Newspaper Revenues Drop Again

This is getting to be a broken record with the newspaper industry.

Ad revenue, the primary source of newspaper income, began sliding two years ago, and as hiring freezes turned to buyouts and then to layoffs, the decline has only accelerated.

On top of long-term changes in the industry, the weak economy is also hurting ad sales, especially in Florida and California, where the severe contraction of the housing markets has cut deeply into real estate ads. Executives at the Hearst Corporation say that one of their biggest papers, The San Francisco Chronicle, is losing $1 million a week.

Over all, ad revenue fell almost 8 percent last year. This year, it is running about 12 percent below that dismal performance, and company reports issued last week suggested a 14 percent to 15 percent decline in May.

“Never in my most bearish dreams six months ago did I think we’d be talking about negative 15 percent numbers against weak comps,” said Peter S. Appert, an analyst at Goldman Sachs. “I think the probability is very high that there will be a number of examples of individual newspapers and newspaper companies that fall into a loss position. And I think it’s inevitable that there will be closures in this industry, and maybe bankruptcies.”

The newspaper industry has been slow to adjust to the online environment, where anyone can get news from an aggregator like Google News for any story around the world. Who needs to buy the local paper when it doesn't cover local news?

Advertising revenues are going to go where the eyeballs are - and that is online.

The New York Times and other nationwide papers aren't doing much better. They too haven't taken the changed circumstances to heart and worked to their strengths. Instead, the Times and WaPo have let the editorial page bias creep into every aspect of the paper - infusing straight news stories with opinion that drops from every lede and every editorial decision to paint a picture that the world fits the views of the editors, rather than the other way around.

Combined, it's a bad time to be in the newspaper business, but what's truly worrisome is that it means that the wire news services like AP and Reuters will become even more relied upon for news to fill pages as newspapers shed their reporters and foreign bureaus to get into the black. That means that there will be fewer voices to report on important news stories from around the world, and a greater reliance on stringers whose journalistic integrity is far from ideal.