Newspapers generate revenue from copy sales (circulation) and advertising. National and metropolitan newspapers account for about 80% of the total circulation of daily newspapers. Regional daily newspapers are located in large regional cities such as Newcastle, NSW; Cairns, QLD; Ballarat, VIC; and Burnie, TAS.
Circulation numbers of both metropolitan and regional daily newspapers have been decreasing over a number of years, which is a trend seen in many of the advanced world’s daily newspaper markets. Some regional dailies have had to contend with slow growth or declines in their catchment population. Suburban or community newspapers are usually published on a weekly basis and are delivered free to readers: Leader Newspapers, which is a major publisher of suburban newspapers in Melbourne (and owned by News Ltd), increased circulation from 1.3 million in 2001 to about 1.9 million in 2010.
Major metropolitan and national titles now account for about 54% of Australian newspaper publishing advertising expenditure (compared with 61% in 2005), with suburban newspapers accounting for about 19%, and regional newspapers about 27%.
Since 2005, the advertising revenue of major metropolitan and national titles has declined, while advertising revenue for suburban and regional newspapers has increased. Localised newspapers are better able to reduce leakage of advertising to the internet, as localised news is less likely to be easily accessible on the internet. In addition, the internet has not had the same level of penetration in regional areas as it has had in metropolitan areas.
News Australia Holdings Pty Ltd (43.4%), Fairfax Media Ltd (23.7%) , Other (23.1%) , Seven West Media Ltd (5.6%) , APN News and Media Ltd (4.2%)
Printed newspapers will continue to come under strong competitive pressure from alternative sources of news and information, and alternative advertising platforms. The newspaper printing or publishing industry’s revenue is forecast to decline on average 4.5% annually in real terms over the next five years to $5.2 billion. In 2013-14, revenue is forecast to decline 4.0%.
Profit margins will come under pressure, despite cost cutting and efficiency and productivity initiatives. Print margins are being eroded as readers and advertisers shift to the internet, and this is causing newspaper companies to cut their legacy print infrastructure and integrate their print and online businesses.
While newspapers’ digital revenue is growing rapidly, it will not grow sufficiently to offset the loss of print revenue. Newspaper operators will work hard to increase the value proposition of their online sites to both readers and advertisers.
Advertising revenue accounts for about three-quarters of newspaper publishers’ revenue. Industry revenue will therefore be affected by the overall level of advertising spending in Australia, and newspapers’ share of this spending. The level of advertising spending in Australia is sensitive to economic activity. The real rate of growth in economy-wide consumer spending will be stronger in the five years through 2017-18 (averaging 3.3% per year) than in the five years through 2012-13 (averaging 2.4% per year).
Stronger growth in consumer spending will be particularly evident in discretionary expenditure and in spending on higher value goods, where retailers’ advertising spending is concentrated. However, a trend of consolidation in the retail trade division will give larger retailers additional negotiating leverage, which may put downward pressure on retail advertising rates
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