Ratings agency Moody’s Investors Service has announced that it has a stable business outlook on the U.S. newspaper industry. It expects sector-wide revenue declines of 5% to 10% for 2010, amid a pickup in the broader U.S. economy.
Says Radio Business Report:
“Our 2010-2011 forecasts assume continued improvement in nominal US GDP growth,” said John Puchalla, a Vice-President and Senior Credit Officer at Moody’s. “The stable outlook is also supported by expectations that operating leverage from aggressive cost cuts will lift earnings for the next 12 to 18 months.”
But after that, the picture becomes much less clear:
The cyclical snapback in advertising could subside in 2012, Moodyâ€™s warned, shifting the stable outlook back to negative as a return to the longer-term trend approaches.
Of late, Moody’s has been cautiously raising its expectations for newspapers. The company raised its credit rating on the newspaper industry to stable from negative in April, citing moderating declines in advertising revenue but warning that many newspapers need to refinance their debt obligations.