Slate, plunged 14 percent to $23.3 million. Display online ad revenue dropped 17 percent.
The Washington Post is one of those curious oddities in the industry that manages to be extremely local — it’s market penetration of the D.C. area has always been one of the highest in the U.S. — and also draws the interest of a large national audience. So while it may compete with the “nationals” i.e. New York Times, the Wall Street Journal and USA Today, on the news front, it is very dependent on local advertising. The NYT, USAT and WSJ get a hefty portion of their advertising revenue through national advertisers.
The local advertising category hasn’t been holding up as well as national advertising. It’s taking it on the chin as the housing market struggles, unemployment remains high and retail outlets are going out of business or simply taking their advertising elsewhere.
That’s not to say that national advertising revenue isn’t hurting as well. It’s more of a mixed bag. At the New York Times, for example, the division that mainly includes its flagship paper reported advertising revenue fell 6 percent to $156.1 million in Q3.
Gannett, which publishes USAT, used to give some information on how that paper was doing by reporting paid ad pages, but the company ceased — to use the parlance of research analysts — to provide more color on the USAT front. Instead, Gannett reports that national advertising, including USAT, fell 17 percent. USAT represents a big chunk of Gannett’s national advertising.
The Wall Street Journal manages somehow to defy these trends. Ad revenue rose 13 percent in the third quarter– that includes print and online – according to a memo from Dow Jones’ top executive Todd Larsen to employees.
First Melinda Gates, now Warren Buffett exit Wash Post board
Warren Buffett has always had a sweet spot in his heart for newspapers. Until he didn’t. In recent years, Buffet – once a paper boy, now a newspaper owner — has been quite vocal about the prospects of the industry. For instance in 2009 during a Berkshire Hathaway gathering in Omaha he told investors that the newspaper industry had the possibility of “unending losses” and that Berkshire would not buy most newspapers in the U.S. at any price.
Buffett, who owns the Buffalo News and has deep ties with the Washington Post, just cut another string of attachment to the industry: After nearly 40 years, Buffett said he is leaving the board of the Washington Post Co.
As my colleague Ben Berkowtiz reported, Buffett has been dialing back on his board commitments, choosing to devote more time to Berkshire Hathaway.
Buffet’s departure comes at the heels of another high-profile board member Melina Gates, who left the Washington Post board in November. With the newspaper industry in decline — it has yet to enjoy the bounce-back in advertising enjoyed by other media like television — the Washington Post is suffering like its peers. Even worse, the company’s cash cow the Kaplan education division is in danger of getting hit by government rules that could impact the business.
While Buffett and Washington Post chief executive Donald Graham, whose family owns the Washington Post, said in a statement that Buffett will still be available to advise the education and media company, the lastest move has got to sting.
(Photo: Reuters)
Washington Post Co: We are (usually) an education company
For the past couple of years, The Washington Post Co has been trying to hammer home to Wall Street that it’s an education and media company, brushing aside its namesake newspaper or anything related to print. That includes Newsweek, the magazine it owned for almost 50 years. The Washington Post earlier this week offloaded the newsweekly to 91-year-old stereo magnate Sidney Harman founder of Harman International Industries.
The move to rebrand the company is understandable since its Kaplan education unit –known mostly to teens everywhere in need of SAT preparation — pulls in roughly 70 percent of total revenue.
Alas the Washington Post is probably rethinking that spin. In its second quarter results released this morning, the company warned that a proposed rule change from the U.S. Department of Education could have a “material adverse effect” on Kaplan’s operating results. The rule, which is still finding its way through the approval process, would adversely affect the test-prep division’s ability to retain admissions and financial aid advisers among other things, the company said in a statement.
Washington Post shares plunged about 10 percent today making it one of the biggest percentage losers on the New York Stock Exchange. And yet, the Washington Post has some familiar company as Harman International is also one of the biggest losers of day.
(Photo: Reuters)
Top 10 newspaper websites in May
Keeping track of how many people visit websites is something that should have been hashed out long ago. Yet for years keeping tabs on such matters has produced results that can vary wildly for each site depending on who is doing the measuring.
Nielsen Online and comScore, for example, are two companies that rely on panels of people to determine the popularity of a website and are often criticized for under-counting visitors. Many critics claim that panels barely account for people’s Internet habits at work since often companies do not allow outside software to be installed on work computers. (Nielsen and comScore require panelists to install software on their computers.)
