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

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

PR Newswire

CHICAGO, Sept. 4, 2013

CHICAGO, Sept. 4, 2013 /PRNewswire/ --Today, Zacks Equity Research discusses
the U.S. Publishing, including The New York Times Company (NYSE:NYT-Free
Report), Gannett Co. Inc. (NYSE:GCI-Free Report), The McClatchy Company
(NYSE:MNI-Free Report), The Washington Post Company (NYSE:WPO-Free Report) and
Journal Communications, Inc. (NYSE:JRN-Free Report).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Industry: Publishing

Link:
http://www.zacks.com/commentary/28831/Publishing-Industry-Stock-Update---Sept-2013

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.

Waning Newspaper Advertising Revenue

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 8.5% year over year in the
fourth quarter of 2012 (October to December) to $6.26 billion, after falling
5.1% in the previous quarter, marking the 26th 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%.

Data compiled by the Newspaper Association of America suggested print
advertising declined 10.8% to $5.29 billion in the fourth quarter of 2012,
after declining 6.4%, 7.9% and 8.2% in the third, second and first quarters 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 16.2% to
$874.9 million, retail dropped 10.0% to $3.11 billion and classified dipped
8.9% to $1.31 billion during the fourth quarter.

Print advertising revenue at The New York Times Company (NYSE:NYT-Free Report)
dropped 6.8% in the second quarter of 2013. At Gannett Co. Inc. (NYSE:GCI-Free
Report), publishing advertising revenue fell 5.3% in the quarter.

Print advertising revenue tumbled 8.7% at The McClatchy Company (NYSE:MNI-Free
Report) and 4.0% at The Washington Post Company (NYSE:WPO-Free Report) during
the second quarter of 2013. Publishing advertising revenue dropped
approximately 9.8% at Journal Communications, Inc. (NYSE:JRN-Free Report)
during the quarter.

Efforts to Mitigate Losses

In an effort to offset declining revenue and shrinking market share,
publishers are scrambling to slash costs. This has compelled many newspaper
companies to undertake cost-cutting measures, such as trimming of headcount,
pay cuts, furloughs, suspension of dividends, voluntary retirement program and
closure of printing facilities.

Newspaper companies have now been remodeling and restructuring themselves to
better align with the growing need of marketers, targeting younger people,
affluent households and other demographic groups with multiple web and print
publications. The publishing companies are adapting to the changing face of
the multi-platform media universe, which currently includes Internet, mobile,
tablet, social media networks and outdoor video advertising in its portfolio.

Publishing companies have been offloading assets that bear no direct relation
with the core operations. The New York Times Company in May 2012 divested its
remaining stake (210 Class B units) in the Fenway Sports Group, the owner of
the Boston Red Sox and the Liverpool Football Club, for $63 million.

Another example of shedding the assets by the company is the sale of Regional
Media Group in Dec 2011, which has long been grappling with shrinking
advertising revenue.

Waning print advertising revenue, in an uncertain economy, compelled The New
York Times Company to take this tough decision of divesting Regional Media
Group, part of The New York Times Media Group. This would allow the company to
re-focus on its core newspapers and pay more attention to its online
activities. The decision to divest the division is also considered part of the
cost containment efforts undertaken to stay afloat in this turbulent
environment.

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