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Newspapers' Fab 2007: $11 Billion of Market Value Vaporized (Dinosaur Media DeathWatchâ„¢)
Silicon Alley Insider ^ | January 2 2008 | Henry Blodget

Posted on 01/02/2008 8:08:02 AM PST by Milhous

Alan_mutter_hed_shotThe newspaper industry is now worth 42% less than it was three years ago and 26% less than twelve months ago, says former newspaper man and Reflections of a Newsosaur analyst Alan D. Mutter. Wacko street analysts and newspaper executives chalk this up to "cyclical weakness." Mutter knows better.

$23B zapped in news stock value

The market value of the American newspaper publishers entering 2008 as independent, publicly traded companies has fallen by $23 billion, or 42%, since the end 2004, the year before the wheels started coming off the industry.

Nearly half the slide in the market capitalization of newspaper stocks came in 2007, when the shares lost a collective $11 billion, or 26%, of their value. Thus, newspapers lost nearly as much value last year as they did in the two prior years put together.



The vaporized value of newspaper shares in 2007 exceeded the combined $10 billion market caps of Gannett and McClatchy, the nation’s two largest publicly held publishers by circulation. And the $23 billion drop in shareholder value since yearend 2004 equals the current total value of all the common stock of Belo, Gannett, Lee Enterprises, Media General, McClatchy, the New York Times Co. and the Washington Post Co.

The biggest losers in the three-year period were Journal Register Co., whose shares fell 91% to close 2007 at a mere $68.9 million in value; Sun-Times Media Group, which slid 86% to a market cap of $176.7 million, and McClatchy, which fell 82% to a value of $1.03 billion. Details for the balance of the group are in the table below.

The declines compare with respective increases in the last three years of 17% and 15.6% in the Standard and Poor’s average of 500 stocks and the Dow Jones average of 30 industrials.

The market values of only two American publishers have risen since 2004, the last year before advertising sales began crumpling after decades of delectably predictable growth.

One winner was the Washington Post Co., whose shares gained 4% in value in the last three years, thanks to aggressive diversification out of the newspaper business and into such lucrative endeavors as its Kaplan test-prep schools.

But the big winner, by far, was Dow Jones, which climbed 65% in value as the result of the sumptuous price News Corp. paid to buy it from the dysfunctional Bancroft clan.

News Corp. itself realized a 10% gain in value since 2004 but is not included in the averages for American newspapers, because the diversified global media company published only one U.S. newspaper, the New York Post, prior to the DJ acquisition. (Speaking of the Post, don't miss this banner story on the people who wear diapers to compensate for the lack of port-a-potties at the New Year's celebration at Times Square.)

The value of Tribune Co.'s shares over the three years remained negative despite the acquisition that took it private in the waning days of 2007. Sam Zell and his fellow employee-owners bought the company for 15% less than the value of the stock at yearend 2004.

Wall Street’s vigorous repudiation of newspaper stocks reflects a deep, and arguably growing, concern that publishers don’t know how to arrest three years of mounting declines in audience, sales and profitability. Even the industry’s promised efforts to improve new media sales are failing to keep pace with online competitors, as discussed here and here.

The accelerated erosion of newspaper shares since the collapse of the easy-credit markets in 2007 appears to reflect waning hopes on the part of investors that a fresh crop of daring souls like Rupert Murdoch or Sam Zell will arrive to bid up the stocks of the sagging public companies so they can take them private and try to fix them.

With neither improved business prospects nor white knights likely to be on the horizon, you can’t blame newspaper executives for cringing as they turn a new page on the calendar. Unless they come up with a lot of creative and profitable ideas in a hurry, many of them may not be around to ring in 2009.


TOPICS: Business/Economy
KEYWORDS: 2007review; dbm; msmwoes; newspapers

Trends to watch in 2008 to gauge the pace of news change

In regards to the future of news, it is probably more difficult to predict when things will happen than what will happen. Long-term changes can be projected through use of logic, whereas short-term events follow a bumpier road of failed experiments, specific actions by individuals, and short-term marketplace responses. So, rather than provide specific predictions for 2008, I have listed below endpoints we may reach within 5 years, against which the rate of change can be assessed one year from now.

Fragmentation: Audiences are consuming very little mass media, having splintered-off into a multitude of sites with news that more directly affects their lives, better matches their worldviews, and more closely fits with their interests.

Monetization: Newspaper and TV advertisers have transferred substantial chunks of their advertising budgets online because sufficient numbers are no longer exposed to their ads in traditional media. Advertisers are also drawn by online’s ability to target sales prospects better because sites are fragmented by interest and much more is known about each individual user – an online feature so valuable that those concerned about privacy are increasingly patronized, marginalized and ignored.

Murdochization: Rupert Murdoch has the largest impact on the national conversation, with his now-superior Wall Street Journal replacing the NY Times as, in his words, the leading “national elitist general-interest paper.”

Collapse of Local Broadcast: Local TV stations are fighting block-by-block for revenues in online hyperlocal news because: 1) broadcast audiences have migrated to the Internet; 2) they prefer to receive their national and international news from the best sites in the world; 3) audiences find hyperlocal news more interesting than metro news; and 4) the networks no longer need the local stations to broadcast their programming the “last 50 miles” to homes because of Internet and wireless technology, depriving the stations of revenues from local ads placed within and between network primetime shows.

Newsosaur an Endangered Species: With the marketplace seizing control of news, a lack of opportunities for youth in Old Media firms, and a new generation of tech-savvy journalists enjoying the pleasures of unedited, free-flowing, fast-changing self-expression, those who defend Old Media practices and government regulation are increasingly regarded as amusing curmudgeons, relics of a bygone era.

