Journal Communications

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The sad and steady demise at newspaper publishers has been a key investment theme for half a decade. Many venerable publishers have tumbled into bankruptcy or into the arms of rivals, and a few hearty enterprises still stand.

Count Journal Communications ( JRN) among the survivors. Though its stock fell from $20 back in 2004 to below $1 in early 2009, the company has subsequently stopped the bleeding. Shares have moved back to the $5 mark, and could head higher still.

Journal Communications publishes the Milwaukee Journal-Sentinel and a host of niche publications that target ad-driven niche segments. The company also operates 33 radio stations and 13 TV stations, and it's the broadcasting divisions that are saving the day. Journal Communications recently topped profit forecasts thanks to robust ad spending on the TV and radio stations -- a trend that should continue as the U.S. economy rebounds.

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An emphasis on cost-cutting at the publishing division has stopped the bleeding there, which has boosted company-wide results. EBITDA plunged to -$66 million in 2008, rebounded to $10 million in 2009, and has averaged around $18 million in each of the last two years.

Meanwhile, total debt has been steadily shrinking, falling from $280 million in 2005 to a recent $42 million. The relatively stronger financial shape has led management to spend some of the company's cash flow in areas where the print, broadcast and online properties can better leverage off of each other. The recent better-than-expected earnings report may be a harbinger of even better days ahead.

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