State of the Economy hits Newspapers

So, as if newspapers in general hadn't been beaten up enough in the past few years, the full impact of the recession we are currently in is starting to hit the newspaper business hard.

For many of these newspaper companies (I'm talking about corporations that have traditional daily newspapers as 90% or more of their portfolios), things were already bad. Circulation numbers had been falling for years. The past 5-10 years had generally been bad news for advertising revenue. In particular, classified categories (automotive, private party, etc). But for papers that were doing it ok, retail, in particular, local reatil, was still holding its own.

But overall, things were still not good. Papers were having to make some cuts, borrow some money, take some lossses. Hoping things would get better. . hoping that craigslist would go away. . . . waiting for the auto dealers to start buying full page ads again. You catch the drift.

Anyways, guess what is just what this already delicate situation? You guessed it, a recession. Starting with the sudden and drastic decline of the real estate market. Fortunately for newspapers, Real Estate had been one category that had continued to be relatively strong. Although there were lots of dollars migrating to online offerings, local agents and builders were still spending money in newspapers, which was one bright spot in the often gloomy classified outlook.

Well, goodbye Real Estate advertising. Some papers went from strong weekly Real estate offerings to no Real Estate section at all.

But of course we can't stop at real estate. As the recession seemingly hits all angles the economy, advertising dollars seem to be increasingly fleeting. Because unfortunately, as silly as we all know it is, advertising is the first thing to go. Our small business owners are concerned with paying their employees, the electric bill, the lease.

This leads us to present day. The Tribune Company (Chicago) yesterday announced its filing of Chapter 11 bankruptcy protection. Unfortunately, I think this will be just one of many huge shake ups for similarly positioned newspaper companies. For many of these companies suffering tough times already, the current recession could be the nail in their coffin.

Those that will survive will be forced to drastically alter the way they do businesses.