DJ Newspaper Stocks Fall On Gannett Results, Scripps Downgrade.
DOW JONES NEWSWIRES
Newspaper stocks took another beating Wednesday following Gannett Co.'s (GCI) discouraging second-quarter results and Lehman Brothers cutting its investment rating on E.W. Scripps Co. (SSP) shares, suggesting that a bottom for the industry is still well off.
Shares of Gannett declined 7.8% to $16; the stock earlier hit levels last reached the day after Black Monday in 1987. Scripps lost 7% to $8.93 while New York Times Co. (NYT) fell 5.1% to $12.19, hitting a 13-year low, and Washington Post Co. (WPO) edged 1.3% lower to $567.94.
Gannett reported a 36% drop in second-quarter profit amid margin and ad weakness; the results weren't final as the company is still computing the size of write-downs which could reach $2.9 billion. Earnings met estimates due the company's massive efforts to reduce costs, but revenue fell short of expectations, indicating a continued struggle for the publisher of 85 daily newspapers and operates 23 television stations in the U.S.
Meanwhile, analysts at Lehman Brothers downgraded Scripps to underweight from overweight, saying they liked the company better before it split off its profitable cable and Internet divisions into a separate company called Scripps Networks Interactive Inc. (SNI).
With Scripps now primarily a holder of newspapers, the firm said it sees ad revenue falling off at a steeper pace. Lehman now says Scripps should see a 12% ad revenue drop in 2008 and another 8.7% decline in 2009.
Wednesday's share drop is not surprising for an industry that is still looking to find its feet in a wave of competitive pressure from online media sources, rising production costs and weakened economy weighing on sales and ad revenue. The combination has proven to be difficult to combat for the industry.
Following Gannett's earnings release and disclosure of June ad revenue, JPMorgan Chase analyst Alexia S. Quadrani said, "The ongoing deterioration in June results suggest a bottom is still nowhere in sight." Furthermore, shares of publishers will continue to feel the crunch after other companies start reporting quarterly results next week, most of which are expected simply add to the wave of bad news hitting the industry.
By Kejal Vyas, Dow Jones Newswires; 201-938-5460, kejal.vyas@dowjones.com
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7 comments:
Why the fascination with Gannett?
Are you trying to imply that newspapers are becoming obsolete and the internet is the replacement?
That's old news.
Comment 6:15
Apparently you didn't read the rating agency's reason for Gannett's diminished sales revenues.
That's exactly the reason they are on the decline. . . because of electronic news medias like SBYnews.
What astonishes me though is the rapid rate of decline.
The stockholders will lose a ton of money and their employees will find out there is no pension plan left. Just like Enron did.
Greg:
Jump . . . now!
Perhaps if Gannett gets in serious financial straits someone will repo the "new press" at the Daily Disappointment.
Then the Bassettman will be unemployed just in time to drive his wife to the Unemployment Office,how cozy!
"Apparently you didn't read the rating agency's reason for Gannett's diminished sales revenues.
That's exactly the reason they are on the decline. . . because of electronic news medias like SBYnews.
What astonishes me though is the rapid rate of decline."
So, 7:34, Is it the intent of this blog to destroy a business? or to disseminate information?
Disseminating information is fine, but taking public glee in destroying another's business is really bad form.
It seems like someone wasn't schooled in proper manners.
o McLean-Based Gannett Sees 36% Drop in Profits; Stock Tumbles
McLean, Va. -- Shares of McLean-based Gannett dropped more than 7% by midday Wednesday after the publisher of USA Today and 84 other daily papers said that its second-quarter profit dropped 36%. Citing a sharp decline in classified advertising and other factors, the company reported net income of $233 million, down from $366 million a year ago. Revenue fell 10% to $1.72 billion. Gannett said that weak business conditions, along with its dwindling stock price, will force it to write down as much as $2.9 billion, to reflect the company's declining value. "The weakening economy had a dramatic impact on our results," said Craig Dubow, Gannett's chairman, president and CEO. "The impairment charges reflect, in part, these challenging economic conditions and pressure on our stock price but do not affect our ability to manage our businesses or make strategic acquisitions."
http://www.gannett.com
http://www.gannett.com/news/pressrelease/2008/2ndq08.pdf (PDF)
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