The Wall Street Journal caused a stir with an article chronicling the decline in newspaper advertising. It seems that the dramatic drop off in both the quantity and price of ads is not part of the current economic cycle, but is actually permanent....you know, like I've been saying for about 6 years now. The WSJ article is behind the pay wall, but here's the Politico version.
Among the hardest hit in the most recent quarter was The Washington Post Co.'s flagship newspaper, where print advertising declined 12% to $66.6 million for the quarter. And unlike at many of its peers, the digital business was no help. Ad revenue at the company's online publishing unit, which includes the Post's website and Slate, fell 13% for the quarter.
Notice that web advertising is dropping as well. Newspapers used to claim that their readers would migrate to the web and that the resulting revenue would save them. That theory is long dead. Readers have many more online options, so it's hard to continually increase traffic, but more importantly, advertisers don't value web views as much as print readers, so even if all of a newspaper's readers moved to the newspaper's website, the paper would sustain a 95% drop in revenue.
You can expect the trend to continue with circulation and ad revenue falling, followed by round after round of cost cutting and eventually leading to a loss of crritical mass and then a rapid collapse. This is what happened to the Tribune and Citizen and will soon happen to the Star.
Speaking of the Star, Lee Enterprises closed at 62 cents a share yesterday. Down over 30% in the last month alone. I think it's unlikely that the Start will exist long enough to cover the 2012 election.