FAS-FAX BRINGS EARLY WARNING OF STORM CLOUDS

Semi-annual look at circulation shows the trend down continues

Are there storm clouds on the horizon?

Last week's release of the latest newspaper circulation figures from the Audit Bureau of Circulations was certainly scary (how appropriate that the numbers came out at Halloween): Nationwide gains were tiny in the April-September period.

The first thing I thought of was the Olympics. Certainly in previous Olympics summers, newspapers have had no problem showing circulation gains. Yet only the larger papers showed any type of gains this year.

Our friends at NBC – the TV network that has the rights to broadcast the quadrennial international sports orgy – didn't help matters with their warmed-over, second-day coverage. The broadcasts seemed to alternate between boring and bizarre. But the reality is that the Olympics did not excite the American public and our latest circulation figures illustrate that fact. (I certainly wouldn't want to have been a multimedia company that had newspapers and NBC affiliates in the last six months.)

Also last week, the Newspaper Association of America (NAA) released its analysis of fall audience data from Scarborough Research's Competitive Media Index. Those numbers weren't good either: In the top 50 markets, newspaper readership fell roughly one percentage point. Broadcast TV and radio gained audience, but only in fractions of a percentage point.

The NAA put a spin on the numbers by pointing out that another recent survey, from NFO Ad:Impact of Greenwich, Conn., showed some good news for newspapers: On-line editions had higher recognition than competitive city guide sites, and more people said they had visited a newspaper site than a city guide site.

And, as we reported last issue and continue this issue, though earnings were awfully good for the publicly traded newspaper companies, Wall Street still seems to be lukewarm to newspapers. Senior Editor Pete Wetmore chats with some of the analysts and though they are somewhat cheered by this quarter's numbers, they don't seem to be as excited as they were a year ago. (For those who are counting, this is the first time I've agreed with Wall Street analysts.)

In the world of retail advertising, we all know that the fourth quarter is the quarter where many retailers make their profits. To goose those profits upward, they will probably advertise extensively, both in run-of-press (ROP) and inserts. But, just how good is this holiday season going to be? Last week a survey of consumer confidence showed that faith in the economy is waning, although that confidence does seem to hinge on both oil prices and the outcome of the presidential election.

And those oil prices? They affect us too, not to mention the price of newsprint (and electricity and ink, and any other consumable that might be out there). So there are a number of factors at work here and none of them looks good. Any one of these factors could be dismissed by itself; as a combination, though, they are scary.

It would be sad if the industry missed those storm clouds on the horizon. The warning signs are there and though they might dissipate on their own, the likelihood of that happening falls somewhere between slim and none. Publishers need to put the entire enterprise on alert: Things don't look good out there and we all need to be at the top of our collective games.

Newspapers will have to work hard over the next two months to pull the calendar year's numbers up. Circulation staff needs to push papers; ad sales staff needs to push ROP and inserts; marketing needs to develop methods of increasing consumer awareness; news staff has to make the story of the transition of presidential administrations compelling and interesting. These are all going to be big jobs (especially the last).

The industry has the opportunity to pull itself out of this potential downward spiral or it can ignore those storm clouds. The choice is yours.

-- David M. Cole

e-mail: dmc@newsinc.net

Inside ...

• Analysts spy some clouds in earnings' silver linings
• Belo, Tribune gain as Post Co. falters and Gray posts a loss
• Marketing ideas, staff play a key role in papers' redesign efforts
• Two-paper cities down more than up in latest FAS-FAX
• Hollinger to keep news operations separate in Chicagoland
• Dot-com pains take a toll on papers
• Persons

From NEWSINC., Nov. 6, 2000, Copyright © 2000, The Cole Group. All Rights Reserved.