Newspaper Audience - 2006 Annual Report

Typically, circulation losses translate into declines in circulation revenue. The Deutsche Bank analyst Paul Ginocchio estimated that public companies lost close to 3.2% on average in circulation revenue in 2005 and forecast another flat or declining year in 2006.14

But circulation revenues are only about 20% of total income for newspapers. The bigger question is whether two years of losses in circulation will translate into a loss of pricing power and revenues in advertising. The worst case, Ginnochio said, was that ad revenues could actually fall in 2006.15 Newspaper executives insisted not. A number of companies announced aggressive rate increases — between 3% and 6% — for 2006 at the December 2005 Media Week conferences with investors and analysts (see Economics).