1 posted on 01/02/2008 8:08:05 AM PST by Milhous
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To: abb; PajamaTruthMafia; knews_hound; Grampa Dave; martin_fierro; Liz; norwaypinesavage; Mo1; onyx; ..
ping
"I remember very vividly looking around the news room - big urban news room with about 200 editorial employees - and I was kind of pondering what it was that made me see the world so differently than all of my friends and colleagues in the newsroom and it clicked one day when - I was pretty sure, knowing all of these things as well as I did, that I was the only one who went to church on Sunday," said Farah.
2 posted on 01/02/2008 8:09:22 AM PST by Milhous (Gn 22:17 your descendants shall take possession of the gates of their enemies)
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To: Milhous
The newspaper industry is now worth 42% less...

The newspaper industry is now worthless.

There, fixed it.

3 posted on 01/02/2008 8:14:55 AM PST by The_Victor (If all I want is a warm feeling, I should just wet my pants.)
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To: abb
This may amuse you. Vaporized: $13.5B in news stock value (Dinosaur Media DeathWatch™) popped up during my prepost FR search. It sure looked like you beat me to the scoop except for different numbers and a missing ping this morning. Then it slowly dawned on me that you actually posted Mutter's article on January 2 2007. LOL. In it Mutter talks about 2006 vaporization. ROTFL.
Coral Ridge Ministries: Proclaiming truths that transform the world.

4 posted on 01/02/2008 8:15:51 AM PST by Milhous (Gn 22:17 your descendants shall take possession of the gates of their enemies)
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To: Milhous

Providing aid and comfort to the enemy should have a steep price.


5 posted on 01/02/2008 9:18:15 AM PST by Thrownatbirth (.....Iraq Invasion fan since '91.)
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To: Thrownatbirth
Raoul's First Law of Journalism
BIAS = LAYOFFS

6 posted on 01/02/2008 9:50:25 AM PST by Doctor Raoul (Columbia = Ayatollah U.)
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To: Milhous

Great post.


7 posted on 01/02/2008 12:05:31 PM PST by TenthAmendmentChampion (Global warming is to Revelations as the theory of evolution is to Genesis.)
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To: Milhous; abb; BOBTHENAILER; Liz; george76; SierraWasp; martin_fierro; bert

2007 might be looked on as the last kinda good year for these losers.

They are in free fall or approaching it.

May they continue their Dixie Chick marketing strategy until they close their doors with a final edition.


8 posted on 01/02/2008 12:46:52 PM PST by Grampa Dave ("Ron Paul and his flaming antiwar spam monkeys can Kiss my Ass!!"- Jim Robinson, Sept, 30, 2007)
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To: Grampa Dave; abb
May they continue their Dixie Chick marketing strategy until they close their doors with a final edition.

Too late for fishwrap it seems. They may retain little, if any, control over their own fate. For instance, yet another angry left wing nutter wrote an opus to declare his formerly beloved Old Gray Lady an Old Gray Nag before summarily divorcing her for her sin of cheating on him with William Kristol. Amid flotsam of leftist boilerplate bobbles an unverified list of NYT advertisers. (Presumably to inspire fellow travelers to boycott. Ironic that a NYT boycott now serves the agenda of both conservatives and socialists.)

New York Times 10 biggest advertisers (non-Movie)
1. Verizon
2. Macy’s
3. Bloomingdale’s
4. Sprint
5. T-Mobile
6. American Express
7. Liberty Travel
8. Kohl’s
9. Dell Computers
10. Chase Bank

Left wing nutter's non-movie disclaimer leads me to believe that movie advertisements account for a big chunk of NYT revenue. He also offers up unverified circ numbers.


Avg
Year Daily Circ
1998 1,110,143
2001 1,151,047
2004 1,133,763
2007 1,120,420

9 posted on 01/02/2008 3:01:28 PM PST by Milhous (Gn 22:17 your descendants shall take possession of the gates of their enemies)
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To: Milhous
Newsosaur an Endangered Species: With the marketplace seizing control of news, a lack of opportunities for youth in Old Media firms, and a new generation of tech-savvy journalists enjoying the pleasures of unedited, free-flowing, fast-changing self-expression, those who defend Old Media practices and government regulation are increasingly regarded as amusing curmudgeons, relics of a bygone era.

Ouch! That one hurts. Get my suppository, Ethel.

10 posted on 01/02/2008 3:04:22 PM PST by SnuffaBolshevik
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To: Grampa Dave
$23B zapped in news stock value

Ain't it beautiful.

11 posted on 01/02/2008 5:14:34 PM PST by BOBTHENAILER (One by one, in small groups or in whole armies, we don't care how we do it, but we're gonna getcha)
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To: BOBTHENAILER

Of course they will raise prices, shrink the paper and reduce the font size (already so small that one needs a magnifying glass and continue to spew left wing propaganda. If only we were to raise taxes to cover the cost of recycling fish wrap. Next we need to bring on the Trial Lawyers bring shareholder lawsuits. Think how wonderfully appropriate this would be.


12 posted on 01/02/2008 5:22:36 PM PST by stocksthatgoup (Number 1 FredHead)
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To: stocksthatgoup
Think how wonderfully appropriate this would be.

Bwaahahahaha. Picture perfect.

13 posted on 01/02/2008 6:52:12 PM PST by BOBTHENAILER (One by one, in small groups or in whole armies, we don't care how we do it, but we're gonna getcha)
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