Jun 20, 2006 1:47 pm US/Central
Newspapers Hope For Growth Online
NEW YORK (AP) ―
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Many Wall Street analysts remain concerned about the prospects for growth at newspapers as more readers and advertising dollars move online. (File)
AP
Newspapers are seeing tremendous growth in online advertising, but as executives presented midyear updates to investors Tuesday, analysts still wonder whether it's enough.
The CEO of Tribune Co., a major newspaper publisher which is also facing turmoil in its boardroom, said he hopes to see online advertising make up between 10 percent and 12 percent of its newspaper revenues by 2010, up from about 6 percent today.
Tribune's Dennis FitzSimons made an abbreviated presentation and declined to take questions, citing a quiet period while the company proceeds with a major buyback of its stock, which is going ahead despite objections from Tribune's second-largest shareholder, the Chandler family. The annual conference for newspaper investors is sponsored by the Newspaper Association of America, an industry group.
Other publishers, also clearly concerned by the inroads being made by Internet powerhouses like Yahoo Inc., are also working hard at growing their online businesses.
Donald Graham, CEO of The Washington Post Co., said he was pleased that online advertising was growing at about 35 percent a year, but he readily acknowledged that "we obviously cannot continue" to grow revenue at that pace indefinitely.
"The program for newspapers has to be maximizing print revenues and readership" while also moving quickly to grow revenues online, Graham said.
Earlier this month the NAA reported that online advertising at newspapers jumped about 35 percent in the first quarter of this year compared with the same period last year.
However, given that print-only advertising advanced just 0.3 percent in the same period, overall advertising revenue rose just 1.8 percent. Also, the online growth rate was slower pace than the 39.7 percent increased recorded in the year-ago period.
Many Wall Street analysts remain concerned about the prospects for growth at newspapers as more readers and advertising dollars move online.
Merill Lynch analyst Lauren Rich Fine told clients in a note June 16 that while newspaper companies were to be applauded for their moves to increase online ad revenues, "the core print business is under some real pressure."
Nonetheless, several executives voiced confidence in the newspaper business, which often produces profit margins of around 20 cents on the dollar, roughly double the average of companies in the S&P 500 index of blue chip companies.
William Dean Singleton, CEO of MediaNews Group Inc., a privately held newspaper publisher based in Denver, noted that he was investing in new presses and had high hopes for the future of newspapers.
Singleton also said that online revenue will make up about 7 percent of the company's revenue this year, and that he expected print advertising to recover from a cyclical downturn. "The Internet's what driving our business today," he said.
For some industry watchers, the question remains whether the growth newspapers are seeing from the Internet will be enough to offset the weakness they are seeing in traditional print advertising.
"Can you make a case that what they're gaining online could in time replace what they're losing in circulation?" said Ellen Berland Gibbs, a financial consultant. "That could be an answer for this industry ... (but) I don't think anybody knows."
(© 2006 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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