US: Report finds cities could be without daily newspapers by 2010

Posted by Rosemary D'Amour on December 4, 2008 at 9:27 AM

A credit rater report on media say that "several cities" in the US will be without a daily newspaper as early as 2010, as newspaper and newspaper groups are likely to default on their debt and go out of business.

The report by Fitch Ratings, released Wednesday, finds that the outlook for US media and entertainment, particularly the newspaper industry, is grim, but is "generally pessimistic across the board" because of the harsh economic climate, according to Editor and Publisher.

The lugubrious trend of the economy is hitting the media industry, and is specifically "concentrated within the newspaper sub-sector." Fitch expects newspaper revenue growth "will be negative for the foreseeable future."

If newsprint costs rise, the report states, "it could be difficult to offset revenue declines with cost cuts."

Both ad pricing and linage are "under pressure" within the components of the industry's revenue streams (circulation and local, classified and national advertising). The downturn in advertising that began this year is "unique," Fitch reports, because it affects both national and local advertisers.

Fitch reports that five of the top ten advertising categories (retail; automotive; financial services; general services; and airlines, hotels and car rentals), which account for more than 40% of ad spend, will be down.

The report finds two newspaper companies, The McClatchy Co. and Tribune Co., as "junk," finding "serious possibilities of default."

Source: Editor and Publisher