For some time now, a grim future has been predicted for newspapers in the current economic slowdown. With second quarter financials rolling in, the predictions seem quite accurate.

Dow Jones Co. reported an 18-percent revenue decrease. Revenue fell to $484.1 million after rising 16 percent in the same period last year. Operating income, excluding restructuring charges, was $72.9 million, compared to $157.9 million in the second quarter last year.

“Our results reflect continued economic softness and a slightly worse than originally expected downturn in advertising compared to usually strong increases a year ago,” said Peter Kann, chairman and chief executive officer of Dow Jones Co. Kann said he expects resumed earnings growth once conditions improve due to aggressive cost reductions implemented by the company.

The New York Times Co. reported a decrease in pro forma advertising revenue for its Newspaper Group of 16.3 percent for the second quarter. During last year’s second quarter, pro forma ad revenues were particularly strong, increasing 14 percent. Pro forma advertising revenue excludes seven newspapers and nine telephone directories (divested Regionals) sold in the second half of 2000. Second-quarter diluted earnings per share were 44 cents, compared with 59 cents in 2000, a decrease of 15.4 percent excluding special items.

“Our second quarter results reflect continued weakness in advertising due to the slowdown in the U.S. economy, as well as the cycling through of the dot-com and technology advertising, categories that positively affected the second quarter of last year, when Newspaper Group advertising revenues grew a record 14 percent,” said Russell Lewis, president and chief executive officer of the company. The New York Times Co. is also working aggressively to reduce costs.

“We remain optimistic about our results for the second half of the year, when advertising revenue comparisons ease, particularly in the fourth quarter, and newsprint prices are expected to be more favorable,” Lewis added.

Gannett Co. Inc. saw a 5-percent decline in pro forma operating revenues for its sixth period ended July 1, compared with the same period in 2000. Diluted earnings per share from continuing operations were 88 cents for the second quarter, down from $1.00 in the second quarter last year.

Journal Register Co. reported second quarter net income of $10.4 million, or 25 cents per diluted share, compared to net income of $13.2 million, or 29 cents per diluted share in 2000. Ad revenues were down 4.5 percent compared with 2000.

“We are pleased with our earnings considering the very difficult advertising climate and significantly higher newsprint prices,” said Journal Register Co. Chairman, President and Chief Executive Officer Robert Jelenic.

When will newspapers recover from this downturn? According to Veronis Suhler Media Merchant Bank’s fifteenth annual Communications Industry Forecast, there is a light at the end of the tunnel, with publishers increasingly looking toward the Internet to improve revenues. Additionally, the report predicts a 3.6 percent rise in advertising spending, with advertising expenditures forecasted to reach $58.2 billion in 2005. Despite forecasted increases, however, Veronis Suhler said total spending for newspapers will still not be able to match the growth rate of the previous five years.

For a complete copy of the Veronis Suhler forecast, contact the company directly.