June 1 (Reuters) - The newspaper industry’s attempts to increase digital revenue while ratcheting down costs is not enough to stem losses from a hemorrhaging print product, a report from Moody’s said on Friday.
The ratings agency, which keeps tabs on The New York Times Co, Gannett Co., Block Communications, McClatchy Co and Gatehouse Media, rated the industry outlook “negative” on declining earnings expectations.
Moody’s projected earnings before interest, taxes, depreciation and amortization (EBITDA) to fall in the range of 11 percent to 13.5 percent this year and drop 12 percent to 14.5 percent in 2013.
“Revenue declines are relentless, and industry efforts to grow the digital business and reduce costs are not sufficient to offset pricing pressure and print volume losses,” wrote Moody’s senior credit officer John Puchalla.
Indeed, the report comes as the organization that tracks revenue for newspapers said that for the first quarter, advertising revenue declined almost 7 percent to $5.2 billion. The modest increase of 1 percent in digital revenue failed to offset an 8 percent decline in print, according to the Newspaper Association of America.
Dogged by plummeting advertising revenue and readers who are choosing to get their news elsewhere, newspapers have been slashing costs over the past several years - including chopping the number of days the printed product is available.
For instance, Advance Publications said last week that it would stop printing the New Orleans Times-Picayune four days a week, giving the Crescent City the distinction of being the largest metro without a printed daily newspaper. Advance said it will focus on its digital publications.
Still, Puchalla warns in the report that even a “complete transformation away from print entirely would eliminate the sizable costs of print product and distribution but the revenue loss is still too great for companies to make the switch yet.”