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This Just In: Value Investors Value Newspapers

Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on . He's also a regular contributor to RealMoney ,'s subscription site. If you'd like to see all of Jon Markman's RealMoney commentary, click here for information about a free trial.

Derided as irrelevant antiques in recent years, newspapers have made an ironic comeback. Senior Bush administration officials didn't call bloggers, after all, to complain that war critic Joseph Wilson had a wife at the CIA. Instead, the officials attempted to co-opt The New York Times, Chicago Tribune and Washington Post, along with Time and NBC.

An odd compliment, certainly. But even that attention is refreshing, as newspapers have grown more accustomed to neglect, most notably from Wall Street. Shares of major national newspaper chains, such as The Washington Post (WPO) and Gannett (GCI), are down 10% to 30% in 2005. All have lagged the broad market, as circulation and ad revenue are in freefall.

On Tuesday, the largest institutional holder of Knight Ridder (KRI) made the ultimate cry for help, telling executives via a public filing that they had failed so miserably to unlock the company's value that they should sell it immediately.

How have we come to this crisis of investor confidence, and what are the prospects for this integral piece of our democracy? Consider the following perspective.

Shrinking Readership, Revenue

It's a random Saturday morning, and after an evening of watching a baseball game on television, reading about it online and talking about it with friends over instant messenger, I pad out to the to the rain-soaked steps in front of my house in my socks and eagerly grab the newspaper. I tear the wet plastic sheeting off the rolled up paper, snap off the rubber band, and plop down in front of a fire with a cup of coffee to read it.

Even though it's only The Seattle Times, not quite one of the world's top 10 newspapers, this uncomfortable sock-soaking adventure is counted as a great pleasure. I've spent a decade writing and editing online, but scanning the newspaper -- skipping my eyes over headlines without having to do any clicking, imagine that -- is still something I value and enjoy. In fact, if news were only available online, the home delivery of a full-blown, hard-copy version of the product might be seen as a fantastic innovation. And at 35 cents a copy, subsidized massively by advertising, it's a real bargain, too.
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