Papers, Broadcasters Feel Economic Pinch - But It's Relative
THE slump in the United States economy is affecting both print and electronic media across the country. A decline in the growth of advertising spending has publishers and broadcasters facing their worst year in two decades, industry observers say.
Hardest hit are local retail, help wanted, real estate, and auto advertising.
``I would summarize the 1990 situation as mixed,'' says Robert Coen, forecasting director for the McCann-Erickson ad agency. ``It really is relatively quite good for ad spending by national marketers like Procter & Gamble and Kraft. But local retailers, help wanteds, and classifieds are a disaster. Local newspapers are in pretty bad shape.''
For Gannett Company Inc., the nation's largest newspaper chain, the downturn has followed the varying performances of regional economies, according to Gannett chairman John Curley. ``Our newspapers in the East ... have posted ad volume declines that are significantly worse than the rest of the group,'' he said at an October talk in Boston.
Publishers and broadcasters are responding with belt-tightening:
Times-Mirror Inc., announced Tuesday it is raising advertising rates and laying off personnel. And it will not increase its stock dividend. The company owns the Los Angeles Times, several major East Coast papers, and four television stations.
The Wall Street Journal has closed its Philadelphia bureau and its European edition's Brussels offices. The paper's newsstand price has been raised from 50 cents to 75 cents.
CBS Inc. is closing the Denver and Chicago bureaus of CBS News and laying off 40 or more employees.
The Boston Herald recently announced a 5 percent budget cut and several layoffs. The moves reflected tightened purse strings at the Herald's parent company, Rupert Murdoch's News Corporation.
Mr. Coen says local newspaper advertising revenues are up only 1 percent in 1990. But since local ad rates rose 6 percent this year, overall ad sales were probably off 5 percent.
It wasn't much better for TV, Coen says. Local television advertising was up only about about 3 percent, ``and most of that from political acitivity.''
Overall, Coen says, advertising spending grew 4.9 percent while nominal gross national product rose about 5.2 percent.
Local advertising lags behind national for TV as well. The Television Bureau of Advertising (TBA) projects that local TV advertising will grow about 3 percent to 5 percent this year; network and spot advertising (national ads sold to local stations) will grow by 6 percent to 8 percent.
The brightest picture in TV is for advertising sold on nationally syndicated programs. Spending on these ads is projected to rise 20 percent to 22 percent this year. Ad sales on cable TV should grow by 14 percent to 16 percent.
The TBA's Ronni Faust says local stations are particularly hard hit by declines in advertising spending by auto dealerships, banks, and local retailers.
Radio ad revenues are projected to grow by 5 percent in 1990, according to the Radio Advertising Bureau. Local advertising through September was up 4.3 percent, while national advertising grew 6.4 percent. But the bureau estimates that radio will post a 1/10 of 1 percent gain in its share of the total advertising pie this year.
``Radio advertising tends to grow during recession economies,'' says the bureau's Laura Morandin, because of its cost efficiency and ability to target specific audiences.
Coen predicts that 1991 will be ``pretty much more of the same.'' He expects total advertising spending to rise 4.6 percent against a backdrop of 4.8 percent increase in nominal GNP. Local advertising will increase of 3.1 percent while national will grow 5.7 percent, he says.
But Coen predicts that 1992 could be a ``boom year'' for advertising, given the Olympics on TV and the presidential elections.