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Skip module menu and go to content. Analytical Paper Series Service Industries Division

Revenue Fluctuations for Newspaper Publishers

By Allison Bone, Services Industries Division, Statistics Canada

Newspaper publishers depend on advertising revenues
Advertising revenues fluctuate with economic conditions
Effects of recession on local advertising unclear
Circulation revenue is growing at a slower rate

Informing Canadians daily

Every day millions of Canadians turn to one of the hundreds of newspapers available in Canada to get an update on what is happening in the world, the country and their community.  The newspaper has been a valuable source of information for Canadians since the first Canadian newspaper was published in 1752.  This article will focus on sources of revenue for the Canadian newspaper publishing industry.  Specifically, it will look at how the industry’s advertising revenue has been affected by economic conditions since 1975.  In addition, it will look at circulation revenue during this thirty year time period1.

Newspaper publishers depend on advertising revenues

When papers were first published in Canada, they often relied solely on government patronage for revenues2.  However, as time passed commercial advertising and classified ads increasingly filled the pages.

In 2005 the industry earned over two-thirds of its operating revenues from advertising (see Figure 1).  Revenues from circulation, distribution of flyers and inserts3, and custom printing accounted for the remaining revenues.  Because of this reliance upon advertising, publishers have had to find new ways to compete with other media sources such as television and the Internet for the attention of readers, and consequently for advertisers.

Figure 1  Sources of operating revenue in 2005. Opens a new browser window.

Figure 1  Sources of operating revenue in 2005

Advertising revenues fluctuate with economic conditions

Advertising revenues typically fluctuate with the well being of the economy.  More often than not if the economy is thriving then the industry’s advertising revenues will rise.  Conversely, if the economy is experiencing a growth slowdown, the industry often has lower or negative growth in advertising revenues.

From the period of 1975 to 2005, there were two recessions as well as two economic slowdowns, all varying in severity.  Advertising revenues for the newspaper industry tended to be negatively affected once economic conditions deteriorated.

The first of the two recessions was in 1981-824.  After having grown an average of 12% per year from 1975 to 1981, advertising revenues increased by only 1% in 1982 and 6% in 1983.  Conversely, when the economy was recovering in 1984, advertising revenues rose by 12%.

The industry had a much more difficult time recovering from the recession of the early 1990s.  From 1991 to 1994 advertising revenues decreased by 12% and although the economy started to recover in 1993, advertising revenues for the industry did not rebound to 1990 levels until 1997 (see Figure 2).

Less severe than outright recessions, there were also two slowdowns between 1975 and 2005.  The first minor slowdown occurred in 1986, a result of high interest rates and a collapse in energy prices5.  The newspaper industry however continued to see growth in advertising revenues during this time, albeit at a slower rate than prior years.

In 2001, the economy experienced a slowdown in growth following the high tech boom of the late 1990s.  Advertising revenues for the newspaper publishing industry contracted by 3% in 2002, before quickly recovering in the following years.

Figure 2  Newspaper advertising revenue, 1975 to 2005. Opens a new browser window.

Figure 2  Newspaper advertising revenue, 1975 to 2005

Effects of recessions on local advertising unclear

Newspaper publishers derive their advertising revenues from different types of advertising such as local, national, and classified advertisements6.  The three types of advertising all reacted differently to the two recessions (Figure 3).  National advertising, which made up just over 35% of advertising revenues for daily newspapers and about 9% for community newspapers in 2005, is more affected by slowdowns in the economy than local advertising, whose behaviour differed between the two recessions.
National advertisers tend to scale back their advertising spending in response to recessionary economic conditions.  The recession of the early 1980s triggered declines in national advertising revenues in 1982 and 1983.  Similarly, the 1990-92 recession caused these revenues to decline in each year from 1990 to 1993.  This type of advertising did not see an increase of revenues again until 1994, a year after the economy started to see higher growth.

Advertising revenues from classifieds behaved in a similar way to national advertising.  This revenue was affected by the recession of the early 1980s, however it only dropped in 1982, whereas national advertising fell for two consecutive years.  And, during the recession of the early 1990s, classified advertising followed the same pattern as national advertising, declining from 1990 to 1993 before rebounding in 1994.

While both national and classified advertising revenues decreased in both recessions, the effect of recessions on advertising revenues from local sources is less clear.  Unlike national and classified advertising revenues, local advertising revenues continued to increase during the 1981-82 recession.  However, local advertising revenues did indeed decline during the recession of the early 1990s, and did not recover to pre-recession levels until 1997.

