The Russell 3000 newspaper index is down 69% year to date, and major publishers including Gannett Co., The New York Times Co. and McClatchy Co. on Thursday and Friday sunk to multiyear lows.
The embattled industry faces tough prospects amid a slumping economy, weakening ad sales and declining print readership.
Gannett profits slump
Gannett, the largest publisher, today reported a 32% drop in third-quarter profits. The publisher of USA Today and local papers plans to rethink its dividend and make more job cuts. The Times Co. and McClatchy reported weak ad sales.
Stocks have tumbled faster than ad volume. McClatchy ended the week with a market cap just below $200 million -- a low price tag for a publisher that last year generated $2.3 billion in revenue and a sign of just how skeptical investors are on prospects for the company and sector. Five of eight analysts following McClatchy have a "sell" recommendation on the stock, according to Bloomberg's database.
McClatchy operates in some areas devastated by the housing debacle; its properties include The Miami Herald and papers in California.
Just two years ago, McClatchy paid $4.6 billion for rival Knight Ridder. (The effective price tag was more like $1.8 billion after factoring out money McClatchy generated on the sale of Knight Ridder assets it chose not to keep.)
Reversal of fortunes
The problems of newspapers are well-known today, yet it's remarkable just how recently it was that investors were such believers. Newspaper stocks were surging well after the dot-com bubble burst.
McClatchy's stock reached its all-time high of $76.05 in March 2005. It closed today at $2.41, down 97% from its peak.
Gannett's stock has fallen 90% from its 2004 peak. New York Times Co. is down 82% from its 2002 high.
Newspapers were among the AdMarket 50's biggest losers today, but stock losses were far and wide across industries as Wall Street reacted to Friday's tumble in global stock markets.
Losses not as bad as feared
Still, U.S. market losses today were lower than what some had expected given global market turbulence and growing worries about a multi-continent recession.
The Dow Jones Industrial Average ended trading down 3.6% (312 points) for the day and 5.3% for the week. Its close (8,379) was the lowest since April 2003.
The Ad Age/Bloomberg AdMarket 50 index of marketer, media and agency stocks closed down 3.2% for the day and 5.9% for the week.