Everyone Keeps Talking About the Disastrous Financials At Many US Newspaper Groups, But Have You Seen The Recent Appalling Numbers From Television And Radio?

Philip Stone August 5, 2008

Talk about traditional media financial disasters and most people think newspapers, but recent US radio and TV results point to big problems there, too, and the feeling is that the Olympics and the Presidential/Congressional campaigns that are supposed to save their day won’t.

Just read some of the latest non-newspaper traditional media headlines:

• Belo, owner of 20 TV stations in 15 markets, reported Q2 total revenue down 4.7% with total spot revenue, including political, down 6.4%. Auto advertising was off 10%.

• US Magazine rate-card reported advertising revenue through June down 3.1% compared to year before but in a sign of the downward trend Q2 was off 4.7%. Ad pages were down through June by 7.4%, but Q2 was down 8.2%.

• Cox Radio’s Q2 station operating income fell 13.6% with total revenues down 8.3%. Local revenues were down 6.1%; national down 17.5%.  President Bob Neil noted, however, that was still better than the results most newspaper companies are turning in.

• Meredith Corp had a disastrous fiscal Q4 that ended in June with earnings less than half of those of the fourth quarter a year earlier. Advertising in its largest categories – food, medicines and home improvements -- declined more than 20%. And the company noted that in its fiscal Q1 now underway, “Publishing advertising revenues are down in the high-teens compared to the first quarter of fiscal 2008, when Meredith posted 11 percent growth in publishing advertising revenues. Broadcasting advertising pacings are currently down in the mid-teens.”

• Disney, owner of the ABC network, ESPN, and 10 local stations in major markets, said broadcast revenues were basically flat and operating income was down 11%. “The pace of advertising sales has slowed somewhat in recent weeks,” said Tom Staggs, chief financial officer.  He said revenues at the local stations were down by “mid-single digit percentages.” CEO Bob Iger, who a couple of months ago shook up the industry by hinting he thought the advertising model for TV may be on the way out, said about these results, “We have detected a weakness at the stations and ESPN, particularly with cars, financials and consumer electronics. Advertising is only 20 per cent of our revenue, so we are not as exposed to the ad climate as our media peers.”

• David Barrett, the CEO of the 26 Hearst-Argyle stations actually uses the “R” word saying today’s business environment is “recessionary-like for ad-driven businesses.”  In Q2 revenues dropped 5.6%. He said that usually even-numbered years are good because of the Olympics and elections but this year is “turning out to be a very atypical even year.”

• While CBS reported an overall 1% revenue increase – not bad in these economic times – radio and TV had a tough time. The radio division reported a 10% revenue drop and operating income was down 12%. The company continues to dump its midsize stations – just two years ago it owned 180 stations, it has gotten rid of 40 and now says another 50 will go and it will concentrate its holdings in the larger markets. Television saw a 2% revenue increase but operating income was down 12%. "We are clearly challenged by the economic conditions affecting many industries, particularly as it pertains to our local businesses," Chief Executive Leslie Moonves told analysts in a conference call. "The economy is tough right now."

And the list could go on…

Fueling such revenue drops is the world’s biggest advertiser, Procter & Gamble. It cut back its Q2 measured US media advertising by close to 20% in Q2 – some $135 million less spend than the same quarter a year ago, according to TNS Media Intelligence.

It said that P&G’s magazine spend fell 8% to $71.7 million in April from a year earlier, by 22% to $70.7 million in May and 26% to $60.3 million in June – a total down of $44 million from last year. TV was down, too, with its April spend off 4% from a year ago to $179.4 million, followed by a much deeper 31% cut to $144.3 million in May. On a percentage basis online would look like the big winner – up 10% -- but that was only an additional $600,000.

Other advertising powerhouses like Unilever and Johnson & Johnson were also said to have cut back heavily.

One way to judge the health of magazines – at least the highly profitable fashion magazines – is to count their September advertising pages since that is the month when the luxury trade trots out is Fall fashions and accessories. It’s not too much of a joke to say that it takes both hands to carry the September Vogue issue, but according to Advertising Age, the September numbers are down.

Vogue could manage “only” 674 ad pages, down 7.1% from last year. Glamour’s ad pages fell 10.6%, GQ was down 8.5% W was down 17.7% and Vanity Fair – not fashion but a good magazine to judge advertising in general,  was down 5.4%.  Richard Beckman, president of the Condé Nast Media Group, said, "This is one of the toughest ad markets we've had in a long time."

Given this type of advertising environment you figure there’s a whole lot of rate card slippage going on out there?

So, with headlines blaring out that at such newspapers as the Washington Post revenues tumbled 13%, perhaps there is some solace that most types of traditional media is feeling the misery – Newsweek, owned by the Post, reported its ad revenue fell 21% for the quarter, even its broadcast division revenue fell 6% although cable was up 16%.

But the Washington Post Company is now primarily an educational products company,  and that side of the business saw revenue jump 14%, perhaps proof positive of that old adage that one should not put all of one’s eggs in one basket. Diversification these days, especially away from traditional media, is the name of the game.