Recession and internet slaying newspapers. A day after we reported on the largest ever fall in quarterly ad revenues for the US newspaper industry comes news that the country’s third largest publisher is taking the axe to staffing levels. McClatchy Co, which owns the Miami Herald and 29 other newspapers across the US, says it is cutting 1,400 staff, or about 10% of the work force. The move will save $US70 million a year and came the same day as the company reported a 16% drop in ad revenues and a 15% drop in overall revenues for the month of May (online advertising has grown this year). McClatchy shares are down 37% this year and a whopping 86% since it announced plans in March 2006 to acquire Knight Ridder Inc., the second-largest US newspaper chain at the time, for $US4.1 billion. There are still quite a few people who reckon the US isn’t in recession. Some of those are on Wall Street, in the Government, the Fed and even in some of the newspapers chopping staff. But if you look at the way ad sales revenues are plunging and the areas where they are weakest of all, there’s ample evidence. Yes, newspapers are being hit by the rapid move to online advertising, but in many cases US papers are one-paper towns or cities; the ads have to appear in them to get a run. The three weakest ad areas are real estate (subprime mess, housing crunch), jobs (five months of job losses in the US so far this year) and cars (car sales plunging, especially for big petrol-chewing models as oil prices surge and car companies cut production, close plants and fire staff). Technology started the process, the sagging US economy is finishing it off: by the time the US economy recovers and is back to being vibrant, the country’s newspaper industry will have changed dramatically. — Glenn Dyer
Meanwhile in Australia… Fairfax hit a new all-time low of $2.88 yesterday, a fall of 13 cents. It’s clear now that the Fairfax merger with Rural Press in the wake of the Federal Government’s media law changes was ill-advised. Rupert Murdoch frustrated an advance on Fairfax by Kerry Stokes (who found his own bunny in the US private equity group, KKR) while James Packer wasn’t interested (his ‘Alan Bond’ was another private equity group, CVC of Europe). And of course, Fairfax and Macquarie Media carved up Southern Cross Broadcasting in another high priced deal that left Fairfax with over-priced AM radio assets, and a TV production and distribution house that gave it an additional exposure to the vagaries of currency movements. Newspaper advertising is falling in this country as well, with job ads very weak, according to a succession of monthly surveys by the ANZ Bank. Last Friday’s surprise earnings downgrade by the Ten Network sparked a sell-off in media stocks, with Seven, Consolidated Media (which owns 25% of the Nine Network and 25% of Foxtel) and APN News and Media, all sold-off, and of course Fairfax. Brokers like Credit Suisse have been negative on the media for a while, with Ten Network on watch lists, while not too many analysts have been enthusiastic about Fairfax. Despite the weakening share price though, analysts see (“hope”) that there will be a board coup with Ron Walker and David Kirk forced out and replaced by John B Fairfax as chairman and Brian McCarthy as CEO. That seems to be why Merrill Lynch remains an optimist (relatively speaking) on Fairfax, as it told clients overnight:
We have been cautious of stocks with TV exposure for some time and Ten’s profit warning only confirms our view that the TV market is particularly susceptible to a slowing advertising environment from domestic and multinational advertisers. We reiterate our Underperform on Ten and CMJ and remain Neutral on Seven.
We do not see a significant read-through for the publishers from Ten’s profit warning, and rather believe the sharp deterioration is specific to TV and not the whole advertising sector. TV advertising has been very strong over the previous 12 months (+8% in CY07) and with 80-90% derived from national display (vs. 15-20%for publishers), TV has always been much more at risk of a slowdown from multinational advertisers (c.35-40% of total).
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Newspaper employment volumes are soft and political advertising predictably down on last year, but anecdotal evidence suggests that most other categories are holding up fairly well, particularly for the rural and regional publications. In the absence of a major Aust/NZ recession, we remain comfortable that Fairfax will be able to grow EBITDA and EPS in FY09 given the more resilient regionals (now >25% group EBITDA), ongoing online strength (16% group EBITDA), a -7% decline in newsprint, synergies from Rural Press (c.$20m) and SBC radio stations (c.$5m). We would also expect management to be ready to cut costs aggressively should revenues come under pressure over the next 6-12 months.
