Newspaper Stocks: Bargain Or Bust?
May 16, 2009 by Tisa Silver
Filed under Finance
Warren Buffett reads the paper, but said for most papers in the U.S., he wouldn’t buy them ”at any price.” Have newspaper stocks been punished too much or is the industry damaged beyond repair?
Newspaper closure is a common industry theme at the moment. According to The AP, the Tucson Citizen will print its final edition today. The Citizen, Arizona’s “oldest continuously daily published” paper, was shut down by Gannett after an unsuccessful search for a buyer. The paper’s commentary and opinion will continue online.
Photo by wili_hybrid, courtesy of flickr
Generally speaking, lawsuits and closures don’t send a positive message to investors, but John W. Rogers, Jr. of Forbes Magazine said he is buying Gannett (Ticker: GCI). In his column,”The Patient Investor,” Rogers says the newspaper “pessimism has gotten out of hand.”
It may be out of hand, but it is not over. Gannett’s stock has fallen 18.5 percent since his latest column hit the web on May 6. (View the chart)
If Mr. Rogers bought GCI at the $4 price quoted in his column, then he is actually up 9 percent based on yesterday’s closing price of $4.36. Year-to-date, Gannett is down over 50 percent. (View Gannett’s year-to-date chart.)
I don’t think newspaper stocks should be lumped together since many companies have other profitable lines of business. For example, The Washington Post Company (Ticker: WPO) owns Kaplan and Cable One, Gannett owns several TV stations, and News Corp. (Ticker: NWSA) owns a little bit of everything (sports teams, newspapers, magazines), domestically and abroad.
Kudos to Mr. Rogers for his patience. In this situation, I’d take the 9 percent and run. Not because I think Gannett is bad, but because 9 percent in a month, especially from a newspaper stock, would be enough for me.