This has been a problem for newspapers websites since many read the news during the work day hours.
ComScore, though, had announced a new methodology that relies on panels as well as counting direct hits from a website’s server. Eighteen of the top 20 newspaper entities are now on board with the new methodology. Here are the top 10 ranked by uniques for May.
Audience and the media: a shaky marriage
How can mainstream news organizations retain (or regain) their audience’s trust in skeptical world where almost anyone with an Internet connection can be a publisher? That’s the topic a panel of industry experts will address tonight at the Thomson Reuters heaquarters in Times Square. We’ll be live blogging the event here from 7pm ET.
The panel comprises: Andrew Alexander, ombudsman, The Washington Post; Michael Oreskes, senior managing editor, The Associated Press; Lisa Shepard, ombudsman, National Public Radio; and Dean Wright, global editor of ethics, innovation & news standards, Reuters. Jack Shafer, editor-at-large for Slate, is the moderator.
If you’d like to put a question to the panel, leave it in the comments box below and we’ll ask a selection on your behalf.
A media source called “Editor & Publisher” points out that all the American media fell for a politically correct lie and propagated it to the country. They reported “Second Cop — Not Kimberly Munley — Brought Down Fort Hood Killer.” It just sounded so much better to credit a woman instead of a black man for the deed. There was no checking internet sources for accuracy.
You were expecting positive newspaper news?
A Facebook friend of mine chastised me on Thursday after reading my story about salary reductions at The New York Times and buyouts at The Washington Post. He wanted to know why I hadn’t found anything positive to write about newspapers in a while.
Watch me use the the Newspaper Associations’ fourth-quarter newspaper advertising numbers, released on Thursday, to dash my friend’s expectations.
Here’s the roundup:
- Print ad sales: Down 20.6 percent. That compares to down 11.6 percent in the fourth quarter a year ago. It also is a downhill slide from 19.3 percent in Q3 2008, 16.1 percent in Q2 and 14.4 in Q1.
- Online ad sales: Down 8.1 percent versus up 22.3 percent last year. It’s also worse than the previous three quarters of down 3 percent, down 2.4 percent and up 7.2 percent.
- Total print and online? Down 19.7 percent versus down 10.3 percent last year. Previous three quarters? Down 18.1 percent, 15.1 percent, 12.9 percent.
If there’s a positive story to write, it’s that the bleeding might slow once the economy recovers. But when will that be? I’m sorry, but the beatings really will continue until morale improves.
(Photo: Reuters)
Good news and Bad news is News. Great job! Please keep writing.
Thanks!
Phil Edwards
Read The New York Times buyout memos (edited highlights)
As we reported earlier on Thursday:
NEW YORK (Reuters) – Two of the most respected U.S. newspaper publishers, The Washington Post Co and The New York Times Co, are embarking on new cost cuts in the face of dramatic declines in advertising revenue.
You can read most of The Washington Post memo on MediaFile, as well as the juicy parts of what Washington Post Chairman Don Graham wrote to shareholders on Wednesday about the state of the company. Here, meanwhile, are the edited memos sent by New York Times executives to employees:
From Times Publisher and Times Co Chairman Arthur Sulzberger Jr, as well as Times Co Chief Executive Janet Robinson:
The salaries of all employees at The New York Times Media Group (with the exception of the IHT, which is working on other cost reduction measures), The Boston Globe, Boston.com and Corporate in New York will be rolled back by 5%, starting this April, and these employees will receive 10 additional days off to use before the end of the year.
At the About Group, Baseline, Globe Direct, International Media Concepts, Regional Media Group, Shared Services Center and Worcester Telegram & Gazette, the approach is similar, with salaries being rolled back by 2.5% with five additional days off. We made the distinction between the two groups by taking into account location and other factors. Next year, we plan to return salaries to their current levels. Of course, such a decision depends on the state of our business. …
This was a very difficult decision to make. The environment we are in is the toughest we have seen in our years in business. Across our Company, you and your colleagues have worked hard to introduce innovative products and services, reduce expenses and improve productivity. We are deeply grateful for your efforts and proud of your achievements. As we take these painful steps together, we remain confident that our great Company will keep moving forward to better times.
