The downturn in newspaper ad revenue has gone from awful to extraordinary. Gannett (GCI) told analysts that sales at its flagship USA Today paper could be down as much as 35%. That would certainly be an indication that the firm’s other dailies are doing poorly and that other newspaper chains including McClatchy (MNI) and Lee (LEE) are not out of the woods.
With its color pages, relatively short stories, and national distribution, USA Today is as much a magazine as a newspaper. Its demise is a signal that large publications such as BusinessWeek, Fortune, and Newsweek may be in more immediate trouble than they have said in public.
Last year, most newspapers suffered advertising revenue drops of about 20%. If the USA Today information is the sign of a broader trend, the drop may be accelerating. That means fewer large newspapers will make it to the end of the year.
Douglas A. McIntyre