Fitch Ratings Agrees: Newspaper Downturn Secular

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Some in the newspaper industry–McClatchy (MNI), for example, though not our beloved New York Times (NYT)–still persist in hallucinating that the industry’s crushing revenue declines are cyclical, not secular, meaning that as soon as the economic horizon brightens, everything will be hunky-dory again.  It won’t, of course.  And denial won’t help.  So perhaps the latest industry report from Fitch Ratings, reported by Mark Fitzgerald of Editor & Publisher, will begin to persuade:

Newspaper industry ad weakness, Fitch concludes in a report subhed, is “More Secular than Cyclical” — meaning much, if not all, of the declines will be permanent…

Fitch says it is true that the outsized declines in real estate are generally localised in newspapers serving markets such as California and Florida, where the housing bubble rose highest before bursting most dramatically. But that may not be the persuasive evidence of a cyclical downturn as it might first appear, the agency argues. Fitch notes that, broadly in the industry, classified revenues taken as a whole are down farther than real estate’s contribution to total would suggest they should be.
 
Continued declines in retail, auto, and help-wanted at a time when “key economic indicators for the U.S. economy have been broadly healthy for most of the year and as such should be supporting the retail, national and other classified categories,” suggest a so-called secular, or permanent, decline in the important classified revenue stream, Fitch suggests.

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