Newspaper Publishing.

• Author: Heffes, Ellen M.
• Position: Focus On

From an earnings perspective, it's no surprise that 2001 is shaping up to be a dismal year for publishers that depend on advertising -- and the newspaper industry is experiencing sharply reduced advertising revenues. Throw in Sept. 11 to an already down-turning economy, and the picture gets even darker.

Financial Executive asked several prominent FEI members who hold senior financial positions at our nation's most respected newspapers to discuss their situations and how they are managing in light of the economic realities. Two such executives responded, and their replies are below.

John B. "Jay" Morse Jr.

The Washington Post Company

Vice President-Finance & CFO

Vice President & Corporate Controller

Stuart P. Stoller

The New York Times Company

Q: How has this year's weakened economy impacted your business, as compared with the past 3 years?

Jay Morse:

We have seen a significant decline in revenues of our advertising-based businesses. With respect to newspapers in particular, the declines have been most notable in classified help-wanted advertising. However, some of our business actually benefits in a down-turn; classified ads for resale of cars generally rises, and it has, and as it gets harder to sell homes, both classified and retail (display) ads for real estate will increase. We also have magazine and television properties that have large advertising revenue streams, and they were hard hit this year, too, although the decline in TV is magnified by the absence of both political and Olympics advertising which occurred in 2000 but not this year.

Stuart Stoller:

Advertising and circulation revenues are the principal sources of revenue for The New York Times Co., with advertising revenues representing approximately 70 percent of total revenues. During the past three years through 2000, advertising revenues grew 8.4 percent, 8.6 percent and 5.2 percent. The slowing U.S. economy results in decreased advertising revenue, particularly in the help-wanted category, as well as a fall-off in dot.com and technology advertising. In the first six months of 2001, advertising revenues declined 15.8 percent.

Q: As a senior financial executive what steps (strategies and tactics) have you enacted (based on your role) to deal with the changing economics and (when applicable) protect shareholder value?

Jay Morse:

The most readily available option to us is to monitor expenses and push for reductions in discretionary spending. We also attempt to stretch out the...