Newspapers, TV Stations Predict a Tough 1991 : Communications: Many media executives forecast additional cost-cutting, even job reductions. The key reason is a drop in advertising.
If the newspaper and television business is an early signal of the economy’s direction, then an economic upturn is unlikely to come next year.
During a weeklong meeting between the nation’s media companies and investment analysts that ended here Friday, industry representatives warned that the bottom is not in sight.
“The only question to ask in 1991 is how much worse it will get,” Richard D. Simmons, president of Washington Post Co., told the annual Paine Webber Media Forum, a gathering of executives, portfolio managers and investment analysts.
“I don’t think anyone has the answers,” said Walter E. Mattson, president of New York Times Co.
Knight-Ridder Inc., the newspaper, television and business information company based in Miami, offered perhaps the most optimistic projection. “We feel we have a realistically good chance for a flat year” for earnings, said Chairman James K. Batten.
The reports were in contrast to the past two years, when the newspaper and television industries were suffering but management expressed confidence that there would be a turnaround in the year ahead.
Now most companies are talking about even more stringent cost-cutting next year, including staff reductions. Knight-Ridder, for instance, said it has preliminary plans to reduce the number of employees at its 28 newspapers by 2.5%, or about 380 people. At Dow Jones & Co., the Wall Street Journal alone will have 150 fewer employees by the end of next year than it did this October.
Most papers also hope to use less newsprint next year--which could mean reducing the space for news--and to increase the amount of recycled newsprint.
And many companies said they also had other “contingency plans” for cutting costs, just in case their assumptions prove too optimistic.
“It used to be that a quality product was all a publisher needed to be successful. That is no longer true,” Charles H. Townsend, president of the New York Times’ Family Circle Inc. magazine subsidiary, told the analysts. “Now you also need quality marketing techniques.”
Most of the problems have to do with weak advertising. Gannett is expecting to sell 2% to 3% fewer column inches in 1991. The New York Times is projecting an 8% drop.
To keep up with rising costs, executives said, they intend to raise advertising rates, even if circulation and advertising volume fail to grow.
Gannett Co., for instance, which owns more than 90 daily papers nationwide, said its circulation would rise only slightly, but it would raise its advertising rates 5% to 6%.
Companies also are likely to raise subscription rates and eliminate discounts for home delivery. Several executives said more papers would be likely to raise weekday prices to 35 cents. Times Mirror Co. is among those studying prices.
The forecasts came after reviews of 1990 that were uncharacteristically blunt, especially for executives who in the past have described tough times with such polite adjectives as “difficult” and “challenging.”
“1990 was simply dreadful . . . a typhoon.” said Simmons of Washington Post Co.
“The most severe slump in more than a decade,” said Robert F. Erburu, chairman and chief executive of Times Mirror, which owns The Times and other media properties.
“Pretty lousy,” said Peter R. Kann, president of Dow Jones.
One question facing the media industry is whether its economic problems are cyclical--temporary reflections of economic activity--or signs of permanent change in the nature of the business.
“We believe it is cyclical,” said Curley of Gannett, echoing the sentiment of most executives. It only looks worse because of the consolidation in the retail industry, the absence of inflation and the unusual growth of classified advertising in the late 1980s.
