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Newspaper Stocks Surge As Their Own News Improves

Gannett shares rose $1.76, or 18 percent, to close Tuesday at $11.74. The New York Times Co. climbed 40 cents, or 5 percent, to $8.39; Lee Enterprises Inc. soared 89 cents, or 42 percent, to $3.03; Media General Inc. gained $1.07, or 14 percent, to $8.97; and McClatchy Co. was up 25 cents, or 6 percent, to $2.65.

All those stocks now go for several times what they did in the depths of the recession. In February and March, "newspaper stocks were being priced as if they were all going to go out of business," Doctor said. Things looked so bleak that Gannett shares plummeted below $2 in early March while McClatchy cratered at 35 cents.

Despite the recent rally, newspaper stocks are 60 percent to 90 percent below where they stood three years ago, before the advertising slide began to siphon away publishers' main source of revenue. At the end of September 2006, for instance, Gannett traded at $56.83, and McClatchy stood at $42.19.

Since then, newspapers in Seattle, Denver and Tucson, Ariz., have stopped publication, and several publishers have filed for bankruptcy protection. The bellwether Standard & Poor's 500 index is down only about 20 percent.

The main reason for the huge disparity: Newspaper ad revenue this year is on pace to total about $27 billion, down roughly 45 percent from $49 billion in 2006.

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