Washington Post, Baltimore Sun will share content
The Washington Post and The Sun in nearby Baltimore will share some of their journalism, at least the stuff that they don’t try to kill each other to get first as they compete across the hedgerows and parkways of suburban Maryland. Here are some details from the release, sent out on Tuesday:
The Post and The Sun have agreed to share the newspapers’ day-to-day coverage of certain Maryland news and sports. In addition, The Post and The Sun may draw on each other’s national, international and feature stories that are distributed by the LAT-WP News Service, to which both contribute. The exchanges will allow each paper to take advantage of the other’s strengths and expertise in specific subjects around the region and the world.
As part of this accord, exclusive stories will not usually be shared, nor will coverage of such competitive subjects as Maryland state government and University of Maryland athletics.
I couldn’t find a piece in The Sun, which is owned by Tribune Co (which recently filed for bankruptcy), but figure it will be reasonably similar to the Post story, which includes this paragraph:
The deal comes as both newspapers, like the rest of the industry, struggle to retain readers and cut costs as the economics of the business shift.
Robert McCartney, the Post’s Metro editor, said that the move can help the paper save money, but declined to get into how that will happen. He did say that sharing some stories could help each paper assign reporters to areas in their home turf where they need more coverage, something that in theory could cut costs. He declined to offer other specifics on savings.
One way would be cutting the size of the local news and sports teams as a result of abandoning coverage areas — not that that would make anyone happy, though it is something that more people in our business have come to expect as a reality. Tribune has been doing this at its papers, while the Post earlier this year offered buyouts.
Newspapers hock their bargain basements
Good newspaper reporters have a knack for timing. They spot trends and tell readers about them before anyone else does. Their publishers have a knack for timing too — the bad kind.
With stock prices spiraling toward zero, debt looming and their future in doubt, newspapers are looking for ways to keep the money coming in. Some of those ways sound good, but only on paper. Here’s the latest example, as detailed in an Associated Press story:
With revenue plunging as readers and advertisers flee to the Web, many newspaper companies have turned to selling off their buildings to raise money or save on costs. But now that option may be drying up too, as frozen credit markets make commercial real estate deals scarce.
At least half a dozen newspaper companies have said this year they plan to sell their buildings, some with the intention of leasing back space for their news operations. Others are moving to smaller offices to save money as staffs dwindle and the era of commanding downtown newspaper buildings appears near an end.
The newspapers could hardly have picked a worse time to put their buildings on the block, with the value of commercial real estate deals plummeting from just a year ago.
One of my colleagues, a real estate reporter, told me I should check this angle out a long time ago, and I always meant to. Two years ago, when I am ashamed to admit we first discussed the idea, we thought it would be a hot story about how papers could make a lot of money as they struggled with falling advertising revenue and circulation. Like the publishers, I ended up not pursuing the idea. That’s too bad for me, but it’s really bad for the publishers.
The story lists a bunch of buildings for sale, while noting that all sorts of problems could complicate the matter, including historical preservation laws on certain properties. It also names companies that are trying to cook up a little cash with their holdings, from Tribune Co and McClatchy Co to The New York Times Co.
Nickelback deal embarrassing for Warner or expensive for Live Nation?
Live Nation said on Tuesday it has signed a global ’360-degree’ deal with Canadian rock band Nickelback covering the band’s touring, recording and merchandising.
The deal was said to be in the $50 million to $70 million range over the course of the three-album/three-tour deal, according to a source.
The deal could cause some blushes at Warner Music Group. Back in December 2006 Warner paid around $73.5 million for a 73.5 percent stake in Nickelback’s label Road Runner Records — no doubt with hopes to sell many more Nickelback albums for years to come.
But Nickelback, which has sold more 26 million albums to date, still has two more albums to deliver for Road Runner and a greatest hits package, so there’s every chance that the band’s best album years will be behind it. So this could instead end up being an expensive deal for Live Nation.
Live Nation never confirms how much it agrees to pay for its comprehensive partnerships with major artists. A deal with pop veteran Madonna, another soon-to-be former Warner artist, was reported to be around $120 million spread over ten years. It also has agreements with Jay-Z and more recently Shakira.
Live Nation management’s bet is that its comprehensive 360-degree deals will allow it to make profits in other areas beyond the recording and thereby spread its risk a little wider than a traditional recording and publishing company. The entire music industry is watching closely to see if this gamble works.
Keep an eye on:
Hmmmm. Guess WaPo/Slate subscribers and readers are getting tired of paying for and reading biased reporting and outright lies, and the advertisers don’t want to waste their money in venues where readers and subscribers are fleeing in droves.