Lower your newspaper expectations – now
Former Merrill Lynch newspaper publisher analyst Lauren Rich Fine said something cautiously optimistic about newspapers at the Dow Jones Media and Money conference on Wednesday: “Most of these companies can still be decent businesses. They just have to rethink their expectations. … Eventually, people will demand quality information, and they will pay for it.”
You can quibble with whether that’s optimistic if you like. To be fair, it’s a nice way of saying that newspapers will no longer be equipped with a license to mint their own coin, and that it’s Wall Street that has to get used to it. After all, as long as Wall Street doesn’t get used to it, you see stock moves like these today:
Gannett down 10 percent, McClatchy down 13 percent, New York Times down 8 percent (To be fair, Journal Register is up 50 percent this afternoon to an ultra-cheap 1.5 cents per share on news likely known only to itself)
Fine, who retired from Merrill and now teaches at Kent State University and was just hired to media blog PaidContent.org, made her comment on the same day that Goldman Sachs analyst Peter Appert — negative on the newspaper business for more than three years — dared to put a time on when U.S. newspaper publishers might see fortunes improve.
Here’s a line from his research note on Wednesday:
Newspaper companies are NOT going out of business (although highly leveraged companies will face particularly acute challenges). Ultimately, we believe newspapers will re-emerge as healthy and dominant players in the local media marketplace as their business models evolve into a hybrid print and online offering. Margins, however, will be significantly below the 20%+ levels historically achieved, and it will likely take another five years before online revenues are sufficiently large to offset secular declines in the print business. Accordingly, we continue to recommend an underweight position in the group.
Again — cautiously optimistic.
McClatchy CEO knows what we all want
You can say one thing for Gary Pruitt , McClatchy’s CEO and perhaps the most ardent defender of the newspaper business — he knows what we all want.
Here’s his comment from the analyst call he did today to discuss McClatchy’s first-quarter earnings :
We want to make sure we maintain our ability to generate revenue.
Who could ask for anything more?
Pruitt also showed off his lighter side in an exchange with Goldman Sachs’s Peter Appert. When the analyst said he was going to ask an unfair question, Pruitt responded, “That’s because I’m going to give you an unfair answer.”
Cue laughter, then cue crying because Appert’s question is at the heart of what most newspaper people want to know: Isn’t there a point where you can’t cut your way to profitability anymore?
Pruitt’s answer:
Ted is absolutely correct. Why are Pruitt and others at the helm in this industry continuing to take massive pay in the face of job losses and other cuts. Come on, Gary. Take one for the team! Can’t you get by on say – oh, I don’t know – $100,000 a year until you figure this thing out? Aren’t you embarrassed when you cash that check every week while you’re slashing jobs?
