No Matter Which Way You Slice It, There’s Only Bad News In The Latest US Newspaper Audit Numbers – Record Circulation Losses And No Sign The Rot Will Stop Any Time Soon

Philip M. Stone November 2, 2006

Big metropolitan newspapers suffered record circulation losses in the past six months, according to the FAS-FAX audit. While some of the losses can be attributed to cutting bulk sales and the like and stopping circulation in outer regions where it may not be profitable, the reality is that the vast majority of circulation loss comes from readers migrating to the Internet and other news choices.

In an industry which has gotten used to reporting 1% drops per audit since declines began in 1987, these last numbers are somewhat staggering: The Miami Herald down 8.8% (Sunday down 9.1%), Los Angeles Times, down 8% with its circulation now at 775,766  (it wasn’t that long ago it was around 1.2 million), The Philadelphia Inquirer down 7.5%, Boston Globe down 6.7%, Newsday down 4.9%, The New York Times down 3.5%, The Washington Post down 3.3%…

Overall, average circulation for the 770 daily newspapers audited was down 2.8% daily to 43.8 million copies and for 619 Sunday newspapers the average was   down 3.4%. In all, 18 of the top 20 circulation newspapers saw declines in a reporting period that has seen the steepest declines in some 20 years.

The numbers are not going to help Tribune as it considers whether to put some or all of the company up for sale. The Los Angeles Times provides about 25% of the company’s total revenue. Other Tribune newspapers were among the bigger losers including the Baltimore Sun down 4.4%, the Hartford Courant down 3.9% and the flagship Chicago Tribune performing rather well under the circumstances, down just 1.7%.

Lower circulation usually translates into less advertising, and at the very least newspapers are going to have a tough time holding their rates, let alone trying to get increases. So the results are really more gunpowder for newspapers continuing to cut back on expenses any way they can as they wait for their Internet revenues to make a meaningful contribution. And that will take some time.

Perhaps the best example of the rot is the San Jose Mercury News in California. It was one of the Knight Ridder newspapers that McClatchy sold to Media News. Last week the newspaper announced it was going to make up to 101 layoffs by Christmas, and this week the audit numbers show why. The Sunday circulation sank 9.7% and the daily circulation fell 9.4%. Even though the Mercury News has been cutting back on third-party sales (hotels, Newspapers in Education program etc.) that much circulation loss in the heart of Silicon Valley is nothing short of a disaster.

One very significant drop hit the Wall Street Journal – its Saturday edition that it has hyped as doing so well instead reported a 6.9% drop. What the Journal has to figure out is whether the Saturday concept doesn’t work – people don’t have time to read the newspaper at home – or people tried it, didn’t like it, and are voting with their feet. Overall the Journal saw a 1.9% drop, so there is something specific to the Saturday paper that needs management’s attention.

The numbers make the Newspaper Association of America (NAA) hit even harder at the premise that it is no longer valid to count just a newspaper’s print circulation and that a newspaper’s web site audience should also be included. CEO John Sturm concluded, “Data that measure the expanded audience is precisely what advertisers want to enhance their understanding of consumer use across newspapers’ multiple platforms. Simply focusing on print circulation numbers in a vacuum obscures that understanding.”

The NAA’s own news release on the numbers shows just how sensitive circulation figures have become. The fact that newspapers suffered circulation losses was not mentioned until the sixth paragraph of the release. Instead the lead and top four paragraphs concentrated on how newspapers are redefining their audiences through their web sites, specialty publications and the like, so instead of a headline announcing a 2.8% daily circulation decrease the headline is “NAA Analysis Shows 8% Increase In Total Newspaper Audience”

The analysis concentrates on the 100-plus newspapers in the top markets that, because of their web sites, have seen their total audience increase by 8%, and the release boasts that in the 25 – 34 year old category at least 17 newspapers demonstrated net audience gains of 20% or more. So much for the official spin.

Newspapers are trying also to get advertisers to think in terms of print readership instead of circulation, since more than one person usually reads each newspaper. The LA Times says that according to a recent survey the newspaper averages some 2.2 million readers on weekdays and 3.3 million on Sundays, about triple the normal circulation numbers.

And meanwhile the cost cutting goes on. In Los Angeles the Daily News, owned by Dean Singleton’s MediaNews Group laid off 21 employees including the publisher. In Denver the newspaper agency that handles business operations for the Denver Post (MediaNews) and the Rocky Mountain News (E.W. Scripps) says it is going to cut 5% of total staff – somewhere between 90 – 100 employees.

US daily newspaper circulation has dropped 30% over the past 20 years.