Weekday circulation of more than 700 newspapers nationwide
(including such venerable names as USA Today, Wall Street Journal,
Los Angeles Times, Washington Post, and Houston Chronicle) has
showed almost a 20 percent drop during the past 10 years or so.
Circulation figures are important because they are used to set advertis-
ing rates, a major revenue generator, apart from the actual income
derived from sales of newspapers. For instance, Help-wanted and real
estate advertising fell by more than 35 percent, while automobile clas-
sifieds dropped by 22 percent. Some newspapers thought they had an
answer to this problem after developing and implementing what
appeared to be an innovative business plan called "sponsored sales."
These are newspapers sold in bulk to hotels, airlines, and other outlets.
By getting a captive audience (for instance, airline passengers or hotel
guests) and a guaranteed front-end contract from a buyer (such as a
large hotel chain), circulation numbers increased significantly at much
lower cost (in comparison, for example, to individual home delivery).
Unfortunately, to the newspapers' dismay, most advertisers now con-
sider such circulation less valuable and have lowered their fees to
newspapers which invested heavily (and became successful) in spon-
sored sales plans. Newspapers are now required to show sponsored
sales figures so that advertisers can adjust their payments accordingly. DISCUSSION QUESTIONS
1. What do you think accounts for the trend of declining sales
among newspapers? Could newspapers have planned for this?
Explain your answer.
2. If you were responsible for corporate planning at one of the
major newspapers, what process would you put in place to
forecast what is likely to happen in the future? What types of
plans would you put in place to ensure the newspaper remains
profitable? How would you handle the unpredictable? Explain
your answer.
3. What should firms do when they realize that their customer base.
such as subscribers and advertisers in the case of newspapers,
seem to be dwindling year after year? Can you think of another
industry where a similar situation is occurring? Explain your
answer.
