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January 18, 2002
Job Sites Taking Bite Out of Newspapers
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At the dawn of the Internet age, many analysts warned that newspapers could lose a big chunk of their lucrative, $9 billion want-ad business to electronic rivals like Monster.com.

Now, after one of the most bruising years in the recent history of the newspaper industry, the Minneapolis Star Tribune asks whether that day is at hand.

Newspaper help-wanted advertising plunged an unprecedented 32 percent, to $5.8 billion, in 2001, the Star Tribune learned from Charlene Li, an industry analyst with Forrester Research.

Some of the lost newspaper revenue can be blamed on the recession, as companies spent less to fill fewer job openings. But an unknown portion of that $2.9 billion likely is gone forever, Li said, as companies experiment and succeed with online sites.

The Star Tribune noted that such sites continued to grow in 2001, albeit at slightly slower rates than in 2000.

"Many have indicated to us that they will permanently shift some of their spending to online and away from print," Li said.

Karen Larson, vice president of classified advertising at the Star Tribune, said that in a soft economy and a time of pinched budgets, advertisers are experimenting with online sites because the price is so much cheaper.

Larson said she believes the newspaper advertising model ultimately will prevail, as have "bricks and mortar" retailers.

Revenue at Monster.com, a unit of TMP Worldwide of New York, rose more than 60 percent through the first nine months of 2001, to $420.2 million. The growth of HotJobs.com inspired a bidding war last year between TMP and Yahoo Inc., which agreed to pay $436 million, or almost six times revenue, for the company.

Another rumored bidder, CareerBuilder, jointly owned by Knight Ridder and
Tribune Co., has acquired established online sites CareerPath.com and Head-Hunter.net Inc.

Help-wanted advertising accounted for about 18 percent of U.S. newspapers' 2000 revenue and, along with all classified advertising, is highly profitable. While neither Li nor anybody else expects all help-wanted advertising to migrate online, even a 10 percent or 15 percent decline in help-wanted revenue - such as occurred during the 1990-91 recession - can have a big impact on a newspaper's profitability.

The most recent declines have staggered the newspaper industry, the Star Tribune reports.

Operating income at Knight Ridder, owner of the St. Paul Pioneer Press and 31 other daily newspapers, fell 38.9 percent in the nine months ending Sept. 30, forcing the company to eliminate almost 11 percent of its work force.

Revenue at the Star Tribune itself, which is owned by McClatchy Co. of Sacramento, Calif., was down 7.5 percent through the first nine months of 2001, largely due to the loss of help-wanted advertising, which slid 43 percent in the third quarter alone.

So far, the news doesn't look much better for the Star Tribune in 2002. The first Sunday paper of the year carried 32 pages of recruitment advertising, down from 64 pages a year earlier.

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