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Newspapers show new life
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September 8, 1997: 8:54 p.m. ET
Increased ad revenues offset declining circulation
From Correspondent Donald Vandemark
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NEW YORK (CNNfn) - The much-maligned newspaper industry is quietly writing one of the biggest success stories on Wall Street. Newspaper stocks rallied Monday on news The Wall Street Journal will raise advertising rates by four percent next year.
In fact, newspaper advertising revenues have shot up 9.5 percent in the first half of 1997, the fastest rise since the mid 1980s, easing fears the Internet would wipe out newspapers.
Ironically, the Internet has become one of the fastest-growing advertisers in the newspapers, according to Morgan Stanley publishing analyst Doug Arthur.
"You could argue that the Internet feeds off of the newspapers to a certain extent," said Arthur.
The tight job market has pushed classifieds up 11.4 percent. Competition in the used-car market is driving auto ads. The bull market is helping fatten up business sections with mutual fund ads. And both local and national retail ads are booming.
While newspaper circulation continues its slow decline, circulation revenue is actually rising as papers raise prices.
Newspapers have learned to become more productive and more efficient internally, according to John Sturm, president and CEO of the Newspaper Association of America.
"Newsprint prices are not too bad right now, and as a result of that, newspapers... are generating the kind of profits that keep Wall Street pretty happy," said Sturm.
Newspaper stocks are generating the kind of returns that make investors happy, too. The Washington Post Co.'s stock is up 26.3 percent this year, beating the Dow's gain of nearly 22 percent. The New York Times Co. and Gannett were both up 37.9 percent so far in 1997.
Another measure of the industry's health is an old-fashioned newspaper war. The newspaper known as the "old gray lady" will get a facelift. After The New York Times opens a state-of-the-art printing plant next week, its daily editions will be dressed up with color photos.
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