Newspapers' Poor Circulation

Are you one of those people who eases into the morning with a cup of coffee and the morning paper? Or do you proudly wear the mark of one of those who offset the banality of a morning public transportation commute with the smudge of newsprint on your fingers? Could it be that you are among the last of a dwindling breed? This isn't, of course, a revolutionary idea in recent history, but it may be backed up by recent data.

Not only does the circulation for traditional newspapers continue to decline, but also it's declining at a more drastic rate. The Newspaper Association of America said earlier this week that over the course of the last six months, there has been a 1.9% drop in daily circulation -- and a 2.5% decline in Sunday edition circulation -- over the course of a one-year period. These are the worst numbers in more than a decade; the rate of decline has been 0.5% to 1% since the mid-1980s.

Among the companies that seem to have the most defensible moat against this sort of thing are those that provide newspapers with national circulation -- think Gannett (NYSE: GCI  ) with its colorful USA Today and Dow Jones (NYSE: DJ  ) with its Wall Street Journal, which not only is a national publication but also caters to a very specific type of reader. New York Times' (NYSE: NYT  ) and WashingtonPost's (NYSE: WPO  ) flagship papers are locally based, but they are often read by people who don't live anywhere near Manhattan or the nation's capital.

Ever since the Internet hit the mainstream, people have wondered about the fate of newspapers. (Not to mention that there has been a disruptive influence from 24-hour cable news channels as well -- the end result being constant updates and a swell of timely information that flies in the face of the idea of a print edition.) Although the initial panic has subsided over the years as newspapers have learned to adapt by supplementing with strong online presences, the Internet angle has gone one step further with the advent of blogs, likely another growing trend -- and destination -- that pulls readers away from traditional sources of news, information, and entertainment.

It's clear that simply slapping a newspaper up on the Internet with a few updates per day is no longer enough. These days, a whole slew of new and interactive features can be incorporated to give a paper a little more jazz -- blogs, discussion boards, quizzes, polls, live chats, special features, and so forth.

Far be it for me to be on the side of the outright doomsayers on this one -- even if there ends up being a huge shakeup in the industry, there will likely be the winners that are able to capitalize off the trends that are currently forming. But in the long run, it seems to me that the Internet is the real future of print news, period -- what's the point in the paper? Eventually it will be an anachronism that nobody will want.

Even the companies that embraced the Internet early and nurtured solid, popular online presences can't rest on their laurels for long. Investors have reason to harbor concern about long-term growth in the industry -- and to keep a careful eye on the news on newsprint.

To read more about what was once black and white and read all over, see the following Foolish commentary:

Alyce Lomaxdoes not own shares of any of the companies mentioned. She rarely buys a newspaper -- she gets her news online.


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