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Newspaper Industry among the Most Profitable

Magazine article Editor & Publisher

Newspaper Industry among the Most Profitable

Article excerpt

Newspaper industry among the most profitable

Veronis, Suhler & Associates issues its 1989 report

Revenue growth slowed in 1989, but newspapers remained among the most profitable of media, a New York investment banking firm reports.

Publicly traded newspaper companies in North America generated pretax operating profits of $3.3 billion in 1989 on 4.2% higher revenue, according to the Veronis, Suhler & Associates Communications Industry Report.

While their revenue grew at the slowest rate in five years, newspaper companies reported 1989 pretax operating profit margins of 17.4%, compared with the 14.1% average for all media companies. Only broadcasters, 17.6%, and business information services, 17.5%, had higher operating margins, the report says.

The eighth annual report tracks the financial performance of 341 communications companies as reported to the Securities and Exchange Commission from 1985 through 1989. It includes 39 U.S. and Canadian companies whose newspaper holdings account for most of their revenues and 50% of the newspaper industry.

Newspaper publishing remained the largest communications segment tracked, generating 1989 revenues of $19.2 billion. Next in line was radio and television broadcasting, at $16.9 billion.

In a separate report last year, Veronis, Suhler & Associates figured publicly and privately owned newspapers took in $41 billion in 1989 and projected average annual revenue growth of 6.6% through 1994 -- 6.7% from advertising and 5.9% from circulation -- making U.S. newspapers a $57 billion business in 1994, $61 billion when weeklies are included.

Newspapers and broadcasters had the least revenue growth in 1989, 4.2% and 3.6%, respectively, while cable television and filmed entertainment enjoyed the biggest revenue growth, 25% and 21%, respectively, The average revenue increase for publicly held communications companies was 10.8%, below the previous five-year average of 13%., while average expenses grew 8.6% a year.

Newspaper revenue growth in 1989 declined to 4.3%, from 6% in 1988. Classified ad spending grew 2.7%, and free-standing inserts, which, like classified, grew in double-digit annual figures in the mid 1980s, slipped to a 7% increase. …

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