NEW YORK The conventional wisdom about media and the financial crisis is that big advertising budget cutbacks will devastate print newspaper and magazine publishers. The Wall Street Journal's top editor sees the possibility of a different outcome.
After recoiling from the initial crisis earlier this fall, advertisers are slowly returning, and may be seeking more conservative, comfortable outlets to make their case to buyers, Managing Editor Robert Thomson said on Thursday.
"You're starting to see them emerge in the sunlight after this period of darkness," Thomson told the Reuters Media Summit in New York.
Once they show up again, they are seeking to spend money in ways that are proven by decades of experience, said Thomson. "People are looking for a safe harbor in times of turbulence."
That would be welcome news for print publishers, which have seen sharp cutbacks in ad budgets that already were flagging before the financial crisis hit.
Newspapers and magazines have suffered in recent years as more people get news online and advertisers cut their print budgets in favor of the Internet, and some analysts say that some U.S. newspapers even may fold in 2009.
Digital information is still the growth business at Journal parent, Dow Jones & Co, which is owned by Rupert Murdoch's News Corp NWSa.N. At the same time, print advertising is a lucrative business even though for many it is shrinking.
Thomson believes that advertisers are starting to understand that consumers often ignore ads in other media because they are doing other things at the same time that sap their attention.
With papers, the ads may be more valuable because they stick around with the printed page. Online, people get distracted, flipping from page to page, and if they notice ads at all, it is because they are annoyed by their intrusion.
"The only multi-tasking that you can do while reading a newspaper is drink a cup of coffee," he said. Online, he said, the link between the reader and the ad is more transient.
Thomson and Murdoch have been remaking the paper since News Corp bought Dow Jones & Co in 2007. News Corp has put its own stamp on the Journal, including an increase in political and general news coverage.
Now the Journal is looking to attract readers in big cities like Chicago and Los Angeles, where local papers are cutting business coverage. That does not mean buying up the papers to deliver the news, however.
"Some people are going to buy newspapers over the next few months, enjoy themselves and make a lot of money," he said. "We're not planning to buy papers, but if you ask me, newspapers have been ridiculously oversold."
Thomson said local papers are being devastated by a decline in classified ads, as people put them on the Internet instead, but the average big city daily still has brand potential that cannot be matched by any other new business.
Dow Jones, where Thomson also is top editor, is growing internationally, meanwhile.
While still a small source of revenue, its Japanese foreign exchange information service is the fastest-growing revenue source for the company.
Dow Jones now plans a Japanese-language site, which likely will launch in the first half of 2009, he said, but the company is not buying businesses there.
Dow Jones also is hiring in India and is looking to hire in Europe. The company has been on a hiring streak, though it also has been laying off some staff in non-news portions of Dow Jones Newswires.
"There is no slash and burn strategy," he said.
The Journal is putting more resources into international coverage, an area in terms of business coverage that has long been the province of its rival, Pearson Plc's (PSON.L) Financial Times, where Thomson was U.S. editor.
"A business reader needs to know about Mumbai and what that means," he said. "The intelligent businesswoman or man knows they can no longer exist in splendid isolation."
(For summit blog: summitnotebook.reuters.com/)
(Additional reporting by Franklin Paul; Editing by Lisa Von Ahn and Gerald E. McCormick)