Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, March 24, 1991                   TAG: 9103210010
SECTION: BUSINESS                    PAGE: E1   EDITION: METRO 
SOURCE: 
DATELINE: THOMAS EASTON THE BALTIMORE SUN                                LENGTH: Medium

AD GROWTH ELUSIVE TO INDUSTRY

Much of a newspaper's cost structure remains the same regardless of business conditions, but its primary source of revenue - advertising - can soar with a resumption of growth. Therefore, investors tend to leap into the stocks when sniffing an imminent upturn on the hope that much of the proceeds will fall to the bottom line.

But the link between the economy and newspaper prosperity has taken some blows. Karen Firestone, an analyst at Fidelity Investments, the large Boston-based mutual fund company, notes that a relatively strong overall expansion in the economy during 1988 and 1989 was not matched by advertising growth.

Yearly comparisons have been poor but this quarter should be truly awful, at least by the stellar standards of an industry whose returns tend to vacillate from profitable to highly profitable. Salomon Bros. reckons that every major newspaper company will show year-to-year declines in the first quarter, some by half.

The harsh results will not be a surprise to the stock market. An index of the 14 largest public newspaper companies compiled by Donaldson, Lufkin & Jenrette turned downward in July 1989, losing about 44 percent by last October.

Since then, they have turned upward and, despite losing a little recently, the index has recovered a third of its loss. Advertising continues to deteriorate around the country, Firestone said. Still, she suspects that that cannot continue.

The number of total advertising lines carried in newspapers is at about the same level as it was during the 1982 recession. "I can't see it getting much worse," she said, "if only because the general economy would have to deteriorate significantly for it to move to a deeper abyss."