‘Green Shoots’ Wilt: Media Fallout Ahead?

Since early March, we’ve been hearing about “green shoots” of supposed economic recovery almost daily. Just the suggestion of this concept, heavily promoted by the current political regime, has sent many banking and retail stocks up a dot.com bubble-like 300 – 400% in a short period of time.

But the more actual economic data we receive, the less it appears the recovery is real. And several recent stories have me wondering how this will impact our long-suffering local media:

— With a large number of car dealerships in Massachusetts closing, how can this not hurt local newspapers, television and radio? Auto advertising represents an important percentage of revenues in the media business. Does this impact the Globe’s survival prospects?

From the San Francisco Chronicle, take a look at how this is already impacting the badly-hurt Bay Area:

In flush times, television stations are accustomed to 30 to 40 percent profit margins. But the recession is goring even these cash cows with a 14 percent drop in advertising revenue in the first quarter of this year compared to last at Bay Area TV stations, analysts say.

Ad revenue took an even bigger tumble at Bay Area radio stations, with a 27 percent decline during the same period.

The main culprit is the imploding auto industry, which provides from 20 percent to one-third of the advertising revenue for broadcasters. With General Motors and Chrysler announcing plans last week to close 1,900 dealerships during the next year, it will take years for advertising levels to recover at TV and radio outlets. “And when it does return, it will be different,” said Robin Flynn, senior analyst at SNL Kagan, who recently conducted a nationwide study of advertising on radio and TV stations and projected the 14 percent TV decline.

“All advertising-driven media have been hit hard by the recession, not just newspapers,” Flynn said. “So companies are really trying to get creative to make up for that revenue.”

Spot TV ads drop

Broadcasters in top-10 markets like San Francisco are generally still profitable, Flynn said. Outlets in large markets are more dependent on national advertisers, so they’ve taken a bigger hit than broadcasters in smaller markets. In the first quarter of 2009, spot TV advertising by the top 200 Bay Area retailers dropped to an estimated $58 million from $62 million the year before, according to regional TV estimates by TNS Media Intelligence. And Bay Area radio stations – which collectively reach 5.5 million listeners a week – saw advertising revenue decline 27 percent in the first part of the year, according to a regional study by Miller Kaplan Arase Co.

“Never seen it this bad. Never,” said Mickey Luckoff, president and general manager of KGO-AM, who has been at the station more than three decades, much of that time with the news-talk broadcaster on top of the ratings chart. “It’s as close to a depression that I’ve seen in my lifetime.”

— Today, the Boston Herald reports JP Morgan Chase is largely exiting the mortgage market here in Massachusetts. That means they clearly don’t see an impending housing recovery here, or they wouldn’t be leaving New England. They’re voting with their feet.

I’m not sure how much local advertising Chase does here, but as a macroeconomic factor, it’s not encouraging.

What do these deteriorating conditions mean for already-weakened media outlets? How much worse does it get from here?

Westminster Dodge / Dorchester image: Mark Garfinkel, Boston Herald

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Globies Hit With More Bad News

*** UPDATED BELOW ***

If the Boston Globe is really such an essential component of life in Massachusetts, as John Kerry and his elitist cronies would have us believe, then why aren’t readers rallying to its defense?

Faced with the impending threat of closure by The New York Times Company, the Globies held a rally last week, attracting few beyond its own staff and union hacks with a vested interest in its survival. Missing from the equation, however, are readers- they’ve continued to abandon the paper.

According to newly-released data comparing March 2009 to the same period last year, the Globe has seen print circulation drop by nearly 14%, now down to 302,000 average copies. That’s a decline of roughly 40,000 daily, just since March 2008.

Sure, we’ve all heard the argument that readers have migrated to the Internet and additional data released today indicates visitors are lingering a a few minutes longer at Boston.com. But that actually means little: short-term traffic surges usually depress that figure, while declining visits cause it to rise.

Why? It’s simple: temporary links from other sites, such as Drudge, lead to huge increases for brief periods. As opposed to hard-core daily fans of a site, they read one story and move on elsewhere. That pushes down the average time spent viewing number.

Conversely, during a month where there aren’t many inbound links, only regular readers remain at Boston.com, sending this number back up. At the end of the day, as one-shot tourists disappear, the core readership is most important.

As with radio and television ratings, there’s obviously more to this than a body count: how long someone remains with a program or an article has a significant role in setting ad rates. Next, we’ll look at how this affects Boston talk radio.

UPDATE: the Globies are attempting to spin this news as “at least we weren’t down as much as the Herald”.

But the comparison may not be valid: since the latter paper shut its presses and outsourced production, the number of copies sent to newsstands has been cut sharply, which appears to be intentional. It has become much harder to find a Herald in many shops, especially later in the day. There is a deliberate attempt to sell every delivered paper without leftovers.

Another point: while the Herald is run on a shoestring budget, the Globe has tremendous overhead, yet the latter’s circulation (300,000 vs the Herald’s 150,000) isn’t big enough to make up for those extra costs.

Nonetheless, I do believe it is time for the Herald to consider beefing up its Sunday edition, which is too expensive at $2.00 for what little is provided. Sunday circulation has now fallen under 100,000, underscoring the need for improvement. Either cut the price or add something extra to the paper, before this deteriorates further.