A memo by Philadelphia Newspapers publisher Brian Tierney to staff paints a sombre picture of the problems facing newspapers. A copy of the memo is on Poynter Online.
In the memo (PDF), Tierney talks about the dramatic decline in advertising revenue. In 2004 the company produced over $100 million in cash for Knight Ridder. This year, the company is projected to have about $50 million in cash flow, but only $10 million to invest in the business.
“Many of you may be asking – did you and the PMH investors see this coming? The answer is yes and no. While our forecasts did expect reduced revenue due to the loss of big Philadelphia retailers like Strawbridges and continued reductions in our classified business, we didn’t foresee the speed and extent of the decline, and didn’t anticipate the huge falloff in the National advertising category.”
To survive, Tierney says the company needs to make significant savings and that “some layoffs are unavoidable”.
The decline in print advertising is a problem across US newspapers. While online advertising is on the rise, it is no proving to be enough to fill the gap left by the changing habits of advertisers.
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