Newspaper advertising slide of 20% tipped from 2011-16

BUSINESSDESK: Newspaper advertising in New Zealand is on a downward trend over the next four years and media companies will only partially make up the lost ground from increased digital spending.

PwC New Zealand’s entertainment and media outlook report says the total newspaper advertising spend is forecast to fall to $483 million in 2016 from $603 million last year and down from $840 million in 2007.

Newspaper circulation spend would rise to $286 million from $257 million over the same period, reflecting price increases and continued efforts to boost subscription numbers, it says.

Daily print circulation for newspapers is forecast to fall to 580,000 by 2016 from 633,000 in 2011, while daily digital circulation is seen climbing to 59,000 from about 1000 last year.

“Newspaper publishers continue to wrestle with the issue of how to replace falling revenues from declining circulations and the resulting lower advertising volumes while giving away news for free online,” PwC says.

“News sites have so far fallen short of replacing the lost revenue, either by way of advertising or online paywalls to news content.”

New Zealand’s major newspaper groups, Fairfax Media and APN News & Media, have written down the value of their publishing assets with the decline in ad revenue.

In May, APN hired Deutsche Bank to advise on ways to maximize profits and value for shareholders, while Fairfax has sold down profitable businesses such as Trade Me to help support its publishing empire.

The PwC report forecasts digital paid circulation spending will reach $1 million for the first time in 2012 and climb to $7.6 million by 2016, though some of this will go to offshore media that attract New Zealand subscribers, such as the Australian Financial Review, the report said.

The report notes that the decline in local newspapers has been less severe than in other countries such as Australia, and this may reflect a tradition of local titles in regional centres with limited competition, which has resulted in a loyal readership

Across the media and entertainment industry, revenue grew 4.3% in 2011 and PwC says growth is expected to continue through 2016 at an average 5% pace.

“The challenge remains on how to keep pace with consumer trends, new technologies and the ever evolving ways of consuming content in this increasingly digital and mobile world,” PwC partner Keren Blakey says.