E.W. Scripps Co. (NYSE:SSP) is one of the few newspaper publishers that Wall Street thanks to its fast-growing Internet and cable businesses. Now, the company may sell off some if not all of its 18 newspapers, which include the Memphis Commercial Appeal and Denver's Rocky Mountain News, according to media reports.
``There might be a better opportunity for these papers to survive with different ownership, certainly with a different capital structure,'' said Scripps Chief Financial Officer Joe Necastro at a Citigroup Inc. investment conference yesterday, according to Bloomberg News. ``We don't want an asset that's generating less cash next year than it is this year."
Who can blame him? Profits of the newspaper business have lagged the rest of Scripps for years. They aren't terrible as newspapers go, but they aren't doing much to help the stock price either, which climbed a whopping 4 percent last year. Investors think Scripps is a well-managed company and are fans of The Home Shopping Network cable channel and the Shopzilla comparison shopping sites. Wall Street, though, has little use for the newspapers owned by Scripps or any other company.
Maybe some of the same private equity players that are in the hunt for Tribune Co. (NYSE:TRB) will be interested in the papers. Gannett Co., (NYSE:GCI), the top newspaper publisher, also will look at some properties as will Dean Singleton's closely held MediaNews Group. Perhaps as in other cities local buyers will emerge. But as I've said before I find it difficult to believe that the new owners will fare much better in dealing with the problems of declining advertising and circulation revenue than the old ones. Scripps, like every other newspaper seller, is going to have dififculty getting good prices for any properties it tries to sell.
Despite the industry's spin, newspapers are a print business. Internet advertising is growing at a healthy rate but that business isn't large enough to make much of a difference to the company's overall bottom line. For newspapers to survive, they are going to need to be in private hands.