Magazine article Editor & Publisher

Still Giant despite Setbacks

Magazine article Editor & Publisher

Still Giant despite Setbacks

Article excerpt

PROFITS HAVE REBOUNDED somewhat from the 1991 recession, despite lower revenues, but financial performance measures tell a mixed story about the newspaper industry's fiscal fitness through a difficult four-year period ended in 1993.

After a recessionary plunge in 1991, newspaper revenues edged up 1.9% in 1993, the biggest jump in three years, but remained below 1989 revenues, declining an average of 0.5% a year from 1989 through 1993, according to an annual report on media holdings of public companies.

Newspapers were the only medium to post an average annual decline and were well below the 7.2% average increase for all media.

Still, newspapers ranked third among all media segments in generating revenues, after business information services and broadcasters, with revenues of $19.6 billion, according to the Veronis, Suhler & Associates Inc. 1994 Communications Industry Report, available for $500 from the firm's New York office.

The report chronicles the financial performance of 483 public companies with interests in 11 media categories -- collectively, the nation's ninth largest industry, generating $224 billion in annual revenue. Based on Securities and Exchange Commission filings, the report includes 38 companies that separately tally results of newspaper operations.

Separately, public companies say their newspapers earned substantially more in 1994, but those results have not been officially reported. Nor does the report count private companies such as Newhouse, Cox and Hearst groups among its findings.

Newspaper operating profits, revenues minus expenses, increased 2.8% in 1993, the last full year available, well below the communications industry's average 9.6% gain.

For the period 1989-93, newspaper operating profits slipped 5.8 percentage points - the only medium showing a decrease over the period.

Operating profit margins -- operating profits as a percentage of revenues -- for newspapers increased a hair in 1993 to 13.9% -- exactly average for all media segments.

Over four years through 1993, however, newspapers chalked up the biggest drop in operating margins, down 3.5 percentage points from 17.4% in 1989, as communications businesses overall reported margins slipped 0.4% points.

In terms of operating income as a percentage of assets, newspapers in 1993 yielded a 14.7% return, second highest after cable networks and well ahead of the communications industry's average 10.2%.

Over four years, however, newspapers posted the biggest decline in return on assets, down 2.5 percentage points from 17.2% in 1990, when they led all other segments. On average, the communications industry lifted returns on assets 0.9 percentage points over four years.

Newspapers reported less operating cash flow, defined as the sum of operating income, depreciation and amortization, in 1993 than they did in 1989, averaging a 3.2% annual decline for the period -- the only segment in negative numbers and far below the industry's 6.7% average annual increase.

Nevertheless, newspapers still ranked among the most profitable of communications media in terms of generating cash.

Measured in terms of operating cash flow as a percentage of assets, newspapers ranked second in 1993, after business information services, generating cash flow equal to 20. …

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