A study by the Audit Bureau of Circulations showed that average daily circulation of newspapers in the country fell 5% over the year in the six months ending September, and Sunday circulation fell 4.5% in the period. Another reason to worry for the newspaper industry is Moody’s downgrading of the industry; Moody’s projects a 5%–6% decline in the industry’s revenues this year, followed by a mid-single-digit decline in 2011. A bright spot for newspapers is their growing reach in the online community. According to a comScore report for September, newspaper websites are accessed by over 102.8 million unique visitors in the United States – that accounts for nearly 61% of Internet users aged 18 and above. Further, newspaper website users generated nearly 4.1 billion page views and spent more than 3.3 billion minutes browsing news sites.
Declining print revenues also impacted New York Times (NYSE:NYT), which saw revenues fall 2.7% over the year to $554.34 million. During the period, circulation revenues fell 4.8%. In the six-month period ending September, The New York Times saw print readership decline 5.5% over the year. Despite 14.6% growth in digital advertising revenues, overall advertising revenues reported a 1% decline as print advertising revenues fell 5.8% in the period. For the quarter, EPS fell to $0.07 compared with $0.16 reported a year ago. The market was looking for revenues of $560.3 million and EPS of $0.05.
NYT’s Paywall Strategy
The company has been working on launching the paid metered model for NYTimes.com scheduled for early next year. They are already experimenting the pay wall model with Telegram, one of their properties, and are pleased with the results thus far. The Telegram.com site offers users free access to ten articles per month, with a requirement to pay either a monthly or a daily access fee for more articles. While the company did not divulge numbers, a comScore Web traffic counter shows that Telegram had 294,000 U.S unique visitors in September compared with 281,000 in August. Management did reveal, however, that the Times’s new model will allow readers referred from third-party sites such as blogs, social media networks, and search engines access to that content without “triggering the gate” so as to maintain the newspaper’s reach and ad inventory.
NYT’s Digital Strategy
Further, as part of their digital strategy, they launched an expanded content NYTimes app for the iPad. The new app fills on the editor’s choice apps and offers access to more than 25 sections of Times content, with more videos and photos that are updated throughout the day. While the app is free for now, it too will become a subscription product in 2011. Since the launch of the earlier version, the app has been downloaded more than 650,000 times. The new version has also received good initial reviews because the current version gives readers easier navigation and access to more content.
Recently, an investor group called the 2100 Trust proposed a buy-out of the Boston Globe. But NYT’s management has dismissed the buy-out as a rumor and are instead focusing on a digital plan for the unit. By the second half of 2011, they will split The Globe’s digital brand into two websites. While Boston.com will remain free, Bostonglobe.com will become a subscription site that will grant access to feature content produced by the newspaper’s journalists to their subscribers.
The stock is trading at $7.73 with a market capitalization of $1.1 billion. It touched a 52-week low of $7.06 in August of this year.
McClatchy (NYSE: MNI) too saw revenues decline. For Q3, revenues fell 5.7% over the year to $327.7 million missing the market’s target of $347 million. EPS for the quarter of $0.12 fell by a cent compared to the previous year but was better than that market’s projections of $0.10.
During the quarter, online advertising revenues grew 1.6% to $47.5 million but failed to offset the 8% decline in print advertising revenues. Total advertising revenues fell 6.4% over the year to $249.1 million. Circulation revenues continued their decline and fell 3.8% over the year to $66.4 million.
McClatchy’s Digital Focus
Recently McClatchy entered into a partnership with Groupon that lets McClatchy’s websites in 28 U.S markets distribute exclusive Groupon deals that are specific to the locality. The partnership is expected to be an alternative revenue model for McClatchy, which is struggling to monetize content online.
Earlier this quarter, McClatchy released their iPad application for the Sacramento Bee. The application offers access to the paper’s latest stories, blog posts, and columnists and lets viewers view Day in Pictures, local pictures, and sports. The application received good customer reviews and within two weeks of its launch, had recorded over 16,000 downloads. McClatchy plans to release the same app for BlackBerry and Android devices soon and will then be looking at “niche apps” that could be of interest to readers.
The stock is trading at $2.92 with a market capitalization of $247 million. It touched 52-week high of $7.16 in April of this year.