Thanks, ABB! A reason for a cold one when I get home! Well, that and the fact that it's a Friday!
U.S. newspapers face more trouble in 2006 - analyst Fri Jun 9, 2006 12:58 PM ET
NEW YORK, June 9 (Reuters) - The U.S. newspaper industry is likely to face a "somber" second half of the year, with circulation and advertising revenue remaining under pressure, according to an analyst's report released on Friday.
The report casts doubt on any hopes of a major recovery for an industry that has seen share prices fall by 15 percent in the last 12 months amid declining readership and a migration of advertising dollars to the Internet.
"The environment will get harder for newspapers before it gets better," according to Deutsche Bank analyst Paul Ginocchio. "And we're not sure when it is going to get better."
Ginocchio wrote that advertising trends are likely to weaken in the second half of the year, saying there are "few positive catalysts."
Ginocchio predicted that retail advertising, a key category for newspapers, will likely be hurt by a shift away from newspaper advertising by Federated Department Stores Inc. , which is closing a number of stores and is expected to put more of its marketing dollars into television and the Internet.
In addition, he said some of the strength seen in real estate advertising could ease, autos should remain weak and help wanted could slow with the economy.
With circulation also struggling, the report cited large market publishers, including Tribune Co. and New York Times Co. , as the ones most likely to have the "toughest time" in the second half of 2006.
Ginocchio has a "hold" rating on New York Times, shares of which were down nearly 3 percent at $23.33 in New York Stock Exchange trade.
Tribune, which recently proposed a $2 billion share buyback, has a "sell" rating at Deutsche Bank based on what Ginocchio said were "the weakest underlying trends in the group."
Shares of Tribune were up 2 percent at $32.25 on the NYSE.