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.