Newspaper Profits Rise, but Competition Grows

By David C. Walters, writer of The Christian Science Monitor | The Christian Science Monitor, April 28, 1993 | Go to article overview

Newspaper Profits Rise, but Competition Grows


David C. Walters, writer of The Christian Science Monitor, The Christian Science Monitor


AFTER three years of recession, the newspaper industry is seeing light at the end of the tunnel - and it can't come nearly fast enough.

"Life is looking somewhat more hopeful these days," said Frank Bennack Jr., president of The Hearst Corp. and outgoing chairman of the Newspaper Association of America. He spoke on April 26 at the group's annual convention here in Boston.

"We expect 1993 to be a reasonably good year, maybe approaching the earnings level of 1989," says John Morton, a newspaper analyst with Lynch, Jones & Ryan in Washington.

Many analysts expect improving advertising linage with revenues rising around 5 percent this year. The industry has also been cheered by the findings of a national survey by Simmons Market Research Bureau, which showed 62.6 percent of adults reading daily newspapers in 1992, up from 62.1 percent in 1991. The figure is considerably lower than the 73 percent recorded 20 years ago.

Despite only modest advertising gains since the large drop during the recession, "the average profitability in the first quarter was somewhere around 13 and 14 percent on each dollar taken in," Mr. Morton says.

Many analysts agree that the industry is poised for solid gains.

"It won't take much if the economy starts turning around to see double-digit gains in revenues for a lot of papers," says Robert Coen, senior vice president of forecasting at McCann-Erickson Worldwide Inc. in New York. "Eventually Help Wanted and other classified areas will really start coming back from the hole they're in." Unions guardedly positive

After several years of giving wage and benefit concessions in contract negotiations, labor unions representing newspaper workers are circumspect about possible wage gains.

"When {revenues} are going down, they ask us to share in the pain," says William Boarman, president of the printing, publishing, and media workers' sector of the Communications Workers of America (CWA).

"But when they're going up, they rarely open the pocketbook and make up for the hard times we experienced," he says.

Mr. Boarman says that in contract talks he sees publishers easing back a bit from the tense negotiating stance of a couple of years ago. "You can sense that there has been a major change in Washington, and we're starting to feel that the {management-labor} relationship will get a little bit better," he says.

James Norton, president of the Graphic Communications International Union, is more sanguine about workers' prospects. "In difficult times we've negotiated concessionary agreements and I expect that as the good times return, that consideration will be reciprocated. …

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