This report on the European newspaper industry is the first report for
the Publishing Market Watch 2004, a twelve-month project analysing the
competitiveness of the European publishing industry sector-by-sector.
The key to competitiveness of industries is their ability to provide “a
sustained increase in real income and the standard of living”. This is
distinct from the more specific concept of the competitiveness of individual
Newspapers covered by this report include national and regional daily
papers, non-daily newspapers (often local), Sunday newspapers and free
newspapers (both weekly local “shopping” papers and daily “commuter” papers).
All EU member states are reported in detail, and New Accession States
where information is available.
Overall, the newspaper industry remains an important one in all member
states, making a valuable contribution to GDP and to culture. It is highly
unlikely that newspapers will cease to be published in the foreseeable
future, but the industry faces challenges that may transform it.
2.1 Statistical report
Circulation is either static or falling in most EU member states,
and has been for some years. Declines are steady rather than dramatic.
Other media are growing in reach; this may leave newspapers at a competitive
European newspapers have among the largest circulations in the world,
outranked primarily by papers in Japan. Nearly half of the twenty highest-circulation
papers in Europe are in the United Kingdom. The differential between the
largest and the 20 th is nearly an order of magnitude.
The number of titles is though declining over the long term. This
is part of the same structural trend. Average circulation per title
is stable as both are declining, suggesting that attrition or consolidation
is taking place.
Advertising revenue grew steadily until 2000; it declined in 2001
in most major markets in the EU under the impact of recession, a trend
that continued in 2002 and 2003. However, it continued to grow in some
New Accession States as a function of their overall economic expansion.
The percentage share of advertising revenue captured by newspapers
is closely related to their circulation per thousand population, and in
many EU states newspapers have been maintaining or increasing their share
despite the decline in absolute revenue. However, they have failed to
maintain their share in the New Accession States as television develops
as a medium. Most newspapers in the EU depend on advertising for more
than half their revenues, and this has risen slowly over the years. If
overall advertising revenues are falling, newspapers will have more at
Employment in newspaper is stable or rising in most member states.
Employment costs are in general rising.
Turnover has risen for newspapers until 2000 and declined in 2001.
Value added followed the same pattern, but operating margins
are more erratic. Productivity (value added per employee) grew
until 2000 but declined in 2001.
The newspaper industry in the United States shares many of the same trends:
circulation has been falling steadily, and advertising revenue peaked
in 2000. The US newspaper industry is much more dependent on advertising,
which accounts for 80% of revenues.
2.2 Diversity and sustainability
Consolidation is a feature of the newspaper industry, but is not always
thought desirable by competition authorities if it has a negative impact
on cultural diversity. It is regulated at the national level. In some
EU countries, newspapers can be subsidised in order to maintain plurality
and freedom of speech, and in most member states newspapers receive some
form of VAT concession. However, at the regional or local level many de-facto
monopolies exist. Foreign ownership is a feature of the newspaper industry
in most of the New Accession States.
The newspaper industry, as any other, must be sustainable environmentally,
socially and economically. Environmentally, the industry creates waste
but is taking steps to ensure that newspapers are printed on recycled
paper and discarded newspapers are themselves recycled. Newsprint for
the European newspaper industry comes mainly from recycled products and
renewable resources. In some countries, the newspaper industry faces “producer
pays” regulation that will compel newspapers to contribute towards the
costs of collecting newspapers for recycling.
Socially, the ageing European population is likely to read newspapers
more than their younger compatriots. However, newspaper readership in
all segments is declining and the ageing population is less attractive
to advertisers at present.
Economic sustainability is challenged by falling circulation revenues
and falling advertising revenues as other media become more significant.
Television is the main threat, but online services are also threatening
both readership (as they provide an alternative source of news) and all
aspects of advertising, including classified advertising and particularly
the important “situations vacant” category. Newspapers have launched impressive
online services but have generally not been successful in monetising them
either through advertising or content charges.
Consolidation will be increasingly attractive to newspaper owners and
this may give rise to some tensions between the industry and competition
2.3 Key business issues
This report was prepared at a critical time for the newspaper industry
in Europe: recovery from economic recession has started, and forecasts
for advertising expenditure are more optimistic for 2004 than for 2002
and 2003. However, newspapers have a challenging commercial environment
that presents them with structural challenges as well as difficult short-term
operating conditions and it is possible that they may not recover the
position they held before the start of the advertising recession in 2001.
The business issues facing the industry arise mainly from competition
with other media rather than from competition between newspapers, although
such competition is an important factor for national daily newspapers
in particular. Although the newspaper industry is also affected by general
trends in business and the economy, it is these structural issues that
will have the longest-term effect on the industry.
In most countries in Europe, as well as in North America, newspaper circulation
has been falling for several years, irrespective of economic conditions
and the penetration of newspapers. This is a long-term worldwide trend
that arises from changing habits in media usage: there are many alternative
news sources available, especially television. There is a specific problem
with attracting younger readers of which the industry is very aware.
Falling circulation is accompanied by a fall in the share of advertising
revenue commanded by newspapers. Between 2001 and 2003, this falling share
was compounded by an overall fall in advertising revenue generally, affecting
all media. Advertising expenditure in general may be changing its pattern,
with a shift in favour of various forms of direct marketing. This may
further reduce the pool of revenue available to newspapers.
Newspapers are also subject to a variety of regulatory activities designed
to protect consumers from monopoly, protect social and ethical values
and ensure access to a diversity of newspapers. Ongoing initiatives that
may affect newspapers include harmonisation of VAT practice, potential
restrictions on financial journalism arising from the Market Abuse Directive
and initiatives that might regulate the content of advertising in areas
such as foodstuffs and advertising to children. National-level regulation
may also affect issues such as distribution. Regulation may also affect
newspapers ability to consolidate where consolidation would make a newspaper
or group more competitive.
However, governments in some member states have also provided financial
support to the industry to ensure political plurality of newspapers.
Newspapers have launched online services, and a few of these are now profitable.
However, many are still cost centres and newspaper the same problems as
other websites when it comes to raising revenues from online activities.
Newspapers continue to experiment with online services, and collaborative
ventures are helping to create efficient platforms for the delivery of
classified advertising in particular.
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