Financial services firm Standard & Poor's predicted that magazine advertising will plunge until the the end of this year, despite media activity during the U.S. presidential elections. The company also said that newspaper profits and cash flow are expected to decrease “at rates that accelerate each quarter,” WWD Media reported Friday.

Struggling circulation levels that publications experience may be contributing to the trend. Increasing debt levels, surging Internet advertising expenditure, plummeting newsstand sales and mature market growth may contribute to a “near-term decline in credit risk,” according to WWD Media.

“Even online advertising has been experiencing a marked deceleration, despite surging past magazine advertising in 2006 and likely past radio advertising in 2008. Challenges are multiplying in the industry as the U.S. economy edges closer to a recession, financial market turmoil continues and consumers tighten spending in ways we had not envisioned,” the firm said.

Five of the nine newspaper groups that the agency rated were rated “CCC”, which could mean that they risk near-future liquidity. The New York Times Co. was put under CreditWatch this summer, after the company announced a nearly 40 percent year-on-year decrease in earnings prior to interest, taxes, appreciation and amortisation in the second fiscal quarter, WWD Media wrote.

At the same time, local radio advertising revenues plunged by seven percent in the second quarter. Internet ads, even though rising, are doing so at a more sluggish rate than last year. Drug, medicine and automobile ads each dropped by over 20 percent in magazines.

According to WWD Media, Standard & Poor's said that the economic turmoil will continue into early- to mid- 2009, but may pick up by late next year. Total ad expenditure is thought to be “minimally higher” at 0.9 percent in 2009, the company said. This year, however, the total ad spend growth amounted to one percent, Seeking Alpha wrote.