Circulation of print news revenue in U.K. to fall 2.9% annually over the next five years, total £4.87B, report forecasts; efforts to cut costs by embracing online will ensure industry remains profitable

Kendall Sinclair

LONDON , October 31, 2011 (press release) – Over the next five years, circulation of print news in the UK is expected to fall, albeit at a slower rate than that of the past five years, according to latest report from IBISWorld, the UK’s largest publisher of industry research. Over the next five years through 2016-17, revenue is anticipated to fall to £4.87 billion, declining 2.9% per annum. Despite the falling revenue, ongoing efforts to cut costs by embracing internet service delivery and online alliances will ensure the industry remains profitable. As the industry remains profitable, established newspapers struggling to survive after recording consecutive years of losses will become likely targets of takeovers and significant management overhaul.

According to IBISWorld analyst, Ee Jen Lee, in 2000, the United Kingdom's 10 largest newspapers sold a combined 22 million copies per day. “Today, that number has fallen to 13 million, and the fall shows no sign of stopping,” says Jen Lee. “Across the developed world, the newspaper industries are in a state of flux, with advertisers reluctant to invest in the online space and classifieds revenue vanishing as advertisers migrate online.” While the internet's revolutionary effect on news is still underway, it remains difficult to predict what form the nation's media consumption will take in the future. Undeniably, readers' voracious appetite for digital material will grow exponentially. Lagging behind in the technology race, newspaper publishers have been left in a state of upheaval, with revenue expected to fall an average 3.8% per year over the five years through 2011-12. In 2011-12, the industry is expected to generate revenue of £5.64 billion, a 5.1% decline from the previous year.

Thus far, the UK Newspaper publishing industry remains profitable despite sharp declines in profitability. When the dust settles, there will likely be fewer news companies but an innumerable army of amateur journalists, bloggers and other online providers using methods like Twitter. In the past five years alone, nearly 80 newspapers closed – mainly small, regional groups that were rendered obsolete by the internet's easy access to news. Stronger participation from smaller players is resulting in a re-evaluation of how the industry creates and disseminates its news.

A most notable and shock exit that rocked not only the local industry but made headlines worldwide was the closure of News of the World, a News International-owned newspaper with the largest circulation in the United Kingdom. The abrupt end of one of News International's paywall experiments is detrimental news for the parent company, but its demise is likely to make way for another newspaper.

Dwindling profits have forced newspapers to adopt various defence mechanisms to protect revenue and profit. As more publishers adopt paywalls and optimise online advertising platforms, others are expanding into other countries in efforts to capture a new market in an information-centric society. Across the board, although overall industry is falling, growth in digital revenue is testament that the industry will not fade away but will take shape in other forms and mediums.

Despite the gloomy outlook for the medium term for the UK Newspaper industry, prospects will brighten in the long term as growth in technology adaption and creative application quickens. Revenue is expected to drop an average 2.9% per year over the five years through 2016-17, to £4.87 billion. Finally, charging for digital content will become more accepted and the means to do so will proliferate, consequently advertising revenue should grow again.

For more information, download the full report from IBISWorld on the Newspaper Publishing Industry in the UK

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About IBISWorld Inc.

Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on hundreds of UK industries. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in London, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.co.uk or call 020-3008-6568.

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