Projo hit by 61% drop in advertising since ’05; digital decliningMarch 14th, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Advertising sales at The Providence Journal plunged by more than 60% over the last six years, forcing Rhode Island’s top newspaper to eliminate a third of its work force and to rely increasingly on subscribers and printing contracts to pay the bills.
The Journal’s total revenue dropped for a sixth straight year in 2011 to finish at $95.1 million, down 5% from 2010 and off 43% since 2005, parent company A.H. Belo disclosed in an SEC filing. Lower advertising and circulation sales were partly offset by $3 million in new printing and distribution contracts.
Journal publisher Howard Sutton declined to comment on the results. “The printed Journal has adapted to changing times, intensifying its focus on local and regional news and carefully managing its cost structure to match lower revenues,” A.H. Belo CEO Robert Decherd wrote in an op-ed on Feb. 26.
The Journal sold $52.9 million worth of advertising in 2011, down 11% from the prior year, with retail, preprint and digital lower but classifieds higher. Advertising has fallen a dizzying 61% at the paper since hitting $136.5 million in 2005, though last year’s percentage decrease was the smallest since 2007.
Smaller staff has more competition
“The company’s newspapers, and the newspaper industry as a whole, continue to experience challenges to maintain and grow print revenues and circulation,” A.H. Belo said in the SEC filing. “This results from, among other factors, increased competition from other media, particularly the Internet.”
The Journal had 468 employees at the end of 2011, A.H. Belo said, down from a reported 709 in August 2008. More than 160 employees worked in the newsroom as of February, Sutton told the paper last month. About 330 Journal staffers belong to the Providence Newspaper Guild or another union, A.H. Belo said.
The Journal has lost advertising at a slightly faster pace than the industry as a whole. Newspaper ad sales declined 48% from 2005 to 2010, according to the Newspaper Association of America, compared with 56% at The Journal. ”Newsonomics” author Ken Doctor said The Journal’s experience is “fairly indicative” of what’s happened at other midsize regional daily papers.
Doctor expressed more concern about the continued decline in The Journal’s digital advertising revenue, which fell 11% last year to $6.8 million. A.H. Belo said the digital losses were caused by “reduced volumes in classified employment, legal, obituaries and in banner advertising.” The Journal started charging digital readers in February.
In an email, Doctor said digital revenue is “the single growth line for the future, and points to a deeper problem. Digital ad growth is going gangbusters, and most dailies are seeing growth there even as print ads continue to decline. What to do: find growth in digital, both in advertising and lowering the paywall to nurture both digital ad and circulation growth.”
Ad sales may fall this year
The Journal’s revenue mix has shifted significantly since the middle of the last decade. Advertising’s share fell from 82% in 2005 to 56% in 2011, while circulation’s share nearly doubled to 36% and printing contracts’ share rose from less than 1% to 9%.
“The company expects newspaper advertising revenues will continue to decrease in 2012, although at a lower rate of decline,” A.H. Belo said in the SEC filing, adding: “The company is proactively positioning its newspapers as a premium product, offering relevant and differentiated local content, and has therefore increased subscription prices in each of its markets.”
The Journal sold an average of 94,357 copies on weekdays last year, down from 163,909 in 2005, A.H. Belo said. Sunday circulation fell to 129,024, down from 231,593 in 2005, a decrease of 44%. Weekday circulation for The Journal’s niche publications averaged 23,938.
More Providence Journal and A.H. Belo coverage:
- Projo paywall will prove pivotal to the paper’s long-term health (Dec. 29)
- Projo’s own ‘pension puzzle’: paper froze its underfunded plan (Dec. 12)
- Projo to cut newsroom staff amid ongoing ad, circulation slump (Dec. 2)
- Full Projo paywall set for 2012 as advertising sales slump 11% (Nov. 3)
- A.H. Belo’s surprising success amid the newspaper storm (May 18)
- No reason for Belo to sell Projo with price at $51 million (Dec. 28, 2010)