MEDIA WATCH

The "gloom and doom" forecasts of the newspaper business are paralleling what's happening in the real estate market with one important difference: housing sales are expected to rebound by next year. Don't expect the same to occur for daily newspaper circulation and their corresponding advertising sales.

Actually, the newspaper story is one of haves (weeklies) and have nots (dailies) because the latter has Internet competition and depends on subscribers. Young adults, in particular, are passing on paying subscription rates and are going online for their news - most of which is free.

That's not the case for weekly newspapers like this one whose stories can only be found in their printed pages and Web sites. And weeklies often focus on defined geography to report on one county rather than an entire metro area. Like other weeklies, the Chesterfield Observer believes county residents want to know about Chesterfield schools, government and their neighbors and are far less interested in what goes on outside the county.

"People under 38 years of age are not subscribing to the [Richmond] daily paper," Vice President of Account Services David Owen with Barber Martin Advertising told the Chesterfield Chamber of Commerce last month. While that age group does visit the daily paper's Web site, online advertising, if profitable, is far less so than the printed product.

At last month's Virginia Press Association conference, some newspaper executives for daily papers indicated advertising and classified sales revenue for January and February of this year were down about 10 percent from the corresponding months in 2007. And last year was not a good year either.

On Mar. 28, Editor & Publisher (E&P), a trade publication, reported a story that last year was "the biggest ad revenue decline in at least 57 years." The Newspaper Association of America reported "total print advertising revenue in 2007 plunged 9.4 percent to $42 billion compared to 2006 - the most severe percent decline since the association started measuring advertising expenditures in 1950."

Even when ad revenue for newspaper online sales was added, nationwide sales "decreased 7.9 percent to $45.3 billion compared to the prior year." Classified revenue, which years ago was a significant profit center because daily papers had little competition for that revenue, dropped 16.5 percent. Now online advertising for classifieds is a serious threat. And E&P wrote that "online revenue [for newspapers] is beginning to slow as well."

People in the newspaper industry - who thought they were in the news business - now recognize they're really in the advertising business. Many in the industry believe the downward trend for daily papers is going to continue. It can't be stopped - only slowed.

More than a year ago, Style Weekly chronicled the dissension and downsizing at the Richmond Times-Dispatch (RTD) that gives you a smaller paper today with less news. Ironically, Landmark Communications, which owns Style, the Virginian Pilot, Roanoke Times and other media outlets, is now for sale. And Media General, headquartered in Richmond which owns the RTD, is rumored to be one of the suitors for certain properties. That might further limit the number of news voices locally and statewide.

The advertising decline plus the general advertising climate has battered the stock price of Media General: down over 50 percent from a year ago. The share price of about $16 has forced Media General to defend its corporate leadership in a proxy battle, and both the company and hedge fund Harbinger Capital Partners wants Media General to reduce debt. But how can you eye some Landmark properties without taking on more debt?

Late last year, Media General stopped printing the Western Chesterfield Exchange, a weekly newspaper in the Route 360 corridor designed to stop the growth of this newspaper. During its brief one year of publishing, that paper seldom had even 20 percent display advertising, while other weekly newspapers around the state - including this one - say their revenue is growing.

The Chesterfield Observer's sales have increased enough to pump up our circulation by almost 5,000 copies last fall (to 48,365) with another increase in circulation scheduled for this summer. While daily papers are cutting staff, we're adding. It's a different business.