Worst Quarter Ever for Newpapers in Print and Online

Implications: Newspapers are failing on both fronts.  They are in a severe print advertising recession.  And online sales are slowing -- up  a mere 7% vs. industry-wide growth of 24%.  Falling revenues make reducing debt at Tribune more difficult and put dividends at risk at McClatchy, Gatehouse and Lee.

Analysis: As predicted, newspapers are being severely hurt by the 2008 ad recession. Print revenues are down 14% in the first quarter -- the biggest decline since comparable records began in 1971.  And online growth of a mere 7% shows how badly newspaper companies have done in competing on the web.  Since 2004 the newspaper industry has at least been able to champion double-digit online growth (even if that growth has been generally below the overall growth of online advertising).

The business press is now putting ever-shorter timelines on the future of the industry.  Fortune, for example, has switched from "down but not out" headlines in Feb, 2007 to the more recent headline: "Print-is-dead vs. long-live-print debate rages."  In that article, Rupert Murdoch, is described at expressing cautious optimism that newspapers will be around "for at least 20 years."  Other timetables are not so generous.

Murdoch has a more global viewpoint than most US newspaper publishers, which is one reason for his optimism.  But he has also injected life into the "national newspaper" market with the purchase of WSJ, an acquisition which has possibly helped USA Today -- a 2% gainer in the otherwise down Gannett portfolio.

The local ad recession is bashing the likes of Gatehouse, Lee and McClatchy.  Bloomberg quotes John Janedis at Wachovia as saying those companies' dividends are all at risk.

Meanwhile, newspapers are still lagging in every of area of online -- from content creation to ad sales.  A quick look at the QuadrantOne website launched by Tribune, Gannett, Hearst and the NYT Company back in February with the goal of boosting online sales shows remarkably little change since it went "live" in February.  That's only four months ago.  Which is not long in the history of newspapers.  But it's about 17 years in internet time.