Although things were tough for all sorts of businesses in the face of the worst economic slump since the 1930s, the decline among the newspaper shares last year was more than twice as deep as the 38.5% drop suffered by the Standard and Poor’s average of 500 stocks.
The debacle was widespread and thoroughgoing, as detailed below. Here are some highlights from the data:
:: The shares of eight of the 14 publishers tracked in the survey fell by 90% or more. The best-performing companies were the Washington Post Co., New York Times Co., and News Corp., but WaPo, the least battered issue of all, still fell 51.5%.
:: While market capitalization surpassed $1 billion for all but one of the 13 publishers that were publicly traded at the end of 2004, only four publishers today are valued at $1 billion or more. The New York Times Co. is barely clinging to the distinction. A drop of as just a few cents per share would knock NYT out of the increasingly exclusive billion-dollar bracket.
:: The biggest loser of all was Tribune Co., which is worthless as the result of the bankruptcy filed less than 12 months after Sam Zell bought its shares for $8.2 billion to take the company private.
:: Trading for pennies, the shares of GateHouse Media, Journal Register Co. Lee Enterprises and Sun-Times Media Group are essentially worthless. GHSE, JRCO and SUTM all were banished to the Pink Sheets earlier this year when their shares fell below the rule at the New York Stock Exchange that prohibits an issue from closing below $1 per share for 30 days in a row.
:: At least two more publishers may be destined for the Pink Sheets early in 2009. Unless LEE's shares turn around within a matter of days, it is likely to be the fourth newspaper stock booted off the Big Board. After falling below $1 per share in mid-December and failing to recover, McClatchy may not be far behind.
It is fair to surmise that newspaper stocks last year got trounced twice as badly as the broader market , because investors have not seen any plausible strategies from publishers to reverse the accelerating declines in readership, advertising and profitability that have been under way since 2006.
As if that were not bad enough, a number of publishers are staggering under the heavy debt they acquired in recent years to fund acquisitions that might have proven to be wise, if the newspaper industry had been able to replicate the steady growth in sales and profits that they largely had enjoyed in the decades since World War II.
But times changed, newspapers didn't and investors lost faith in the long-term viability of the industry.
