Newspaper Publishers See Online Growth

Newspaper publishers, both large and small, have begun to show solid returns from their online units.

On Friday, The Washington Post Co. reported sharp growth in its online business. In the last three months of the year, the company said same-quarter revenue at its online unit rose 45 percent to $10.6 million. Advertising revenues for the quarter were up 79 percent. For the year, the online unit brought in $35.9 million, 18 percent more than last year. Advertising revenues were up 60 percent compared to 2001.

The results are one of a number of signs that newspaper companies, after early missteps, have begun to reap dividends from their investments in online units. While revenues from these units remain small — at The Post, the online unit represented just 1.4 percent of total annual revenues — their growth significantly outpaced publishers’ other media properties.

Nielsen//NetRatings’ AdRelevance unit reports that general news sites saw a surge in ad impressions in the fourth quarter, growing 30 percent from the previous quarter 17.9 billion impressions.

And financial results at other newspaper publishers echo the gains shown at washingtonpost.com. Yesterday, Knight-Ridder said its online revenues for the quarter were up 33 percent from a year ago. For the year, the unit took in $55.3 million, up 31 percent from 2001. And in the fourth quarter, the online unit actually turned a small profit of $456,000. Like the Post’s online arm, Knight-Ridder Digital still accounted for just 2 percent of the company’s total revenues.

Last week, Dow Jones said the online version of its flagship Wall Street Journal, helped improve operating margins in its electronic publishing group. The Online Journal, which is a subscription site, enjoyed an 8 percent growth in subscribers compared to a year earlier.

On the other end of the scale, publishers of small-circulation papers have also shown encouraging returns. Davenport, Iowa-based Lee Enterprises publishes 38 newspapers, such as the Billings Gazette (Mont.) and Lincoln Journal Star (Neb.). It reported earlier this week that its online revenues increased 43 percent in its latest quarter.

“I think it has to do with the type of audience that comes to newspaper sites, generally frequent visitors who are very loyal who think of the news site as the first place to turn for local information,” said Michael Zimbalist, executive director of the OPA. “As a result, newspapers can extend their expertise in selling their audience to advertisers.”

The New York Times and Tribune Cos. report their fourth-quarter results next week. USA Today’s Gannett reports the following week.

The good news coming out of news sites follows up on a robust third quarter. In November, the OPA reported that its membership, which includes most large newspapers’ online units, enjoyed solid growth in ad sales. Of the 18 members that participated in the survey, the ad sales increased an average of 35.7 percent and overall revenue 47.4 percent.

The increase in ad revenues comes as news publishers are getting more ammunition in their fight to be seen as a prime place to reach at-work consumers. Earlier this week, Editor & Publisher released the survey results showing that the trend of newspaper sites of all sizes to require registration has not hurt their readership. Also, research set for release at next week’s Newspaper Association of America meeting shows that newspaper Web sites are about five times more likely than TV to reach consumers between 8 a.m. and 10 a.m.

“It’s a general phenomenon that the newspaper brand remains the dominant voice in each market,” Zimbalist said. “Even the smallest are placing much more emphasis on how to use this online channel to bolster their operating results.”

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