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Register Reworks But Faces Tough Going as Web Gains

The Orange County Register has been battling a running slump in readers and a more recent drop in advertising.

Last week, I wrote about some of the changes the Santa Ana-based paper has made to turn things around, including making a bigger push on the Web, cutting the print edition of one of its magazines and combining two of its publications.

But relief could be slow in coming, according to Moody’s Investor Service, which recently released an industry outlook for the newspaper industry.

A number of factors continue to pinch newspapers.

“Competition is continuing to take advertising share from newspapers, particularly in targeted channels, such as online advertising,” analyst John Puchalla wrote in the report.

Print advertising revenue is “down across the board” with companies such as Intel Corp. “continuing to re-allocate their ad spending from traditional channels, such as newspaper, radio and television,” to targeted online advertising, Puchalla said.

“Newspaper companies are generating significant growth from their own online initiatives,” he said, “but not enough to offset print losses.”






Register Web site: print edition feeling more heat from online advertising

Online advertising is a small chunk,about 5% to 8%,of newspaper revenue, according to Puchalla.

Moody’s recently lowered its debt rating on Register parent Freedom Communications Inc. of Irvine. It dropped its corporate rating for Freedom to “Ba3” from “Ba2” to reflect “continued weakness in operating performance,” particularly in its newspapers.

Freedom has about $700 million in debt and yearly sales of nearly $900 million.

“Accelerating declines in print-advertising revenue make us even more pessimistic about the rating outlook for the newspaper industry than we were six months ago,” Puchalla said.

There’s a greater potential for a pullback in corporate advertising, caused by the housing downturn, he said.

That “could make the already tough and arguably recessionary revenue environment for newspaper publishers more challenging in the year ahead,” Puchalla said.

What’s making matters worse is the newspaper industry didn’t completely recover from the weak economy following the 2001 terrorist attacks, Puchalla said.

“A strong rebound after the 2001 recession never materialized,” he said.

The “modest growth” in newspaper ad revenue of 1.7% from 2002 to 2005 “lagged well behind gross domestic product growth,” Puchalla said.

“This resulted in less of a cushion to absorb the down in advertising that began in late 2006 and continued into 2007,” he said.

Despite challenges, Freedom Chief Executive Scott Flanders said he strongly believes “in the viability of the daily newspaper.”

“We must evolve as our readers change in the manner in which they consume and access news and information,” he said. “The newspaper is no longer the sole source of the day’s events. TV and the Internet each contribute in this regard and it is essential that we offer the local reporting that is available only from our local reporters.”


Pacific Expands

Costa Mesa-based Pacific Communica-tions expanded its staff after bringing in more work.

The advertising shop, which focuses on healthcare marketing, said it hired Christie Cruz as associate creative director and Nicole Stark as account supervisor to work on advertising for several products from Irvine-based drug maker Allergan Inc., including wrinkle smoother Botox Cosmetic.

Both women have worked for Pacific Communications before.

The OC ad shop, which started as the marketing arm of Allergan and still is owned by the drug maker, has been doing more work for the company.

Pacific Communications recently landed work on Allergan’s use of Botox to treat hyperhidrosis, or severe underarm sweating, after besting BBDO Worldwide in Minneapolis. The work is for consumer marketing,the first direct-to-consumer Botox assignment for Pacific Communications.

The shop already handles Botox marketing to professionals.

Pacific Communications has been touting itself.

It recently rolled out its own new ad campaign, which broke earlier this month. The tagline is “Shake up your thinking” and “Get seismic with your brand.”

Ryan Abbate, Pacific Communications president, said the goal is to help dispel a “commonly held perception that the best practices in healthcare advertising only come from agencies in the east.”

“It reflects a new level of boldness on our part, and through our growth, the strong belief that we can offer clients everything that large East Coast agencies offer,” Abbate said.

The campaign was created by the shop’s

own staff.

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