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The financial downturn comes at a particularly tough time for the advertising industry, which now faces a perfect storm of economic downturn and the transition away from traditional ads towards the internet.
Overall ad spending is expected to drop about five percent in 2009, to a remarkably low percentage of the national GDP. The sector that will be hit the hardest, is publishing—a point I've been reiterating for months.
News of cutbacks at newspapers and magazines on Tuesday alone was simply remarkable. Time Warner [TWX
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] Time Inc. magazine division is cutting 600 jobs. The Christian Science Monitor is stopping publishing a weekday paper, the 100-year-old organization shifting to a web-only format. Gannet[GCI
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] , the nation's largest newspaper publisher, is laying off 10 percent of its workforce, about 3,000 people. On Monday the Tribune Company,[TRB
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] taken private last year by Sam Zell, said it will cut 75 more people from the Los Angeles Times staff, now reducing it to half its size a year ago.
To try to compensate for lower ad sales, newspapers are raising newsstand prices and stopping delivery to less profitable customers. This has resulted in most of the largest U.S. newspapers showing a decline in print circulation in the six months between April and September.
Gannett attributes half its 5.5 percent weekday circulation decline to the publisher's decision to stop delivering to customers more than 200 miles or so away. Newspapers insist it isn't all bad news, that they're focusing on high quality paid subscriptions, and many publishers say they're reaching more readers thanks to the addition of online. Online ad sales will be crucial for papers to help compensate the decline of other ad sales. Next year could still be a bit of a bloodbath for newspapers, but they'll all be looking to the future in their online presence.
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