City Desk

Newspaper Ads Down 29 percent: Not A “Good” Slump

Recessionary times are all about relativity. Beancounters take a look at the biz climate and decide just how big of a hit the organization is going to take. We estimate that sales will be off 20 percent from the same period last year—that's how the exercise goes.


And then, when sales drop by a margin that's smaller than projected, a weird moment arises, and in the boardroom it sounds like this:

Well, our classified advertising sales were off by 11 percent this quarter, but we'd estimated that it would drop by 23 percent. So that's good news.

The whole phenomenon of cheering less-severe-than-predicted losses got a nice write-up by Washington Post reporter Frank Ahrens, in a February piece titled "Down Only 27%? We'll Take It!" The headline was based on a twist of fate for the stock price of Cisco Systems:

Consider Wednesday's quarterly earnings report from technology giant Cisco Systems, which builds much of the Internet's plumbing. The company announced profits that were down 27 percent over the corresponding period last year and predicted that sales would sink 15 to 20 percent in the next quarter.

In response, shares of Cisco climbed about 3 percent; the news was not as bad as expected. Some analysts suggested that Cisco's "turnaround" would lead tech stocks back.

Too bad no such bad-news-is-good-news scenario applies to the latest news for the newspaper industry, in which ad revs were down by 29 percent in the second quarter. According to the AP, the "magnitude" of newspaper industry losses has "intensified" over the last 12 quarters. Hard to find any good news here:

In a report released earlier this week, [industry analyst Ken] Doctor predicted newspapers won't recover all the advertising revenue that has evaporated during the past three years because be believes the recession accounted for only half of the decline. The other half of the equation represents ad spending that has permanently migrated to less expensive options on the Internet, Doctor said.

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