Newspaper publishers

The operating profit margin for Canadian newspaper publishers declined for the second consecutive year in 2005, as the growth in operating expenses outpaced the growth in revenue.

Data from the survey of newspaper publishers show that the industry's operating profit margin in 2005 was 13.3%, compared with 14.2% in 2004 and 15.1% in 2003.

Operating profits for the industry amounted to $696 million in 2005, a $20-million decline from the previous year.

Operating expenses rose 5.2% in 2005, mostly the result of higher printing and distribution costs. Salaries, wages, and benefits, which account for 39% of industry expenses, rose 1.1%.

In contrast, operating revenue increased 4.1%.

For the surveyed portion of the industry, nearly three-quarters of revenues consisted of advertising revenues. Advertising revenues increased 2.2% to almost $3.9 billion in 2005, less than half the rate of growth of 4.6% in 2004.

Daily newspapers accounted for nearly $2.8 billion of the industry's advertising revenues, compared to $1.1 billion for community newspapers. Advertising revenues for both segments increased at the same pace in 2005.

Daily newspapers earned 35% of their advertising revenues from national advertising in 2005, while national advertising accounted for only 9% of advertising revenues for community papers.

On the other hand, local advertising accounted for 73% of ad revenue for community papers last year, and only 38% for daily newspapers.

National advertising revenues are earned from national or regional campaigns. Local advertising revenues are from department stores, restaurants, specialty stores and supermarkets found in the community, as defined by the Canadian Newspaper Association.

Despite a general trend toward declining circulation numbers, particularly for paid daily newspapers, circulation revenues rose 5.2% to $871 million last year.

The increase for daily newspapers was due in part to changes in accounting for circulation revenues. They moved from reporting circulation revenues net of distribution expenses to reporting gross circulation revenues. Another factor was a 3.5% increase in the price of newspapers, as measured by the Consumer Price Index for newspapers.

The Internet has changed the way people access their news. According to the Canadian Internet Use Survey, 62% of Internet users chose to read news and sports articles online from their homes in 2005.

By offering consumers a choice between print and electronic news, newspaper publishers are able to reach a broader spectrum of readers.

Available on CANSIM: table 361-0003.

Definitions, data sources and methods: survey number 4710.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Allison Bone (613-951-3010; fax: 613-951-6696; allison.bone@statcan.gc.ca), Service Industries Division.