Bad news even worse

Merrill Lynch analyst Lauren Rich Fine looked at the circulation decline at newspapers in the March 2005 ABC figures. Low and behold, she found that paid circulation (those who paid 50% or more for the paper -- real subscribers, if you will) declined even more than newspapers wanted you to know.

What this means is that the deeply discounted 25%-50%-paid category that 'soared 40.9%' are the 1-cent to 10-cent-a-copy type given away to hotels, schools, provided to advertisers for handouts to their target audience, etc. In other words, newspapers, to counter loss of subscribers, are giving away even more newspapers (up 40.9%) than before in an effort to hide their loss of readers. Advertisers are aware of this, Merrill Lynch can analyze it in minutes after the figures were released, newspapers know the facts. They just don't want their readers to be aware of their declining subscribership (and influence.) [Bolding and color mine.]

"Merrill Lynch has compiled a chart breaking out the 50%-or-greater circulation numbers for the latest Fas-Fax period, ending March 30, listing how much those numbers have grown or slipped in the past year. In nearly every case, the declines there exceed the newspapers' overall numbers, showing that the 'quality' category is still in retreat. In the sample of about 20 papers, the overall daily circulation sank only 2.4% but the 50%-or-greater category plunged 5.2%. Those losses were reduced because the 25%-to-50%-paid category soared 40.9% and other-paid grew 4.5%.

Here are the papers profiled by Merrill Lynch, followed by, first, the percentage gain or loss in over-50% daily circ and then the overall percentage for that paper in this period.


The Sacramento Bee +0.8 (+0.5)
Minneapolis Star Tribune -0.4 ( +0.3)
North County Times (Calif.) -0.4 ( -1.9)
St. Louis Post-Dispatch -0.8 (+1.2)
Milwaukee Journal Sentinel -1.4 (-0.8)
The Boston Globe -2.1 (-3.9)
The New York Times -2.2 (+0.2)
Wisconsin State Journal -2.3 (-1.6)
The Washington Post -3.8 (-2.7)
The Philadelphia Inquirer -3.9 (-3.0)
The Miami Herald -4.7 (-3.8)
Detroit Free Press -6.1 (-2.3)
Chicago Tribune -7.5 (-6.5)
Rocky Mountain News (Denver) -9.4 (-6.5)
USA Today -9.8 (+0.3)
The Wall Street Journal -9.9 ( -1.5)
Los Angeles Times -12.9 (-7.7)
New Haven (Conn.) Register -20.9 (-1.8)

In other words, the greater the difference between the first (percentage of gain or loss) and the overall percentage is the amount that newspaper is hedging with 'other paid' and deeply discounted giveaway papers.

The Wall Street Journal, unique among the papers analyzed, has a significant online subscriber base they are required to count as 'other paid and discounted subscriptions' even though the online is somewhat more abbreviated and the online subscription rate is as much as dead tree subscription rates at other papers.

Notice USA Today, though, and the New York Times, both touted in earlier stories as having bucked the trend with new subscribers. The Los Angeles Times is bleeding readers. What a surprise. /sarcasm off

Stockholders, however, may be getting wise to the scams. Wall Street certainly is. Besides the Merrill Lynch analysis, a Prudential Equity Group review of the figures shows the huge increase in 'other paid' circulation.

INCREASES
The Star-Ledger (Newark, N.J.) 83.7%
New York Post 60.4%
Charlotte Observer 40.4%
The San Diego Union-Tribune 33.3%
The Tennessean 32.3%
The News & Observer (Raleigh, N.C.) 31.3%
Fort Worth Star-Telegram 26.7%
The Wall Street Journal 25.7%
The Tampa Tribune 24.8%
Kansas City Star 23.5%
Denver Post 23.5%
Riverside Press-Enterprise 23.3%
The New York Daily News 21.3%
The New York Times 20.2%
The Seattle Times 20.1%

DECREASES
The Philadephia Daily News -50.3
The Arizona Republic -50.0
The Baltimore Sun -49.8
The Orlando Sentinel -46.2
The Philadelphia Inqurier -23.2%
The Rocky Mountain News (Denver) -19.7
Des Moines Register -13.6%
Asbury Park Press -9.8%
Atlanta Journal-Constitution -9.7

Definition of 'other paid' from ABC.