Media Companies See No Quick Relief to Slump
Coming off one of their worst years ever, media companies are not expecting any quick relief from the 1991 advertising decline that has battered the nation’s biggest newspapers and television stations.
“1991 was the toughest year we have had since we went public,” Gannett Co.'s chief financial officer, Douglas McCorkindale, said last week. Now the nation’s largest newspaper company, Gannett sold stock to the public in 1967.
John Curley, chairman of Gannett, which publishes USA Today and more than 120 other newspapers, said Wall Street analysts’ estimates of the company’s 1992 earnings were too optimistic. “We don’t see much evidence of a recovery,” he said.
Other leading newspaper publishers, including New York Times Co., Times Mirror Co., Tribune Co. and Washington Post Co., are hunkering down in anticipation of flat or down business in 1992. Executives from the companies spoke at an industry financial conference last week.
Cutbacks in advertising weighed heavily on newspapers, magazines, broadcasters and other media companies this year, depressing profits and causing some publishers to offer discounts to lure advertisers.
In addition, the anemic economy has curtailed classified ads for help-wanted and real estate, two longstanding revenue-generators for publications.
Total advertising spending in the United States is expected to be off about 1.5% this year to $126.7 billion, according to Robert Coen, an industry forecaster at McCann-Erickson Worldwide, a leading ad agency.
Ad spending at the nation’s television networks fell 5% in 1991 from 1990, while local TV stations saw a 6.5% decline, he said. Ad spending at magazines fell 4%, radio was down 2% and newspapers were flat.
Only cable television and syndicated shows on broadcast TV saw strong gains. Outside the media, direct-mail advertising and Yellow Pages advertising rose 4%.
The ad slump has hurt earnings at newspapers and other media companies. Net income at Arlington, Va.-based Gannett dropped 21% in the first nine months of the year, to $204.6 million, or $1.34 a share, from $259.7 million, or $1.62 a share.
At the New York Times, chief financial officer David Gorham said classified advertising for the company’s flagship newspaper, as well as its other publications, would drop next year.
Chairman Peter Kann at Dow Jones & Co., publisher of the Wall Street Journal, said: “We are not looking to 1992 as an easy year. General economic conditions will not change. Advertising will not bounce back.”