As competition from the Internet and other media has transformed the market, the rate of decline in newspaper advertising revenue is accelerating. This decline, which is causing newspaper stocks to plummet, has spurred restructuring and consolidation, and has affected Dow Jones's talks with News Corp. and the Tribune Co. sale.

A slump in advertising revenue that began last summer is accelerating this year, as total print and online advertising revenue is down 4.8 percent to $10.6 billion in the first quarter, compared to a year ago, according to the Newspaper Association of America.

In the first quarter, revenue for every major ad category – classified, national and retail – was down, writes the Wall Street Journal's Emily Steel. Classifieds declined the most, as spending dropped 13.2 percent in that category. Yet, writes Steel, this downturn is “not so much a result of competition from the Web as of economic woes affecting certain categories of advertisers.” Additionally, real estate classifieds have dropped along with the property market, and employment and auto classifieds are also in a slump. Financial newspapers are also being hurt by lowered technology advertising.

And while the newspaper industry has grown slowly for years, following years of declining readership, in the past couple years competition from the Internet and free classified Web sites like Craigslist and other media “has transformed anemic growth into slipping revenue,” Steel states. She adds that although publishers are trying to generate a larger percentage of ad revenue through the Web, analysts have said that Web revenue growth is also beginning to slow, and is not enough to offset the print decline.

The poor outlook of industry revenues will likely affect the Bancroft family's thinking on the possible sale of Dow Jones & Company to Rupert Murdoch's News Corp. and the Tribune Co.'s auction to Sam Zell. The Bancroft family, Dow Jones's controlling shareholder, will have to take into account how the company would fare as the industry continues its downturn. “If the family votes against the deal, it could face hurdles finding a new buyer in a world where ad dollars continue to decline,” Steel writes.

Meanwhile, the Tribune Co., with ad revenue that dropped 11.8 percent in May, is taking on a large amount of debt to go private, and experts have questioned whether it will still be able to afford borrowing extra, thus raising questions about the company's ability to complete its buyout.

“Our going-private transaction is on track, and financing for it is fully committed,” the Wall Street Journal quotes Tribune spokesman Gary Weitman as saying. “We anticipate closing the transaction in the fourth quarter, following FCC (Federal Communications Commission) approval, and we expect to be in full compliance with our credit agreements.”