On Newspaper Stocks (Again)
I’m pessimistic about newspapers. But, that doesn’t mean I’m opposed to buying newspaper stocks. The two most interesting offers from Mr. Market are for Journal Register Company (JRC) and Journal Communications (JRN). Expect a write – up on each soon.
There was a recent piece on Journal Communications over at the Motley Fool. Mr. Simpson thinks JRN should dump its telecom business. I have to agree. In fact, I'd like to go a step further. Why not split the whole thing up? The parts are worth more than the whole. So what if it the company isn’t big? It’s cheap, and the value is in specific local assets that could be run just as well if each business was spun off, or if the different businesses were sold to a few bigger companies. There’s value in JRN. Separating the telecom, TV, radio, and newspaper assets should make that value obvious.
I don’t expect it to happen. For now, the value isn’t obvious. That means it’s a good time to dig into JRN. We might just find a bargain.
On a separate note, most newspaper stocks don’t look insanely cheap if you assume decreasing revenues (which I do). The big names may not be your best bet here.
Comments
I wrote about Gannett (GCI) twice in December and purchased it myself. Small town newspapers aren't going away, there's no replacement for them. GCI has a significant web presence. Note how historically they have consistently managed to outperform peers in managing the decline of national papers. They have a history of growing earnings and a history of dividend increases.
http://nodoodahs.blogspot.com/2005/12/whats-on-my-screener.html
http://nodoodahs.blogspot.com/2005/12/saturday-night-update.html
Posted by: nodoodahs | February 3, 2006 07:41 AM
Looking forward to your report, I've been watching JRN for a while but haven't had time to do any research on it.
Posted by: MarketWizWannabe | February 3, 2006 11:04 AM
I am not so pessimistic about newspapers or print media in general. Its just that the digital phenomenon has caught this staid and old economy industry off guard. I am optimistic that content creators (newspapers) will survive albeit in a form different than what we see today. This ofcourse means a lot of upheaval, consolidation and thus opportunities for smart investors.
One company I like is News Corp (NYSE:NWS), their politics aside its a great conglomerate with newspapers, book publishing, satellite broadcasting, movie studios, TV channels and now lately the forays into the web space (my space acquisition). It seems to me that here is a company perfectly positioned to take advantage of the intersction of the old media and new digital revolution.
http://soundmoney.blogspot.com
Posted by: Ashish Kelkar | February 4, 2006 07:58 PM