Magazine article Editor & Publisher

So Much for the Economic Rebound

Magazine article Editor & Publisher

So Much for the Economic Rebound

Article excerpt

Revenue imperiled by war

Ads hold firm for now, and circulation is up a little, but the outlook for a longer war makes everyone nervous

With the fighting in Iraq proving tough and full of surprises, the quick-war-followed-by-an-economic-rebound scenario may be fading to black.

That assumption had led newspaper- industry watchers to forecast a 4% to 5% rise in newspaper revenue this year, in the belief that the war's end would unleash a flood of withheld ad dollars in the second quarter. Publishers now face the possibility that advertiser and consumer uncertainty about a longer war could push the ad recovery into the year's second half, at least.

"As this thing drags out, the more likelihood there is that advertisers will pull back and potentially will have a significant impact," says Michael F. Curtin, president and associate publisher of The Columbus (Ohio) Dispatch.

He and others will be better able to quantify that impact in the coming weeks. But expenses -- largely due to rising health-care costs -- already are expected to go up roughly 4%, perhaps more at papers that have staffers overseas covering the war. And if revenue growth falls short of that? Blaylock & Partners publishing analyst Edward J. Atorino sees newspapers lowering growth expectations rather than sharply trimming costs for a third year in a row. "It would be hard to start cutting back," he says. "They're really lean. You can't cut forever."

Meanwhile, newspapers can't count on much new revenue from readers. The bump in circulation caused by war coverage has proved modest so far. Many papers are printing 25% to 50% more copies for single-copy-sales outlets and selling just about half of them, giving them only a slight boost in overall circulation -- nowhere near the rise charted after 9/11.

Still, there's reason for hope. A widely held view contends that, even if the war lasts several weeks or longer, most advertising will resume as people return to their regular shopping patterns.

"Barring some catastrophic event, they have product in stores. They have to move that product," says Heather McKie, vice president of advertising at the Chicago Sun-Times. "One client actually told us ... they've made promises to Wall Street, so pulling back isn't an option for them."

Advertisers can't "afford to go dark too long," agrees Owen Landon III, executive vice president at Landon Media Group LLC. …

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