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Newspapers Find Ways to Beat Falling Ad Revenue

Justin Sullivan | Getty Images

An umbrella group for newspapers in the United States is releasing new information about the economic health of the industry. The Newspaper Association of America says newspaper companies have found new ways to make money as the state of the industry changes.

Revenue for newspapers in the United States fell again in 2012, down two percent. However "The American Newspaper Media Industry Financial Profile of 2012" showed positive signs for newspaper owners. The industry has found new ways to make money in what was a $38.6 billion dollar industry last year.

(Read More: Papers Worldwide Embrace Web Subscriptions)

Print ad revenue, still the most important metric for newspapers, continued its decline, dropping six percent from the year before to $18.9 billion dollars. Retail advertising dropped eight percent, classified ads, once the lifeblood of the American newspaper industry dropped nine percent. Auto ads also fell nine percent, real estate advertising dropped 12 percent.

(Read More: New York Times Looks to Sell Boston Globe)

Despite the drop in ads, newspaper circulation increased in 2012 by five percent.

Investors have not been shying away from traditional newspaper stocks over the last year. The New York Times (NYT) stock is up 40 percent in the last 12 months. Gannett (GCI) which owns about 100 newspapers in the U.S. saw its stock jump 38 percent in a year. The Washington Post's (WPO) stock is up 15 percent but it must be noted the company has many sources of revenue outside of the newspaper business. The McClatchy Company's (MNI) stock dropped seven percent in the last year. It owns 30 newspapers in the U.S. including the Fort Worth Star-Telegram, the Sacramento Bee and the Miami Herald.

(Read More: Extra, Extra! "This' Newspaper Stock a 'Buy', Says Cramer)

This report comes days after another major newspaper, Cleveland's Plain Dealer announced it would cut home delivery to three times a week this summer. The New Orleans Times Picayune cut its print edition to three times a week last year and the Hearst owned Seattle Post Intelligencer cut its print edition entirely in 2009. All three newspapers are focusing more on their digital products.

Digital growth continues to move forward for the industry. The Newspaper Association of America estimates that "digital only" revenue grew 275 percent in 2012. However "digital only" circulation revenue remains a very small part of the business, making up just one percent of the gross income for the newspaper industry.

(Read More: Tribune Co. Hires Bankers to Sell Newspapers)

Despite the continued downturn in revenue, The Newspaper Association of America's findings suggest optimism for the industry. Newspapers have found creative new ways of making money. Several newspapers are now consulting local businesses in their markets about how to take better advantage of the internet and social media. Revenue in this space almost doubled in 2012. Newspaper companies are also using their existing delivery routes to deliver other products for other companies.

The Newspaper Association of America gets its data from 17 newspaper companies which own 330 newspapers nationwide representing almost half of the print circulation in the country.

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