Figure 3  Local, national and classified advertising revenues (Index 1975 = 100). Opens a new browser window.

Figure 3  Local, national and classified advertising revenues (Index 1975 = 100)

As a proportion of overall advertising revenues, national advertising revenues have become more important to newspaper publishers, particularly in the past decade (Table 1).  The growth of large retailers, who are likelier to operate and advertise nationally may have contributed to this increase.

Table 1  Proportions of advertising revenues by type of advertising, 10 year intervals, 1975 to 2005. Opens a new browser window.

Table 1  Proportions of advertising revenues by type of advertising, 10 year intervals, 1975 to 2005

Although advertising generates over two-thirds of operating revenues for the industry, the competition for advertising dollars has become more intense from other sources such as television, the Internet, billboards and other forms of media.  Newspaper publishers have had to find new ways, such as developing their own Internet sites and free commuter dailies, to attract advertising dollars.  Moreover they need to convince advertisers that the readership for their papers is strong.

Circulation revenue is growing at a slower rate

Circulation revenue is the second largest source of revenue for publishers, making up 17% of their operating revenue.  Over time, circulation revenue has shown slower growth than advertising revenue.  Although the circulation revenue from sales of newspapers has more than quadrupled from 1975 to 2005, this was less than the five-and-a-half fold increase recorded for advertising revenue.  To put this in context, for every dollar of advertising revenue generated in 1975, the industry earned 31 cents in circulation revenue.  By 2005 this had fallen to 24 cents for every advertising dollar.

Moreover, the rate of growth of circulation revenues has declined even further in recent years (Figure 4).  While circulation revenues grew by an average of 8% per year from 1975 to 1990, they rose by an average of only 3% per year from 1991 to 2005, despite an upturn from 2003 onwards7.

Figure 4  Circulation  revenue, 1975 to 2005. Opens a new browser window.

Figure 4  Circulation revenue, 1975 to 2005

The smaller growth in circulation revenue is partially a result of declining circulation numbers among the top 20 newspapers in Canada.  The number of papers in circulation for Canada’s largest 20 papers, has declined by just over 3% from 1999 to 2005, which goes a long way towards explaining weak growth in newspaper circulation revenues (Figure 5).

Figure 5  Total circulation for selected paid dailies7, 1998 to 2005. Opens a new browser window.

Figure 5  Total circulation for selected paid dailies8, 1998 to 2005

In addition to increased competition, the industry faces changing habits of newspaper readers.  According to a recent Statistics Canada study9, roughly one-third of Canadian households used the Internet as a source for news in 2003, compared to one-fifth in 2000.  This study also indicates that average household spending on newspapers has decreased since 1999 when households spent an average of $108 per year on newspapers compared to $99 in 2004.


  1. See note at the end of article for more detail on these surveys.
  2. The Evolution of Newspapers, Ultimate Guide to Canadian Newspapers
  3. Beginning in 2005, Statistics Canada began to classify revenues earned from the distribution of flyers and inserts as advertising revenues.
  4. “Alternative Measures of Business Cycles in Canada: 1947‑1996” Philip Cross, Canadian Economic Observer, Catalogue n. 11-010-XPB, February 1996
  5. “Alternative Measures of Business Cycles in Canada: 1947‑1996” Philip Cross, Canadian Economic Observer, Catalogue n. 11-010-XPB, February 1996.
  6. Local advertising represents advertising revenue from businesses such as department stores, restaurants, specialty stores, supermarkets, and other service providers  found in the community.  National advertising is the advertising of products and services either nationally or regionally.  These ads are most frequently placed by advertising agencies, and convey the message of the manufacturer or distributor.  Classified advertising includes advertisements for jobs, housing, used cars, etc. Source: Profile of the Canadian Daily Newspaper Industry, Canadian Newspaper Association,$file/CNA
  7. This upturn is partially a result of a number of newspaper publishers who switched from reporting circulation revenues net of distribution expenses, to reporting full circulation revenues and higher distribution expenses.
  8. The paid daily newspapers selected here include the top 20 papers in Canada according to circulation numbers in January 2005 (using CARD).  These same newspapers were then tracked back to 1998.
  9. Dugas, Erika.  What Canadian households spend on culture goods and services,  Statistics Canada, Catalogue no. 87‑004‑XWE, Vol 15, no. 4.

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