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.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV