The Seattle Times appears to have held on to about two-thirds of the 90,000 former Post-Intelligencer subscribers it grabbed when its Hearst-owned rival shut down last March, giving the Times a rare circulation boost while most other U.S. newspapers saw their circulation numbers slide dramatically during the last six months.
The Audit Bureau of Circulations (ABC), whose biannual survey monitors circulation figures for all major U.S. papers, said in its latest tally released today that the Seattle Times had an average daily paid circulation of 263,588 for the six-month period ending Sept. 30. That was up from 194,000 at the end of March, a gain of about 36 percent. The only other paper among the nation’s 25 largest papers to show any gain during the latest six-months, the ABC reported, was The Wall Street Journal, whose circulation rose 0.6 percent to just over 2 million, pushing it ahead of USA Today, where circulation dropped 17 percent to 1.9 million. ABC reported the Seattle Times' Sunday circulation fell about 6% during the latest six-month period to 359,672.
Under their joint operating agreement the Seattle Times managed circulation for both the P-I and its own subscribers. When the P-I shut down March 17, the Times automatically transferred all the P-I subscribers to its own rolls, boosting the Times’ circulation to about 289,000. The latest industry figures indicate the Times has shed about a third of those P-I subscribers although because the numbers are averaged over six months the Times’ current circulation is unclear.
A Times spokesman had not responded to Crosscut’s request for comment on the new circulation numbers when this was posted.
The ABC’s circulation reports are closely watched by the newspaper industry and by advertisers, who use the numbers as a benchmark for negotiating ad rates. “They’re hugely important,” said Keith Mackay, senior vice president and media director for Publicis In the West, Seattle’s biggest media buyer.
For the Seattle Times, this month’s ABC numbers could be especially critical. Times Co. officials have been saying publicly since July that the company’s financial outlook has bottomed out, but the company will need to show its lenders evidence of revenue improvement when it renegotiates its debt. Company managers have told union officials those loan negotiations were scheduled for the late third quarter or early fourth quarter. Earlier this month, Times Chief Executive Frank Blethen told a luncheon gathering that the company, which had more than $100 million in debt and plummeting revenues earlier this year, had considered filing for Chapter 11 bankruptcy protection from creditors before the Post-Intelligencer ended publication.
The Times gained some relief from an increase in circulation revenue after the P-I closed. It also pocketed more than $30 million from the June sale of its Blethen Maine newspaper chain and got another boost when staffers agreed to take a 12 percent cut in benefits this summer, part of $90 million in budget cuts over the past two years.
Nonetheless, rumors have continued to swirl inside the company that a Chapter 11 filing could still be imminent if total revenues don’t rebound. In late July, the company said it expected the Seattle Times would show a 30 percent drop in total revenues this year compared with 2008, with ad revenue falling even more sharply. In a blog post last week, the Pacific Northwest Newspaper Guild, which represents Times newsroom employees, said the company set off bankruptcy alarms earlier this month when it began using a new payroll system, issuing staff paychecks two days ahead of schedule.
Blethen, whose family owns 50.5 percent of the Times Co., has said recently that he believes the company's fortunes will improve with a rebound in the economy. Traditionally, newspapers see their strongest revenue gains during the fourth-quarter holiday season. But Publicis’ Mackay said the Seattle Times’ holiday ad revenues are more likely to be flat or down slightly from last year. Nationally, he said, advertisers cut ad spending by about 20 percent earlier this year and local spending also has fallen, especially on newspaper ads. “I can’t see local advertisers, like mall jewelers, or local Targets or Best Buys, spending more this holiday quarter than last year,” Mackay told Crosscut.
According to Mackay, Times officials may also have erred by not renegotiating ad rates when the P-I folded and the joint operating agreement ended in March. Under the JOA, the Times handled ad sales for both papers, often bundling their advertising into one sale, with the Times getting 60 percent of the revenue and the P-I getting 40 percent.
“When the P-I shut down, I called the Times ad people right away,” Mackay said. “I said, ‘With the P-I gone you’re going to lose a lot of circulation. Are you going to renegotiate the rates?’”
The Times refused to renegotiate, he said. Instead, the paper kept the bundled JOA rates in place, assuring Mackay and other media buyers that they would retain most of the P-I’s circulation by simply shifting subscribers over to the Times’ rolls. Now, with about 30,000 of those former P-I’s subscribers gone, advertisers can seek lower rates or negotiate for additional cut-rate ads during the holidays, Mackay said.
“It’s great that they were thinking so optimistically back in March, but we’re not idiots,” Mackay said. “We all knew what was going to happen. It was a funny decision to make.”
Another factor likely to drag down fourth-quarter ad revenue for the Times is the disappearance of former advertisers in the economic downturn. Circuit City, Bailey Banks & Biddle, and GI Joe’s are among the largest to fold, but a number of smaller Seattle-area companies have also been hit by the economy. Ron Downing, former co-owner of Mt. Pilchuck Ski & Sport in South Everett, said his store spent a third of its $150,000 ad budget on holiday ads in the Times last year. The store closed for good in March. This year, said Downing, “There’s nothing left to spend.”
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