NEWSPAPERS: PUBLISHING, OR PUBLISHING AND PRINTING

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This category includes establishments primarily engaged in publishing newspapers or in publishing and printing newspapers. These establishments carry on the various operations necessary for issuing newspapers, including the gathering of news and the preparation of editorials and advertisements but may or may not perform their own printing. Commercial printing is frequently carried on by establishments engaged in publishing and printing newspapers, but even though the commercial printing may be of major importance, such establishments are included in this industry. Establishments not engaged in publishing newspapers but that print newspapers for publishers are classified in SIC 2759: Commercial Printing, Not Elsewhere Classified. News syndicates are classified in SIC 7383: News Syndicates.

NAICS Code(s)

511110 (Newspaper Publishers)

Industry Snapshot

Since the 1960s, newspaper management has under-gone a transformation from essentially family-run companies to the concerns of multimedia corporations. According to Ellis Cose, author of The Press, 1963 brought the first sign that the newspaper industry was in for a change. That year, the Chandler family, owner of The Times Mirror Company, whose chief holding was the Los Angeles Times , listed the company on the New York Stock Exchange. Soon other newspapers went public, making their actions accountable to shareholders and not just the families that ran them. This trend led to the growth of newspaper chains and the proliferation of a corporate culture, which stressed profits and growth over conventions of journalism. By 1989 five companies—Washington Post Company; Times Mirror Company; The New York Times Company; Gannett Co., Inc.; and Knight-Ridder, Inc.—were responsible for one-fourth of the newspapers read each day in the United States. Almost 10 years later, the top 10 newspaper companies owned more than 270 newspapers, accounting for 45 percent of total daily circulation. In keeping with the transformations of the industry, corporations that controlled newspapers began to branch out into other related ventures such as book publishing and marketing, and as a result their newspapers became part of entire communications systems, rather than self-contained enterprises.

The newspaper industry has been feeling pressure since the late 1980s. Many papers with long histories have been forced to shut down, and many others have reported financial losses. To counteract this crisis, publishers reduced editorial and production staffs through layoffs and hiring freezes, raised newspaper prices and advertising rates, experimented with new layouts, and increased automated processes. The terrorist attacks against the United States on September 11, 2001 served to exacerbate an already worsening economic climate during the early 2000s. This situation had negative implications for newspaper advertising levels. The industry's advertising revenues fell from $48.7 billion in 2000 to an estimated $44.3 billion in 2001, a 9.9 percent decrease.

Circulation figures have declined steadily since 1987 at a rate averaging 1 percent a year. In 2001, total daily circulation was projected to reach 55.6 million, the lowest level since the mid-1950s. In the six months preceding September 30, 2002, Advertising Age reported that 48 of the leading 100 U.S. daily newspapers saw their circulation levels decline, while 46 achieved gains. Overall newspaper readership—the percentage of adults who read newspapers—also has been declining, falling from 77.6 percent of adults in 1970 to 61.5 percent in 2002, according to the Newspaper Association of America. However, 2002 levels were higher than 1998 (58.6 percent). This increase probably could be attributed to a heightened interest in news following the events of September 11 and rising tensions in the Middle East.

Organization and Structure

A variety of publications could be called newspapers. The most common format is the gatefold, which is divided into individual sections. Pagination in a gatefold restarts in every section. The other major format, the tabloid, is read like a book or a magazine. Tabloids usually have fewer articles than gatefolds and are paginated without interruption from beginning to end. Traditionally, the content of tabloids has been considered less serious and less comprehensive than that of gatefolds.

Frequency of publication is another variable among newspapers. The papers with the greatest circulation are dailies; most of these issue a denser, more expensive Sunday edition. There are far more weeklies in operation, though their circulation is smaller. The two most common types of weeklies are the community newspaper and the alternative newspaper. The community newspaper highlights local current events such as education, sports, and politics. The alternative newspaper provides coverage of news items and arts-related activities that are often overlooked by the mainstream press. Since advertising provides the bulk of revenue for weeklies, these newspapers are often free.

Advertising. Most newspapers rely on circulation and advertising to finance their operations. Measured in linage, advertising amounts to about 80 percent of an average newspaper's income. Placement of advertisements is a significant factor; the section and page of an ad, as well as its size, will determine its price. Department stores traditionally have been a major source of advertising dollars, filling pages with pictures of their merchandise. Classified advertising is also a reliable and profitable endeavor for newspapers, adding up to 37 percent of total advertising income. This type of advertising is sold by the word.

One recent and controversial development in newspapers is the "advertorial," or paid announcement on the opinion page or in another section where the advertiser expects to gain from its context. Other advertisements of this type consist of multi-page inserts or theme magazines distributed with papers. Paid announcements are labeled as such to avoid confusion; however, many editors feel the ads jeopardize the integrity of the newspaper.

Circulation. Newspapers are sold in vending machines and privately owned newsstands or by subscription, which allows customers to pay a reduced rate per issue and have the paper delivered to their homes or businesses. Newspapers profit from subscribers because they mean guaranteed, consistent sales. In determining a price for newspapers, publishers have to weigh the potential earnings from sales against what readers are willing to pay. If the price is too low, circulation might be healthy, but profits could decline. If the price is too high, circulation could drop.

Averaging 50 to 60 percent of total costs, personnel represented the largest expenditure for newspapers. Departments include management, editorial, advertising, circulation, and production. Within the editorial department, the staff is divided according to paper sections, which may include: local and national news, sports, entertainment and the arts, business, opinion, and others, depending on the paper's size and focus.

Newsprint was the second-highest expenditure, averaging one-quarter of total costs. The United States consumes more than one-third of the world's newsprint, most of that going for the nation's newspapers. A dip in newsprint costs can save a newspaper during hard times, and since a failed newspaper means loss of business for the newsprint manufacturer, most offer substantial discounts from list prices. However, publishers such as the New York Times Company and the Tribune Company also own paper mills and consequently suffer when newsprint sells at a low cost. Equipment, such as printing presses and cameras, represents the third largest expense for newspapers.