Newspaper ad sales sink
June 18, 2001: 5:37 p.m. ET

Washington Post, Dow Jones, Knight-Ridder, NY Times see weak 2001 ad sales
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NEW YORK (CNNfn) - Four of the nation's biggest media companies reported declining advertising sales Monday as the economy continues to slow, forcing companies to trim costs.

The New York Times Company cited the advertising slowdown as it posted a 17.1 percent decline in May sales. Despite the reduction, the company said it is comfortable with analysts' second-quarter earnings estimate of 43 cents per share.

In addition, The New York Times (NYT: down $0.57 to $37.93, Research, Estimates) said income for 2001 will fall toward the higher end of analysts' estimates of $1.80 to $2.20 per share if cost cutting measures continue to improve its bottom line.

The Washington Post Co. projected a weak advertising outlook in 2001, citing declining sales at its flagship newspaper and other publications.

Additionally, Dow Jones & Co., publisher of the Wall Street Journal, said the whopping advertising slump has shown no signs of easing, and that as a result, it could provide no financial guidance for 2001.

Knight-Ridder Inc., which publishes the Philadelphia Inquirer, Miami Herald and San Jose Mercury News, said operating revenue fell 8.8 percent in May as a result of weak ad sales. The company also announced it is cutting an additional 1,700 jobs.

Media companies have been hard hit in the slowing economy as companies have slashed their advertising budgets and eliminated thousands of jobs in an effort to stay profitable in the slowing economy.

The reality of the slumping ad market hit home last week when advertising firm True North Communications warned that second quarter profit could fall as much as 12 cents a share. The company, which is merging with Interpublic Group of Cos., said it would consider cost-cutting measures, including job cuts.

But some analysts view this year's weakness as a buying opportunity, particularly since the lower ad revenue figures will make for easier comparisons next year.

"Anyone who picks up a newspaper in the morning can feel that it's a lighter newspaper. That obviously tells us that advertising is thin and the pages on newspapers, when you really look at it from investor standpoint, though next year is an improving profit picture, the reason to own the stocks may be to go contrary to the environment today," Lee Westerfield, a publishing analysts at UBS Warburg told CNNfn's The Biz Monday. (WAV 533KB) (AIFF 533KB)

Washington Post Co. CEO Donald Graham told analysts Monday that ad sales at the Washington Post Co. (WPO: up $4.56 to $546.56, Research, Estimates) are weak, but that the company's cable and education operations, which are less ad-dependent, are poised for substantial growth in the coming years.

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Preliminary figures show the company's advertising sales declined 8.4 percent during the first five months of 2001 from the same period a year ago. Ad revenue at the Washington Post fell 8.9 percent in the first half. Post-Newsweek Stations revenue slipped 5.9 percent from a year ago, and ads also declined at the company's Newsweek magazine.

"The mix of our businesses is significantly different from what it was in 1990, when the company was overwhelmingly dependent on advertising," Graham said.

Meanwhile Dow Jones CEO Peter Kann said the company is using targeted cost-cutting to meet second quarter earnings estimates, but that the weak advertising market made it impossible to provide financial guidance.

And Knight Ridder blamed its 8.8 percent operating revenue decline on the ad market with the worst shortfall coming in help-wanted ads. graphic

-- from staff and wire reports


Washington Post

Dow Jones

Knight Ridder

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