Newspaper Industry Predicted To Strengthen

The recently published research acknowledges growth potential for revenue and profit levels. It pin-points the new young readership base born from the ‘rise’ of the free paper and increasing popularity of the compact as having positive consequences for the newspaper and advertising industry.

PwC’s analysis of the switch from broadsheet to tabloid stresses that the value of the changeover for advertisers will depend on the process running smoothly and the final negotiated position with the advertisers on the relative value of ads in the new format.

PricewaterhouseCoopers argues that the increasing fragmentation of other media, particularly TV and radio, will result in a premium being put on national newspapers as a medium with the ability to deliver to a mass audience. Regional newspapers are also expected to benefit as local radio fragments with the rise of digital technology.

The increasing use of colour printing in the newspaper industry will also aid advertising revenue growth and newspaper employment of brand extension will provide opportunities for the industry to develop new revenue streams with high margins.

Although national newspapers in the UK are under priced, PwC predicts that there is scope for publishers to drive substantial circulation revenue increases within the industry. However, although price increases may result in a decrease in one-off readership figures, this will be counteracted by other factors.

Commenting on the new report, David Trunkfield, director of PricewaterhouseCoopers Transaction Services group said: “We believe that the focus on declining ABCs masks a more fundamental positive outlook in which newspapers will be able to continue to drive revenue increases. Combine this with the high operating leverage inherent in newspapers, and progress will translate into strong profitability in the short to medium-term, as proven in the strong private equity interest in the auction of the Telegraph earlier this year.”