Moody's: Newspaper revenues stabilise, for now

Posted by Erina Lin on June 4, 2010 at 4:32 PM

"Revenues set to stabilise in 2010-11, but long-term outlook is still negative," the title of the latest forecast for the U.S. newspaper industry released by Moody's Investor Services pointed out a "very cautiously optimistic forecast," Media Post reported.

According to the report, newspaper ad revenues will drop another 10 percent to 15 percent this year, but "may" finally bounce back in 2011, as the forecast for next year is ambiguous, ranging from another 3 percent decline to a 2 percent growth.

It's not such bad news for the industry as ad revenue plunged 22 percent in 2009, the Associated Press reported. The ratings agency still rated the outlook for the industry "Stable," according to analyst John Puchallain.

However, Moody's warns that in 2012 ad revenues could turn negative again and stay stagnant in subsequent years, which indicates "continuing long-term structural shifts away from print to digital advertising," according to the AP article posted on Business Week.

Shares of newspaper stocks have lagged behind the average this year. The New York Times was down 29 percent, and News Corp dropped 5 percent, compared to average declines of 2.3 percent for the Dow Industrials and 1.9 percent for the S&P 500, Barrons reported in a blog.

Better performers are Gannett, which was down only 1.75 percent, and Washington Post, which is up 5 percent for the year.