Edward Atorino, CFA
Edward Atorino, CFA, is a media stock analyst for The Benchmark Company, which provides research and financial advisory services to institutional investors, New York City.
Are newspapers dead? And if so, how about their stocks? As more readers migrate online, newspaper companies have seen circulation and advertising plunge and their revenues cut in half over the past decade. That has led to a recent wave of broadcast media giants spinning off their print operations into separately traded companies. That includes Rupert Murdoch’s 21st Century Fox spinning off Wall Street Journal owner News Corp. (NWS) and Tribune Company spinning off Los Angeles Times owner Tribune Publishing (TPUB).
But the grim outlook for print media’s future is driving newspaper stock prices so far below fair value that strong, intermittent rebounds are inevitable. Example: In 2013, stock in The New York Times Co. (NYT) rose by 87%…and Lee Enterprises (LEE), owner of the St. Louis Post-Dispatch, jumped 204%. Newspapers have attracted some highly respected investors. Amazon CEO Jeff Bezos bought The Washington Post last year, and Warren Buffett’s Berkshire Hathaway has acquired 28 daily newspapers over the past three years.
Bottom line: Newspaper stocks are no longer buy-and-hold investments. But some well-known papers still are profitable and can survive for many years by pursuing a strategy of cost-cutting and tapping online revenues. Consider investing in these stocks when they get very cheap, then selling after any big move up. Right now, I’m keeping an eye on EW Scripps, which is merging with Journal Communications and spinning off their combined newspapers that cover 14 markets, including the Milwaukee Journal Sentinel…and Gannett, which is spinning off USA Today and 81 local newspapers.
