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August 16, 2006

Newspapers In The News

There were some interesting developments in the newspaper industry yesterday.

First, Nelson Peltz has filed with the SEC indicating he has an ownership stake in Tribune (TRB) of 1% of the outstanding shares. The amount is small and there is no way of knowing his intentions but it is probably fair to deduce that the Chandler family has a new ally. Investors must agree as TRB shares rose 5% on the news.

Second, TRB and New York Times (NYT) both provided monthly revenue reports yesterday and the news remains bleak. NYT had a lousy July with its News Media group incurring a -5.3% decline in advertising revenues. This group includes the company’s New York, New England and Regional newspapers. New England has been terrible for awhile and had another double digit decline but the worse than expected results were due to weaker than expected performance in NY and the smaller regional papers. Digital revenues included in the News Media group were up 27% so the decline in print advertising is even worse than the headline numbers. Help Wanted, Automotive, and Studio advertising categories were noted as particularly weak.

TRB’s monthly revenue report wasn’t nearly as bad as NYT’s but it is hardly encouraging. Advertising revenues for TRB’s publishing properties fell 1.4% in July with similar underlyng trends to NYT. TRB’s results appear more in line with the weak industry trends in July so NYT clearly is underperforming.

Finally, Google (GOOG) announced a plan to offer online coupons via its Google Maps in conjunction with its Local Business Center. The always helpful Lauren Fine of Merrill Lynch noted that based on Newspaper Association of America data, coupon related revenue to the newspaper industry totaled $1.1 billion in 2005. In an email exchange, Lauren explained that roughly $250 million would be distribution fees that the companies which produce coupon inserts pay to newspapers for distribution. Other coupon revenue sources could be other types of coupon inserts and regular ads with coupons.

GOOG’s initiative is local in nature allowing anyone who has a business registered with GOOG to offer a coupon. This should provide plenty of near-term protection for the newspapers which get most of their coupon revenue from national advertisers. However, it is another headwind and if the local coupon idea takes off it represents another advertising alternative for local advertisers and the potential for further loss of market share.

Posted by Steve Birenberg at August 16, 2006 09:30 AM in Newspapers