Newspaper publishers are running out of costs to cut, so they need to show some real advertising revenue gains soon, according to a Wall Street Journal article.

It claims that publishing executives have tended to hype slight moderations in the rate of decline of their year-on-year ad revenues, which does not reflect actual improvements in performance. In other words, there is no real recovery in advertising income.

The article quotes Wachovia analyst John Janedis as saying that if papers don't see a print advertising pick-up in the fourth quarter "it's increasingly likely that expense cuts, while significant, won't be enough to drive upside to earnings."

He forecasts that Gannett - the largest US newspaper publisher and owner of the British Newsquest chain - will see its ad revenue drop an additional 14% in 2010 after a 30% decline this year.

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