The trials and tribulations of our newspaper groups have received plenty of exposure, but those in the US are in a far deeper hole.
In fact, like so many other parts of the economy, Australian newspapers have yet to go through the gut-wrenching assault on their classified and display advertising that their American counterparts are enduring.
The internet has taken much of the growth from the sector, but Australia doesn’t have the sort of rival for classifieds that Craigslist is for the US. Craigslist operates here, but hasn’t had the major disruptive effect that it has in the US.
There are rival online businesses, but after threatening much, they have faded: there’s only one online car site with clout.
Nor have we had a housing slump, financial crunch and recession as America is having. All sectors have slashed advertising in US papers, especially in employment and real estate.
And the collapse of the US car industry, long one of the major advertisers, has damaged newspapers, magazines and especially TV stations, both Network and local.
Judging by the detail of the latest US Government car policy, there won’t be much money flowing to the media from that sector for months to come. The cuts of 2008 will be deeper in 2009 as GM, Ford and Chrysler battle to survive.
This is all why 2008 has turned out to be the worst year for American newspaper in decades.
American newspaper print ad revenues fell to their lowest level in 14 years last year and online ad revenues fell for the first time in five years, according to figures for 2008 ad revenues from the American Newspaper Association.
The Association released the numbers on its website on the weekend.
They show full gory detail of the damage done to the American newspaper business last year, as the impact of firstly the internet, then the credit crunch and recession slashed all forms of advertising in American papers, large and small.
The falls were dramatic: total revenue down $US7.42 billion, or 16.6% to $US37.848 billion, the lowest since internet ad revenues was first broken out 2003. Print advertising was down 17.7% at $US34.740 billion, the lowest since 1994.
Online advertising fell 1.8% as revenues slumped in the final quarter, knocking the 2008 total down to $US3.109 billion from 2007’s peak $US3.166 billion.
That’s the first known annual fall in on line ad revenue and a sign that the previously strong internet model for many papers is as susceptible to the recession as the old analogue print model.
At least four major US newspaper groups are in bankruptcy protection (chapter 11) as a result of the slide in ad revenues, led by the Tribune Co, owners of papers in Chicago, Los Angeles and a host of smaller cities (and 23 TV stations). These companies owe in excess of $US16 billion, with the biggest debt by the Tribune Company.
Seven newspapers have closed or are closing this year and switching to an online presence because of the losses caused by the dramatic slide in revenues in 2008, and the way they have continued into 2009.
Revenue fell 16.6% last year from 2007 at $37.848 billion as the economy tanked, with even online revenue falling, so dramatic was the impact of the slump and credit crunch on spending.
As well the growth of the Craigslist online classified advertising system (and imitators), have carved a widening toll through the ‘rivers of gold’ , to use the famous phrase about the Fairfax classified ads from years gone by.
The terrible damage was chartered quarter by quarter: the first quarter of 2008 saw a 12.85% drop, the March quarter of 2008 experienced a fall of 15.1%, then 18.11% in the third quarter and a sickening near 20% fall (19.74%).
From the peak in 2005 of $US48.435 billion, newspaper ad revenues from all sources have now fallen more than 23%, a crippling loss.
In classifieds, 2008 saw American papers experienced a 37% loss in real estate ad revenues; it was 29% for cars and a huge 42.5% for employment. Real estate and employment classified revenues have fallen more than 60% from 2006.
And there’s no let up.
Some US newspaper groups, such as the New York Times Co and the Washington Post Co have reported that the 4th quarter revenue slide of 18%-20% has continued in the current quarter.
In Britain there’s suggestions the situation could be worse, especially for regional papers where revenues have been sliced by 30%-40% in the past year.
It’s why the major shareholder in APN News and Media, Independent news and Media is trying to convince bankers to restructure loans. No one wants to inject capital, or buy APN.
Compared with the reality that is US and UK media life at the moment, Australia is an oasis of relative wealth.
