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Riddle me this investors: is the smart money heading into newspaper stocks? Don't laugh but CNN/Money's Paul La Monica points out that some well-known funds are increasing their stakes in this most hated of sectors on Wall Street.
But before people start loading up on the New York Times Co. (NYSE:NYT), E.W. Scripps Co. (NYSE: SSP), Gannett Co. (NYSE: GCI), Lee Enterprises Inc. (NYSE: LEE) or McClatchy Co. (NYSE: MNI) consider that these shares are down double-digit percentage points because their businesses are floundering. Yes, online advertising revenue is picking up but remember that these companies will get the vast majority of their profit and revenue from dead trees for some time to come.
But has all of the bad news been priced into these stocks? Ariel Capital Management, Wellington Management, T. Rowe Price and Fidelity Management and Research seem to think the stocks have nowhere to go but up, La Monica says.
They are certainly buying low. Can they sell high?
Newspapers are still very profitable even though their traditional revenue base of advertising and subscriptions continues to erode. The companies will get their share of advertising revenue moving online and big advertisers still want to be associated with quality content. Plus, billionaires motivated by power and ego such as Rupert Murdoch continued to be drawn to the sector. People sometimes forget that these companies have business outside of publishing that do very well.
Even so, these stocks are only for investors with tons of patience and tons of antacid tablets.
[photo laffy4k]
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Reader Comments (Page 1 of 1)
10-18-2007 @ 5:55PM
Sinoe Man said...
As American daily papers die off, so eventually should schools of journalism also. If so, finally the last bastions of Leftism, the MSM & the academy, will shrink in power & influence.
This is a cheering prospect for the future in America.
10-18-2007 @ 5:51PM
Sinoe Man said...
Granted, newspapers have been & remain cash cows, but their longterm prospects are dismal.
Cultural changes other than in mass communications, cable & the internet, are serving to diminish the attractiveness of newspapers to individual readers. For one thing, as our manufacturing jobs continue to fall & the number of people work in offices increases there's less & less of a customer base for newspapers.