Posted on 05/31/2006 9:25:12 AM PDT by Grampa Dave
AP A Second Look: Newspaper Stocks Wednesday May 31, 11:35 am ET Tribune Co.'s $2B Buyback Might Spur Similar Moves, but Analyst Says Odds Are Low
NEW YORK (AP) -- A day after Tribune Co.'s shares rose 7 percent on news of a $2 billion buyback program, analysts considered whether the move would spur similar actions from other newspaper companies. Tribune Co.'s shares settled down on Wednesday, falling 3 cents to $29.87 during morning trading on the New York Stock Exchange.
Citigroup analyst William Bird praised the move on Tuesday.
"We believe today's move is a positive for shareholders to the extent that it will be additive to earnings per share (the exact amount will depend on asset sales), will return a significant amount of cash to shareholders, and lower Tribune Co.'s cost of capital," he wrote in a note to clients.
Furthermore, he said it was possible other companies might consider a similar move.
"We believe the positive stock reaction raises the potential for other industry players to consider similar action, though we still peg the odds as low," Bird wrote. "We believe Gannett Co. Inc. is the next best candidate given its similarly depressed valuation and shareholder-friendly management."
Separately, an analyst at UBS said further consolidation in the industry, following the proposed $4.5 billion sale of Knight Ridder Inc. to McClatchy Co., was unlikely.
"Most newspaper publishers are controlled by families under dual share class structures, and investors may be unable to pressure them to be targets of acquisition without family support," wrote UBS analyst Brian S. Shipman in a research note. "We believe that current media cross-ownership rules may create an impediment to merger and acquisition activity, due to the potential to have to divest assets at low valuations."
Problems plaguing newspaper companies such as reader migration to newer media can't be solved by increasing scale, Shipman said.
"We believe that long-term growth will be more defined by investment in new media assets, which have growth profiles superior to traditional media, instead of through consolidation among newspaper companies," Shipman wrote.
His top picks in the publishing sector are non-newspaper stocks McGraw-Hill Cos., a textbook publisher, and magazine publisher Meredith Corp.
Elsewhere in the sector, shares of the New York Times Co. fell 9 cents to $24.26 on the New York Stock Exchange.
Shares of Minneapolis Star Tribune-owner McClatchy fell 58 cents to $45.57 on the NYSE, while shares of Journal Register Co., publisher of the New Haven Register, edged down 7 cents to $9.91.
Journal Communications Inc. shares dipped 2 cents to $11.74 on the Big Board. The company owns the Milwaukee Journal Sentinel, among other papers.
Gannett Co. Inc., USA Today publisher, shed 2 cents to $54.21 on the NYSE, while Washington Post Co. rose $11.96 to $810.99.
This has to hurt.
Yeah, if you want to short them!! HA!
This lead turkey buyback "ain't flying" very well even in the media owned by the big dinosaur fishwraps.
No, no, Dave!! It feels really good!! Depends on whose ox is being gored, lol...
I may have to learn how to short these Dinosaurs to take advantage of their impending doom.:)
One of the good things to come out of this, will be the disclosure of analysts who are worthless, and those who are nailing this mess, like this man, Mr Brian S. Shipman:
"Separately, an analyst at UBS said further consolidation in the industry, following the proposed $4.5 billion sale of Knight Ridder Inc. to McClatchy Co., was unlikely.
"Most newspaper publishers are controlled by families under dual share class structures, and investors may be unable to pressure them to be targets of acquisition without family support," wrote UBS analyst Brian S. Shipman in a research note. "We believe that current media cross-ownership rules may create an impediment to merger and acquisition activity, due to the potential to have to divest assets at low valuations."
"Problems plaguing newspaper companies such as reader migration to newer media can't be solved by increasing scale, Shipman said.
"We believe that long-term growth will be more defined by investment in new media assets, which have growth profiles superior to traditional media, instead of through consolidation among newspaper companies," Shipman wrote."
You could also buy the stock and also buy a put option. If the stock goes up, you make money. If the stock goes down, your put makes money.
However, there is a set of strategies that can always be executed if you have a negative view on a given stock or group of stocks, assuming only that the stock(s) in question have listed options, as most do nowadays. If you like (strictly your choice), I'll lay out these strategies, their execution, and their respective advantages and disadvantages.
NYT in with a new 52-week low today.
TS
Please share your plan (speaking only for myself.)
"Was it elite class and peon class? :)"
That sounds right!:)
NYT in with a new 52-week low today!
How low can it go?:)
Thanks.
Amen Dave. You said it. A byproduct from my research for FReeper MSMWOES threads:
In the spring of 1971 Fritz Beebe, a former partner in the New York law firm of Cravath, Swaine & Moore, and chairman of The Washington Post Company, approached the owner, Katharine Graham, with a dilemma. The company, Beebe said, was running out of money. Over the years the Post had been fairly generous in granting stock options to favored employees, and the cost of buying out those options had put the company in a bind.
That last sentence illustrates how Ponzi companies profit from exploiting equity exchanges. People who wish to invest their savings into securities soon learn that it always pays to ask themselves, "Why does this particular company want my cash?" Conservative companies typically want cash to purchase assets with intrinsic value - equipment, buildings, land, or to meet payroll until a down market picks up. OTOH Ponzi companies want cash simply to pay off insiders. Ponzi companies make a mockery of equity exchanges by exploiting them to ripoff small savers.
Bull. Every fishwrap seems to carry billions in expense camouflaged as Goodwill and Intangible assets. Try taking Goodwill to a bank to see how far it goes as collateral in securing a loan.
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