— Glenn Dyer
Miranda “loud and proud” Devine? Anyone who thought Miranda Devine full of hot air, here’s the proof, kindly provided by The SMH sub-eds on Saturday (thanks to a Crikey reader for the pick-up). Just read the first line:
Is the Wall Street Journal – gasp – better under Rupert? Back in January, I griped about how genocidal tyrant Rupert Murdoch, having just won the pink slip to the Wall Street Journal, was already ruining it. I based my riff on an e-mail observation from my friend Ben Compaine, in which he noted that the Journal had abandoned its tight focus on business and was now larding its pages with mediocre political and international coverage. (See the content analysis from the Project for Excellence in Journalism that proves my point.) Call it subtraction by addition. Murdoch’s design — stated and restated — was to knock the New York Times off its perch as the first newspaper the elites reach for each morning. Fat chance of that, I thought, as the Murdoch-ized Journal landed on my doorstep week after week. And then some time around the beginning of the month, my disposition changed, and the Journal moved to the head of my daily newspaper line — not because of its political and international coverage but because it was swinging hard again in its traditional wheelhouse to produce great enterprise journalism . — Jack Shafer, Slate
AP cracks down on bloggers. It’s all fun and games until some online yokel takes the copy and paste function a step too far. At least that seems to be the stance of the AP, which has announced it intends to impose restrictions on how much of its articles (those darn) bloggers will be able to use, “The principal question is whether the excerpt is a substitute for the story, or some established adaptation of the story.” — Fishbowl NY
Spanish loco for mobiles. To say that Spain is crazy for cell phones is an understatement. Approximately 44 million people live in Spain, but in January of this year the number of cell phones in the country reached 50 million . There are more phones than people here. While Americans might also be addicted to the cell, the Spanish relationship with the cell phone has evolved differently from ours for reasons that are clear and others that remain a mystery. — Mediashift
Last night’s TV ratings
The Winners: Seven News was tops with 1.744 million, with Today Tonight second with 1.585 million. Nine’s 8.30pm drama, Sea Patrol was 3rd with 1.490 million and Seven’s Border Security was 4th with 1.435 million. David Attenborough’s Elephant – A Spy in the Herd on Nine at 7.30pm was 5th with 1.377 million and the last episode of Desperate Housewives in this series averaged 1.370 million at 8.30pm for Seven. Surf Patrol on Seven at 8pm was 7th with 1.308 million, with Nine News next with 1.287 million. Home and Away averaged 1.277 million at 7pm for Seven, ahead of Nine’s repeat of Two And A Half Men in the same slot with 1.220 million. The 7pm ABC News averaged 1.203 million in 11th spot, with A Current Affair 12th with 1.202 million. CSI New York averaged 1.096 million at 9.30pm, Australian Story at 8pm on the ABC a solid 1.027 million for 14th and 15th was Andrew Denton interviewing David Attenborough with 1.006 million. Top Gear averaged 826,000 on SBS. Ten’s 8pm program, How To Look Good Naked averaged 751,000, hurt by Big Brother. Boston Legal on Seven at 9.30pm, 831,000.
The Losers: Ten overall. Its best program last night was Good News Week at 8.30pm with 986,000 viewers in 16th spot nationally in All People. Big Brother at 7pm, 901,000, Big Brother Big Mouth, 634,000. It is appalling. Good News Week though did well in a couple of male demos, as did Top Gear on SBS. Desperate Housewives did best on the night in the main demos, especially with female viewers.
News & CA: Seven News again won nationally and in every market but Melbourne. Today Tonight won nationally and all markets. Seven News beat Nine in Sydney by 171,000 viewers. Why? The 7pm ABC News was second in Sydney in front of Nine, 350,000 to 344,000. Ten News averaged 944,000 viewers and the late News/Sports Tonight averaged 317,000. The 7.30 Report averaged 838,000; Lateline, 409,000, Lateline Business, 178,000. Nine’s Nightline, 245,000, SBS News at 6.30pm, 237,000, the late News at 9.30pm, 128,000. 7am Sunrise 327,000, 7am Today, 247,000.
The Stats: Seven won 6pm to midnight All People (and the other demos, except over 55’s) share of 28.6%, (27.7% a week ago) from Nine with 28.3% (28.9%), the ABC on 18.1% (17.1%), Ten with 17.7% (18.1%) and SBS with 7.2% (8.2%). Nine won Melbourne, Brisbane and Adelaide, Seven won Sydney and Perth and managed the national victory from that. Nine still leads the week 29.3% to 28.2%. In regional areas a different result with Nine winning through WIN/NBN with 33.9%, Prime/7Qld second with 26.3%, then the ABC with 16.6%, Southern Cross (Ten) with 15.8% and SBS with 7.4%.
Glenn Dyer’s comments: For one of the few times in recent years, a direct broadcast of an American golf major had a noticeable impact on TV viewing yesterday. The US Open was in a thrilling final round on Ten, but it was the location of the championship: on the US West Coast. The 19 hour time difference meant that Ten showed the golf in “prime morning TV time” from 6am to around 11am. Tiger Woods (who won this morning in a sudden death 19th hole pay off, so good ratings again for Ten) managed to draw level at 18th hole on the last day to send it into a playoff. An average 161,000 people watched Ten’s coverage, up to double and triple to audience for some programs on the network in mornings. Seven’s Sunrise audience averaged a very low 327,000, down around 60,000 to 80,000 on normal. Nine’s Today averaged 247,000, down around 40,000 on recent levels. Ten’s 11am news’ audience jumped to 173,000. That was Ten’s only victory of the day. Fourth again for the second night in row, for a second week, isn’t a good look. Tonight its the Australia’s Got Talent on Seven, Ramsay’s Kitchen Nightmares on Nine, up against All Saints on Seven and NCIS on Ten. A fresh Simpsons episode on Ten, and a repeat. 10 to 1 on Nine at 7.30pm.
Source: OzTAM, TV Networks reports