In the fourth quarter, newspaper revenue dropped 10%, including revenue from online enterprises.
According to The Wall Street Journal, "Ad spending at newspapers and their Web sites totaled $12.6 billion in the December quarter, compared with $14 billion in the final three months of 2006." Online spending was only 7% of the total.
Two companies may be facing forced sales of some of their properties or even outright liquidations. The company in the most trouble is Journal Register (NYSE:JRC). The firm's share price is at $.55 and has been slightly lower. Two years ago, it traded above $12. Falling revenue this year could cause the company to miss payments on its debt. In the fourth quarter of last year, the company has about $9 million in operating income before a non-cash write-off. Its debt service was also $9 million. Revenue is likely to be down more again this year.
The other company in real trouble is the nation's third-largest newspaper operator, McClatchy (NYSE:MNI). The operator bought rival Knight-Ridder and took on huge debt in the process. McClatchy trades just above $10, down from $50 less than two years ago. The company's revenue fell almost 12% in February. McClatchy recently wrote off almost $1.5 billion due to the falling value of its assets. Both Moody's and Fitch have either cut the firm's ratings or put it on credit review.
Just a year ago, it would have been unusual to find investors who thought a large newspaper company would go Chapter 11. This year, it will almost certainly happen.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 4 of 4)
3-31-2008 @ 5:41PM
Artie said...
Hopefully, the New York Times and Washington Post will follow those others into bankruptcy and extinction!
3-31-2008 @ 5:50PM
Artie said...
The new slogan for the New York Times should be - "All OUR views that's s**t to print!"
3-31-2008 @ 6:30PM
jeannette said...
I hope the New York Times follows in it path. I hate liberal people. Their brains are missing and the conservatives have enough of the Liberals and the left wing nut jobs. The left wing even tries to hurt their own causes
3-31-2008 @ 6:45PM
StoneMan said...
I seriously believe that Liberalism is a Mental Disorder. Or the Water or Wine Liberals Drink is Laced with Lead. They should be tested for Lead and Mercury Levels since this thinking reminds me of the Roman Empire Demise. I used to read everything I could get my hands on, subscribed to 4 or 5 papers growing up. Now, 3 or 4 times a week I will pick up 2 papers here in San Diego just to reveiw the local stuff. Too bad the ink in the fingers and fun of the Newspaper has gone by the way of Leave It To Beaver......It's Over, get over it and think for yourself....
3-31-2008 @ 7:14PM
Ginny Sinclair said...
I quit the LA Times because it was too liberal. I just wanted the facts, not their slant on them. Also, their grammar and spelling were terrible.
3-31-2008 @ 7:00PM
lee rader said...
Anyone who wonders why newspapers are going under, only have to read the blob, I mean blog, of beltwaybob. He tells it all, no facts, no proof, nothing. Just the usual Bush bash, that all Libs indulge in. Fellow Conservatives, Bush may have let us down, but the two Dems running for the highest office are real jokes. Neither of them should be allowed to take this office. Tell them both in November just what we think of 1) A congenital liar, and 2) A black racist.
3-31-2008 @ 7:15PM
Bill said...
What am I going to use to line my birdcage??
3-31-2008 @ 7:42PM
Richard said...
I believe that the newspapers have seen their better days. The modern age of information leads many of us to gather the news from the internet.
I only purchase the small town newspapers for business and home addresses. I advertise in the local paper and usually get good results in a profile advertisement they offer to the business community. I never buy the state or regional newspapers.
3-31-2008 @ 7:43PM
David said...
No self-respecting fish would be caught dead in the New York Times!
Remember: one lie can cause more deaths than any bomb.
4-01-2008 @ 9:14AM
Ed said...
I hate to disappoint you all but the demise of daily newspaper readership has nothing to do with the political stance those papers take. It has almost entirely to do with news - especially national news - being so readily available from other sources, specifically the Internet and cable TV. As the population ages and those who don't use the Internet for news die off, readership will drop even more. As readeship drops, advertising drops. When the two declines reach a critical mass, papers die. It's as simple as that.
That said, print journalism is not dead, just evolving. After years of working for a city daily that is in serious decline, I have been for the last four years the editor and lead writer of a free small town weekly - one of a small chain of four such weeklies in central Michigan. Our papers are thriving. Advertising was up last year over the previous year. Things are looking so good, we are in the process of starting up a fifth paper in an adjoining town. The secret? We give people something they can't get on the Web or even on TV - news that actually effects peoples' lives, such as local and community news about school boards, town councils, county government, business development, local sports, etc. I am convinced that the newspapers that survive are the ones that become more local instead of more diversified.
3-31-2008 @ 10:24PM
Denise said...
Hi Beltway Greg! You said it right. Too bad I am too old (and married) or I would ask you for a date too!
4-05-2008 @ 3:35PM
Kent said...
Newspapers are passe media with cable news and webnews in the forefront. However, I enjoy readubg them when eating lunch.