October-November earnings releases may forecast what we can expect in 2016
All things considered, 2015 hasn’t been an awful year for revenue and earnings, at least compared to the years just following the fiscal crisis – but it hasn’t been fantastic, either
A number of media pros have expressed the same sentiment about the coming year: 2015 was the year media companies expanded as they rushed into new digital editorial and advertising efforts, but 2016 will be the year we see serious contraction.
That’s almost hard to believe as we regularly hear of layoffs at newspaper and magazine companies, but compared to the past few years, especially 2008 and 2009, this year has been pretty good. But to sustain growth, or even to maintain stability, the revenue and profits need to come, too. That’s where 2015 has been pretty disappointing.
A number of newspaper companies have complained to me when I’ve pointed out their poor performance, often using the same excuse: compared to the rest of the industry, our revenue decline of X percent wasn’t that bad. That’s a hell of a way to brag up an earnings report.
The reason revenue has felt disappointing it is that revenue trains from digital readership continues to be far below the losses still being seen in print readership, and especially print advertising. The NYT has gotten great press for what it has accomplished in 2015, its circulation revenue is up nearly 1 percent (1 percent!), but overall revenue is down 1.5 percent through the first half of the year. A great second half of the year might mean they can go through 2015 without recording a revenue decline. That really would be a great accomplishment – but they are the leaders in their industry.
The magazine business appears to have just given up talking about its revenue achievements. In B2B, the organization that was once responsible for tracking ad pages still hasn’t even posted its final report for 2014. On the consumer side, well, that new report is all about audience, and if the figures being released are accurate, the magazine business is the fastest growing business in America, though I know of no publisher who would dare actually say that in public.
The tech business continues to lead the nation and world in growth, especially on the consumer electronics side, Apple seems immune to ever reporting slowing revenue growth, but a number of people have told me they believe it is just a matter of time. With the way cell phones are sold today, it is likely that a good number of customers may feel they do not need to upgrade their phone as they have done reliably every two years. But I cannot make any predictions, Apple keeps chugging along and I’m just an observer on sidelines watching in amazement.
But where I live, in flyover country, I never see anyone wearing an Apple Watch. I think that really does means something. A few years ago I could judge the success of an Apple product roll-out simply by observing what consumers were using in public. When I was Greece in 2012, one could see all the German tourists with their iPads. In 2008, one started to see just how many people were now owning iPhones. Apple has not completely rolled out its retail strategy for the Apple Watch, with just now starting to sell the device in stores such as Best Buy and Target, but will that make a difference? I really don’t know. I don’t wear a watch and don’t plan to start, and I know many others who feel the same way. But…
TNM always pays attention to Apple earnings to track iPad sales. But for the past year and a half those sales have been lower than the comparison quarter. That likely won’t change with report either. The iPad Pro comes out in November, but sales will be minuscule compared to what we saw with the iPad during the holiday season of 2013, when Apple released its first iPad Air and the 2nd generation of the iPad mini (the first with the higher resolution display). Apple sold over 26 million that quarter, but this quarter might see Apple sell less than 10 million units for the first time since 2011.
Apple reports earnings October 27, Google (pardon me, I mean Alphabet) is a week earlier on October 22. That say day, though, a more interesting earnings report might be that from Amazon. Can they surprise again, be profitable?