I was intrigued by two recent items on Gannettblog
: this one
about Gannett's revenues through the first two months of the year
, and then this one
about Gannett's Friday conference call with Wall Street. It's not a pretty picture. Classified advertising is down, real estate advertising is down, employment ads are down, and auto ads are down.
Pro forma classified revenues declined 13.6 percent in the second period. Real estate revenues were down 20.7 percent, employment revenues were 16.1 percent lower, and automotive revenues declined 13.3 percent. U.S. Community Publishing pro forma classified revenues were 18.0 percent lower in February reflecting declines of 26.6 percent in real estate revenues, 23.3 percent in employment revenues and 10.9 percent in automotive revenues.
Those are big numbers, and it's really even worse than it looks. Look past the percentages to the dollars. In the first two months of the year, total ad revenue is down $69 million compared to 2007, and total revenue is down $88 million. The declines are accelerating, as the fall from 2007 to 2008 is more than twice as large as that from 2006 to 2007. Across Gannett, daily newspaper circulation is down more than 290,000 from 2007 to 2008, and circulation on Sundays is down nearly 350,000.
Compare 2008 to 2005 and the hole gets deeper. For the two-month period, ad revenue is $112 million less today, and total revenue is $125 million less today. Total daily newspaper circulation is down about 750,000, and Sunday circulation is down by 1 million.
With all that in mind, see this item at TechCrunch, with the title: "What Media Company Gained the Most Market Share in 2007? (Hint: It Starts With a G).
" That would be Google. Henry Blodgett
looked at the numbers for 17 media companies and found Google's revenues from ad sales rose by $2.6 billion. That's more than twice as big a gain as the next most-improved, Rupert Murdoch's News Corp. Total ad revenue by those 17 companies rose by 9%, to $58 billion.
Change just one word in TechCrunch's title: What media company lost
the most market share in 2007? (Hint: It also starts with a G.) Anyone? Anyone? Bueller? Anyone?
The answer is Gannett. While Google gained $2.6 billion in revenue, Gannett's ad revenues fell by $338 million. So, the pie is getting bigger, and Gannett is getting smaller.
Gannett might try to say that it's making strides online. According to Neilsen NetRatings, Gannett's web sites, which would include USA Today and the Enquirer's Cincinnati.com sites, got 25.8 million unique visitors in February, and increase of more than 3 million from a year ago.
But Google had 104 million unique visitors in February, according to Nielsen. Gannett isn't close. This January report
from Comscore shows how wide the gap is. Look at Table 3: Gannett had roughly 23 million unique visitors in January, ranking No. 33 and in the company of groups like CBS, Expedia, Bank of America and Yellowpages.com. In January, Yahoo had 138 million unique visitors, Google 134 million. The New York Times had 48 million.
This is bad, very bad, and there's no way to spin it otherwise. Gannett is losing revenue faster than its gains on the web can compensate for, and -- as the economy skids into recession -- the decline is accelerating. The budget cutting at the Enquirer has been vicious over the last year. It will only get worse. The Enquirer has cut the fat, it has cut into muscle and now it will be asked to start chopping off limbs. When you have fewer people in the newsroom to produce an editorial product, there's less in the product worth reading, so reversing the skid in circulation and producing meaningful gains in web traffic will be nearly impossible.
Gannett apparently believes the key to saving the print product is hard news and watchdog journalism
, but Gannett's history is all about the journalism of hope
and News 2000
and "Real Life, Real News"
(scroll down to October 2, 2oo3). That's all very soft. Twenty-five years of these programs means Gannett doesn't have the DNA or the leadership to do hard news well enough to save itself. Hollis Towns a hard news editor? Tom Callinan? Get serious. Under their leadership the amount of enterprise reporting in the Enquirer as fallen to almost zero, so it looks like the future of the Enquirer is more "hard news" stories about the weather and high school sports and appeals to readers to submit photos of their pets. This is not a recipe for improvement, let alone survival.
Gannett needs to forget the past, and ask what it needs to do to build readership of the newspaper and viewship on the web, and then implement those plans without regard to the next quarter's profit. On the current path, with Gannett thinking about each quarter's profit, it will soon run out of quarters. Maybe CEO Craig Dubow needs to give up his bonus
for a year or two, or three, but if Gannett doesn't figure this out soon -- and by "soon," I mean now -- it's dead.