Outsell, Inc. Projects Crippling $20 Billion Revenue Shortfall for Newspaper Industry by 2010

Burlingame, CA

WHAT:

Outsell, Inc., the leading research and advisory firm for the information industry, is projecting a cumulative $20 billion revenue shortfall for the newspaper industry by 2010 in its newly published report, “Deadline with Destiny”--the fourth study in an ongoing series examining the news industry.

The sobering conclusion is based on analysis of national industry data that Outsell was first to aggregate publicly. The data ties together the mature businesses of circulation and print advertising, and the emerging online ad business, assembling revenue trending for the next five years.

“The estimated shortfall is even larger than newspaper executives have acknowledged,” says Outsell lead analyst Ken Doctor, who headed the research. “The perfect storm of print circulation decline, accompanying pressures on print advertising, and the rapid growth of lower-revenue-producing online news media is eroding the industry. The business of news faces an unprecedented transformation as these trends likely accelerate over the next five years.”

Outsell analyzed historical and current revenue trends by advertising type; expense information; key cost structure issues; and current industry margins. The company then built three possible scenarios applying those trends, and projected the likeliest outcome.

KEY POINTS:

• The decline of paid circulation revenues for print newspapers will speed up as key 18-39-year-olds continue their online migration, undermining newspapers’ traditional mass market claims. In Outsell’s worst case, Hit the Wall scenario, 2010 circulation of daily papers will drop to 43.9 million, 19.5% less than 2004. Sunday circulation will take a greater hit at 45 million, 22% less than 2004.
• Newspapers’ online ad revenue growth rate of about 30% masks the larger problem that online revenues aren’t replacing lost print revenues fast enough. Only by generating new top-line growth and by negotiating better revenue-producing agreements with the search aggregators (Google, Yahoo, MSN+) will news companies transform themselves in time.
• News companies must consider lowering their operating margins from an average of 21% to levels more commonly seen (averaging 12.8% among the Outsell 100SM roster of public information companies). Only by lowering margins and strategically cutting the core will news companies be able to both maintain their competitive content-producing muscle and invest for the future in new online products and services.
• Workforce cuts, already underway, are insufficient to meet the accelerating financial challenges.

Journalists who would like to talk with Outsell should contact Dawn Ringel, Warner Communications, 781-449-8456 or dawn@warnerpr.com.

Companies that would like to purchase this report should go to http://content.outsellinc.com/coms2/summary_0245-3382_ITM or contact Outsell directly at 650-342-6060 or info@outsellinc.com.

About Outsell, Inc.:
Outsell of Burlingame, CA is the leading research and advisory firm providing actionable market analytics for the information industry. Founded in 1994, Outsell helps publishers, commercial information providers, and content software technology vendors identify, maintain, and grow markets and revenue streams. Outsell also works with information management executives in top corporations, government agencies, and educational institutions to benchmark spending, optimize performance, and demonstrate best practices. Outsell invests heavily in unique information industry data assets that form the core of its high-quality, fact-based research, analysis, and recommendations for clients worldwide. For more information, see www.outsellinc.com.