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Amid all the challenges, the good news for newspapers is financial, at least for now.

While declines in circulation and in the number of newspapers became a fact of life in the 1990s, the industry remained economically robust. In 2002, newspapers had advertising revenues of just over $44 billion. In the first 6 months of 2003, advertising revenue was just a little less than $21 billion.1

The industry is also enormously profitable. According to Morton Research, a market analysis firm, in the first half of 2003, the 13 major publicly traded newspaper companies earned an average pretax profit margin of 19 percent.

While such margins are high compared to some industries (such as retail or automobiles), in fact they are lower than some others (such as software). That sort of comparison, however, may miss the point. Such profit margins are what Wall Street has come to expect of any public newspaper company, and what lenders and many owners expect of any privately held newspaper company as well.

One reason for this financial stability is that, in an age of fragmentation and information clutter, newspapers, despite declining circulation, still amass large audiences. And these audiences are people, often affluent, who spend a good deal of time with the product, especially on Sundays.

As a result, while circulation in the 1990s was declining, advertising dollars continued to grow, and at a rate that outpaced inflation. While total advertising income hit a steep decline in 2001, a slow recovery began in 2002 and the beginning of 2003, although revenue from classified ads – primarily employment classifieds – still lags behind the levels of 2000.2

Earnings improved in 2002 but only because of continued cost controls, generally, and a 22 percent decline in newsprint prices. Newsprint prices headed back up during 2003 and presumably will keep going if display advertising volume and the size of newspapers increase with a strong 2004 economic recovery.3

Daily Newspaper Advertising Revenue
1984 to 2002
Design Your Own Chart
Source: Newspaper Association of America data
* The 2002 figure is an estimate.

Part of the pressure on classified comes from new online competition from nonjournalistic ventures like In 1998, a consortium of newspapers started Classified Ventures in an effort to compete head-to-head with the new online startups for key classified ads. In 2003, Classified Ventures investors included Belo, Gannett, Knight Ridder, McClatchy, The Tribune Company and the Washington Post Company. The group runs and, and connects 170 online newspaper and television Web sites.4

While it has been successful with these sites, it has not always been able to best the new companies. Classified Ventures’, launched in 1999, failed to rival the online giant eBay and is now defunct. The Tribune Company, Knight Ridder and Gannett have sought to address the decline in employment advertising with their own employment online site,, and have gained substantial ground on industry leader,

Still, since late 2000, newspaper recruitment classified dropped from 19 percent of total industry revenue to less than 8 percent in 2003, according to research from Goldman Sachs. One market analyst, Peter M. Zollman, founder of Classified Intelligence, an online classified consulting firm, predicts that newspapers’ share of online classified will decline for “a long time.” Even with the moves that some of the big newspapers have made, he contends, many papers responded too slowly to employers’ needs.5

The problem is compounded by a loss in the 1980s of department and grocery store retail ads, which had once been the two biggest sources of retail advertising. As these stores died out or consolidated, the discount retailers that sprang up to replace them, like Wal-Mart and Best Buy, bought little or no newspaper advertising. While this has been going on for decades, it is another long-term pressure on the industry.6

In the long run, newspapers may have to prove themselves as a medium that can build new audience by offering something that the rivals from online and elsewhere do not. They need to cover aspects of the community, offer a depth of information, and provide a level of synthesis other media do not.

Print, uniquely, has the potential to tell people what they can trust and not trust in an age that the journalist and educator Michael Janeway has called one of “fact promiscuity, fact chaos.”7 Or what Vartan Gregorian, the president of the Carnegie Corporation, has called a time when information is in oversupply but knowledge in undersupply.8

Accomplishing this may depend on the willingness and ability of newspapers to sustain their quality and diversify their content to win back disappearing readers.


1. Newspaper Association of America, “Quarterly Newspaper Advertising Expenditures,”

2. Newspaper Association of America, “Quarterly Newspaper Advertising Expenditures,”

3. Lauren Rich Fine, Newspaper Industry Primer, 7th Edition. Merrill Lynch, July 9, 2003. p.10

4. Classified Ventures web site:

5. Lucia Moses, “Help Wanting,” Editor and Publisher online, December 8, 2003,

6. Leo Bogart makes the point that the industry has been resilient in finding new types of advertising – such as cell phone plans – to cover the loss of these two giant categories. Leo Bogart, “Newspapers. Figure out how to give readers a choice and take your eye off the quarterly earnings report,” Media Studies Journal, Spring/Summer 1999, p. 60-68.

7.Meeting at Columbia University to discuss journalism curriculum at which author was in attendance, November 14, 2003.

8. Gregorian has made this point many times, but specifically did so at a meeting of Columbia University Task Force to re-examine journalism education, Winter 2002 with the author in attendance.