Moody’s expects smaller ad decline for newspapers this year, affirms stable outlook

Moody’s sees smaller ad decline for papers in 2010

NEW YORK — Moody’s Investors Service said Thursday that it expects the newspaper industry’s advertising revenues to drop another 5 percent to 10 percent this year before potentially edging back to positive territory in 2011.

For an industry as hard hit as the newspaper business, that is not such bad news. Ad revenue dropped 22 percent in 2009, according to Moody’s. The ratings agency said its outlook for the industry remains “Stable.”

With the economy improving, newspaper companies such as The New York Times Co. and USA Today publisher Gannett Co. have been reporting slower advertising declines each quarter. Moody’s said the aggressive cost cutting that newspaper companies did last year should help buoy profits for the next 12 to 18 months.

Moody’s projects a range for 2011 of down 3 percent to up 2 percent.

The long-term outlook for newspapers is still uncertain. Moody’s said its outlook could become negative in 2012 as the snap-back in ad revenue brought by the economic recovery fades.

While newspapers were certainly hurt by the recession, they also face the permanent shift of ad dollars onto the Web, where competition is fierce and ad prices are just a fraction of what they are in print. Ad revenue has typically accounted for about 80 percent of newspaper revenue, with the rest coming from subscription rates.