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Newspaper ad revenue plummets to 1986 level

By Andrew Vanacore
AP Business Writer / March 24, 2010

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NEW YORK—Newspaper advertising revenue plunged 27 percent last year to its lowest level since 1986, according to figures released Wednesday, reflecting the toll of the recession and a media shift that's driving more marketing dollars to the Internet.

Newspapers sold $27.6 billion worth of ads in 2009, a figure that includes both print and online revenue. That's down from $37.8 billion the year before, according to the Newspaper Association of America.

The picture is even more grim after adjusting for inflation. The $27 billion in revenue that newspapers received in 1986 would equal nearly $53 billion in today's dollars.

Things did improve toward the end of 2009, raising hopes that the worst of the slump is over. Ad revenue in the final three months of the year fell 24 percent from a year earlier to $7.7 billion -- the smallest quarterly percentage decline of 2009.

"Unfavorable trends for newspaper ad spending continued to diminish as the fourth quarter progressed, a sign that business conditions have begun to gradually improve," NAA President and CEO John Sturm said in a statement.

Still, U.S. newspapers have a deep hole to climb out of, having seen ad revenue fall by nearly $22 billion, or 44 percent, in unadjusted dollars since 2006.

Although newspapers' Web sites have offered a small but steadily growing revenue stream, even that was thrown into retreat by the recession. Online ad revenue fell almost 12 percent to $2.7 billion last year after a 2 percent drop in 2008.

The slump has hit other media as well, including magazines, broadcast television and even Internet titans such as Google Inc., which saw its breakneck revenue growth slow considerably.

With revenue shrinking, the corporate parents of many of the country's biggest and most respected daily newspapers -- the Chicago Tribune, the Los Angeles Times, The (Baltimore) Sun, The Philadelphia Inquirer and The Denver Post -- sought bankruptcy protection to reduce their debts. The Rocky Mountain News in Denver closed, and the Seattle Post-Intelligencer folded its print edition to go online-only. Layoffs have become commonplace.

Most painful for newspapers has been the decline in classified advertising, an income source they are unlikely to lure back from cheap or free Web sites such as Craigslist.

Classified ad revenue tumbled 38 percent in 2009 to $6.2 billion. It's also down more than 68 percent from a peak of $19.6 billion in 2000, without adjusting for inflation. Where classifieds once amounted to as much as 40 percent of total ad revenue, they now account for just 22 percent.