2005 Annual Report - Newspaper Economics

By the Project for Excellence in Journalism and Rick Edmonds of The Poynter Institute

As businesses, newspapers are strong, highly profitable and resilient. In good times and mediocre, the industry now boasts operating margins in the low-to-mid-20% range, a bit less than Microsoft and Dell but higher even than pharmaceuticals.¹ Over the last quarter century, the business has weathered the phenomenal rise of WalMart (only rarely a newspaper advertiser) and the decline of traditional department stores (once the reliable source for page upon page of display advertising). Newspapers went with the flow as retailer preference shifted to preprint inserts, and they developed new categories like travel and telecommunications. What happened in 2004?

From one perspective 2004 was a solid year: ad revenues were up about 4% over all, profits up a little more thanks to tight cost controls, and margins matching the previous two years, though still well off the peak of 1999 and 2000.

But beneath those numbers, there are pressures on revenues and profits that seemed more downbeat in 2004 than before.