Archive for July, 2007

Next on the sale block: Gannett?

July 31, 2007

Gannett tops the Wall Street Journal‘s list today of newspaper companies “most likely” to be sold, now that Rupert Murdoch has apparently won control of Journal parent Dow Jones & Co. The WSJ‘s Deal Journal blog writes of Gannett:

“Probably the most likely to be sold, it is the second-cheapest out of 10 U.S. publishers tracked by CapitalIQ, trading at a multiple of cash flow of 7.1 times. The cheapest is Tribune at 6.1 times and the industry average is 9.7 times. The trouble with the USA Today publisher is its size. Even though the stock has lost almost half its value in the past three years, Gannett has a market cap of $11 billion and more than $5 billion in debt. That is more than most media companies could afford, and it isn’t clear that the ones who could would want exposure to the industry.”

Others on Deal Journal’s list, in order, with the blog’s handicapping notes:

  • New York Times Co. A sale can’t go through without permission of the controlling Sulzberger family, which has so far said it wants to keep the company independent.
  • Washington Post Co. Family controlled. Also, shares are up 40% in the past five years, reducing pressure to sell.
  • McClatchy. Its $2.7 billion in debt still outweighs its $2 billion market value. That could scare away bidders.
  • Pearson. The Financial Times parent is more focused on bolstering its competitiveness than considering on any sale.

Under Dubow, stock is second-worst performer

July 30, 2007

Two years after Craig Dubow took over as CEO on July 15, 2005, Gannett stock is down 30% — the worst performance of any big U.S. newspaper publisher except McClatchy, whose ill-timed purchase of Knight Ridder’s newspapers sent its stock into a tailspin. (I’ve also included the S&P-500 Index’s performance for comparison.) Faring best during the period: Dow Jones, buoyed by hopes the controlling Bancroft family will accept News Corp. chief Rupert Murdoch‘s $5 billion bid by today’s deadline.

The question, as always: How long will Wall Street and the board of directors remain patient with Dubow? He’s now on a three-year contract signed in February 2007 that provides for a “rolling” three-year term, until either Dubow or Gannett give notice it won’t be extended. In that case, the contract is to expire Dec. 31 of the second year after the notice, according to the March 15 shareholders proxy report.

Gannett stock: It happened this week

July 28, 2007

Click on these two graphics to make them bigger. Let’s face it: Few stocks escaped debt-related worries this week. Still, GCI’s performance was especially bad. In the chart (above), GCI (blue line) fell 6.1% during the week vs. a smaller 4.9% decline by the broader S&P-500 Index (red line). Equally alarming, the table (inset, left) shows GCI had the worst performance among the six big newspaper stocks I follow; only the Washington Post Co. advanced over the five days. Indeed, it’s worth noting that GCI’s $48.63 closing price today was the first time it fell below $50 since late November 1997 — nearly 10 years ago.

Nashville trimming staff; any other examples?

July 25, 2007

The Tennessean is seeking 15 buyouts, apparently in the newsroom, according to Nashville Scene. “The news comes amid a series of recent cost-cutting measures at the paper,” the weekly says, “including implementing a hiring freeze, shrinking news hole by what one source says is roughly six pages a month and removing TV listings from rack-sale papers, which has led angry readers to dial the Tennessean customer service number in droves.”

I’m betting those 15 positions are a lot for a newspaper that size. Can anyone fill me in? Send tips to Work at another GCI paper considering buyouts of layoffs? Please let me know, too.

Dividend gets big boost, but stock craters

July 24, 2007

The board approved a 29% hike in the quarterly dividend, the single-biggest increase since 1995, according to this dividend history. But Wall Street wasn’t impressed: GCI shares traded at a new low during the day, coming within pennies of falling through $50.

To be sure, it was an especially bad day on Wall Street, with major market indexes plunging. Still, this was just the sort of shareholder income increase that was supposed to make institutional investors happier. What happened?

Gannett stock: It happened this week

July 20, 2007

Click on the chart for a bigger version. GCI (blue line) closed today at $51.81, down a whopping 6.5% for the week after Wednesday’s discouraging earnings report. Worse still, GCI traded as low as $51.64 during today’s session, a new 52-week low. The broader S&P-500 Index (red) fell a much smaller 0.2 of a percentage point.

Investors punish quarterly results

July 19, 2007

Shares fell 2.5% today after the second-quarter results, closing at $53.49 after trading as low as $52.88 during the day. That’s drawing closer to the 52-week low: $51.65. Volume was more than three times the 1.75 million daily average shares trading.

Earnings: Slightly beat lowered expectations

July 18, 2007

No big ugly surprises this morning in the second-quarter results. Here’s the AP’s story and here’s the company’s statement.

Excluding one-time gains, per-share earnings fell to $1.24 from $1.28 a year ago. That was a penny better than Wall Street’s expectations, the AP story says. Overall revenue fell 3.4% to $1.93 billion from $2 billion in the same period a year ago. That revenue figure is well below expectations of $1.96 billion, if I’m reading this chart correctly.

Separately, the company said in its monthly statistical report, newspaper advertising revenue fell 6.2% in June from June 2006. USA Today broke a five-month losing streak; revenue rose 7.4% from a year ago.

Another E-Day dawns

July 18, 2007

As in second-quarter earnings release. The statement should hit the wire by 9-ish. Look for the press release on the company site here.

Making sure front page ads are truly ‘additive’

July 16, 2007

Los Angeles Times publisher David Hiller (left) made that pledge when he announced Friday that one of the nation’s biggest metropolitan newspapers would soon start publishing ads on page one. “We will make sure the revenue is additive, and not just switched from other pages,” Hiller said in a memo. The Times writes about the change here.

Hiller was spurred by what appears to be a pretty amazing dropoff in second-quarter revenue. It slid 10% and cash flow plunged 27%, “making it one of the worst quarters ever experienced,” Hiller said. Year to date, ad revenue is down 8%.

But Editor James O’Shea said he “vigorously opposed” putting ads on Page One, the Times story says, and advised the publisher against doing so. “Front-page ads diminish the newspaper, cheapen the front page and reduce the space devoted to news,” O’Shea said. “This would be a huge mistake that will penalize the reader.”

Gannett newspapers long ago bowed to corporate and started publishing ads on section fronts. But I’ve always wondered how publishers like Hiller can ensure the ads don’t simply move the same revenue around the paper. Can anyone explain? Comment, below, please!

[Photo: Los Angeles Times]