Magazine article Editor & Publisher

Danger Signs Popping Up across the Country

Magazine article Editor & Publisher

Danger Signs Popping Up across the Country

Article excerpt

Papers suffer as U.S. economy falters: Belts are tightened, editions shrink, and the news of layoffs spreads

The outlook for the newspaper business has gone from bad to worse.

Three months ago, forecasters were hopeful that the advertising slowdown would be short-lived and that conditions would improve in time to put a bow on the holidays.

Since then, the economic climate has darkened, as has the national mood. On Feb. 27, the Conference Board reported that U.S. consumer confidence had fallen for the fifth straight month, to a 41/2-year low. And newspaper ad revenue declined 1.4% in January, according to Deutsche Banc Alex. Brown. Analysts called it the worst month in eight years as they reached for their erasers to revise downward their predictions for 2001.

"Now, nobody believes that second-half recovery will materialize," said Michael Beebe, a newspaper analyst for Goldman Sachs.

Newspapers that got the bulk of the dot-com, financial, and technology sector spending windfall last year are suffering the toughest comparisons.

Dow Jones & Co. Inc. and the New York Times Co., two beneficiaries of that revenue, issued first-quarter earnings warnings last week.

Dow Jones said ad linage at The Wall Street Journal was expected to decline by 25% to 30% in the quarter, versus a 38.2% increase in the first quarter last year. The company said it expected 16 cents to 20 cents in earnings per share in the quarter; a First Call Corp. consensus estimate called for 56 cents EPS.

"In the year-ago periods, the technology and finance sectors were particularly buoyant," Chair- man and CEO Peter Kann said in a conference call. "This year, the technology and financial sectors, especially tombstones, are particularly weak."

Dow Jones said it would reduce costs by as much as $60 million this year, in part by an undetermined number of layoffs.

The Times Co. said it expected first-quarter EPS of 35 cents to 38 cents, compared with 47 cents in the same period last year. A First Call consensus estimate was looking for 45 cents EPS this quarter.

Other economic-related news leaked out last week. Word came from the San Jose (Calif.) Mercury News that it expected to have layoffs because of the softening Silicon Valley economy.

"In addition to a significant increase in the cost of newsprint and a significant and unexpected spike in the cost of utilities, we are hit especially hard by the sharp drop in recruitment advertising, as fewer Valley companies hire while more announce hiring freezes or layoffs," Chairman and Publisher Jay T. …

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