Magazine article Editor & Publisher

Soft Landing for Year-End Profits

Magazine article Editor & Publisher

Soft Landing for Year-End Profits

Article excerpt

Resolution 2001: Tighten up & rebound

Call it the Millennium hangover. The slowdown that started earlier this year looks to continue into next year, bringing newspaper companies back down to Earth. Last week, some warned that they'll miss profit estimates in the fourth quarter and will be belt-tightening to make their profit goals next year.

"We are concerned with some revenue softness in retail, and to some extent in classified," Robert C. Woodworth, president and CEO of Pulitzer Inc., told analysts and investors at one of two media conferences in New York last week. He said the company would come in "slightly below" its fourth-quarter earnings estimate of 47 cents because of slower ad growth and costs related to staff reductions.

With a cooling economy and the absence of last year's dot-com ad spending spree, the decline in revenue growth was expected.

After a period of outstanding growth, the industry will have to settle for just doing well. Those companies with substantial broadcast holdings face an extra hurdle next year, when there will be a big void left by the absence of election and Olympics advertising.

It's a downer compared with last year, when national advertising skyrocketed, the price of newsprint was low, and newspaper stocks were flying high. Newspapers are still expected to show respectable growth in 2001, with comparisons getting easier in the second half of the year.

Forecasting guru Robert Coen of Universal McCann called for total newspaper ad revenue to grow 4% to $43.7 billion in 2001, down from 4.4% in 2000 (see story, p. 28.) And publishers think that the $50-a- metric-ton newsprint price hike March 1 may not fully take effect if ad revenue sluggishness continues to curtail the appetite for newsprint. The March increase would be the fourth in a little more than a year.

Newspaper executives at the media conferences outlined plans to boost profits next year despite the challenging environment, by increasing sales efforts, trimming payroll, and continuing to convert to narrower page widths. They pledged to narrow their Internet losses with the goal of reaching profitability in 2002, if not sooner.

Gannett Co. Inc., the biggest U.S. newspaper company with 99 U.S. dailies, said it would be more aggressive with ad rates next year to offset rising newsprint costs, while head count would be flat to down slightly. The company looks for total run-of-press ad revenue to increase 2% to 3% next year. …

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