NEWSPAPER INDUSTRY Job ads dwindle amid weak economy, competition

Overall, newspapers have seen an 8 percent drop in help wanted ads revenue.
NEW YORK (Dow Jones/AP) -- Help wanted!
Hurt by the sputtering economy and competition from the Internet, newspaper publishers' revenue from recruitment advertising is about half its $8.7 billion peak in 2000, according to an estimate by the Newspaper Association of America.
And many newspaper executives don't expect a recovery to begin in the lucrative advertising category until next year.
Even then, with many economists predicting a sluggish economic recovery for help-wanted advertising, which tends to lag economic rebounds, may see anemic growth once it starts.
The dramatic falloff in help-wanted advertising -- down to 9 percent of overall newspaper ad revenue from about 18 percent at its peak in 2000 -- is "the thing weighing most heavily on newspapers' earnings and stock prices," said Peter Appert, a newspaper industry analyst with Goldman Sachs & amp; Co. "We're into the third-year of an ad recession and help-wanted continues to get weaker."
For example, Gannett Co., publisher of USA Today and 99 other U.S. newspapers, disclosed at a media conference in June that its help-wanted revenue has fallen by about a third from a high of between $750 million and $800 million in 2000.
Stealing market share
Tempering a rebound in newspapers' help-wanted revenue is the Internet. Online job-search sites such as Monster, owned by Monster Worldwide, and Yahoo Inc.'s HotJobs have taken market share. These sites have also softened newspapers' power to jack up advertising rates.
"There is a limit to how much they can raise prices when there are online competitors," said Karl Choi, who covers the newspaper industry for Merrill Lynch. "They have lost pricing power."
Some publishers have found a bright spot by starting their own Internet help-wanted advertising sites. The most high-profile of those is CareerBuilder, an online-recruitment site owned by Knight Ridder Inc., Gannett and Tribune Co.
The publishers' bet on CareerBuilder, now No. 2 to Monster, seems to be paying off. This week it agreed to partnerships with AOL Time Warner's America Online and Microsoft's MSN, replacing those companies' previous pacts with Monster.
Exactly how much share the Internet has gobbled up is largely guesswork. Wall Street analysts estimate that online job-search sites including No. 1 Monster and others have snagged about a 13 percent to 15 percent share of the market.
When losses to publishers' own online offerings are factored in, the market share loss could exceed 30 percent, according to some analysts. Newspaper executives, meanwhile, haven't revealed much on the subject.
Slow to respond
Newspapers were very slow to respond to the threat of the Internet, allowing online competitors to go from zero share of help-wanted advertising in 1998 to a high of almost 15 percent by 2001, said Appert of Goldman.
"However, after getting beaten over the head for several years, they woke up to the challenge and have responded pretty aggressively with their own online offerings."
CareerBuilder expects the partnerships, which accounted for an estimated 25 percent of Monster's online traffic, to nearly double jobseeker traffic on its Web site, from 7 million now to more than 12 million monthly.
However, William Bird, who follows the industry for Smith Barney, cautions that to focus on online gains misses the bigger picture. "If we define the market as print and online recruitment advertising, newspaper companies ... are continuing to lose share," he said.
"Newspapers are producing steep declines on big revenue bases while scoring big increases on very small online recruitment advertising revenue basis."
For example, he noted, CareerBuilder Network posted second-quarter revenue of $37 million, up 37 percent from a year ago. That's a fraction of its owners' help-wanted revenue losses over the past three years.
Despite the hurdles facing newspapers, a turnaround in hiring, whenever it comes, should offer significant upside.
But don't expect those gains to kick in any time soon. "The speed in which we return to 1998 mid-cycle levels will hinge on the pace of U.S. job creation," Bird said. "I believe it could take three-plus years to get there."