Newspaper shares slid $23B in 6 months
Wall Street’s intensifying repudiation of the industry means that the companies in the group have lost a cumulative $49.7 billion in market capitalization in 3½ years, vaporizing 51% of shareholder value since Dec. 31. 2004.
To date, the decline in newspaper shares has not had a commensurate impact on the compensation (details here) enjoyed by the chief executives of several of the affected companies.
As you can see in the table below, Journal Register Co. and the Sun-Times Media Group (nee Hollinger) suffered the worst losses in the 3½-year period, respectively shedding 99.1% and 96.9% of their value.
Journal Register is deemed to have a 72.9% chance of defaulting on its crippling debt, which in all likelihood would render its shares valueless. Sun-Times, which has a legacy of tax and other issues resulting from the criminal mismanagement of former chief Conrad Black, has been for sale all year, with no takers identified at this writing. Both publishers were booted off the New York Stock Exchange earlier this year, because their shares fell below the minimum price required for listing. They now trade on the Pink Sheets under the symbols JRCO and SUTM.
While the stocks of Lee Enterprises (LEE) and McClatchy (MNI) remain in good standing at the Big Board because their shares trade above well above the required minimum price of $1.10 apiece, their performance was not much better than that of the two publishers exiled to the Pink Sheets. Their market caps respectively have plunged 91.2% and 90.2% since Dec. 31, 2004.
MNI this year wrote off $2.8 billion, or 70%, of the $4 billion it spent to buy the bulk of the Knight Ridder chain in 2006, because the acquired assets were overvalued under the accounting rules described here. Required to undergo the same accounting exercise as McClatchy, LEE in May wrote off $862 million in the book value of its publishing assets, including nearly 53% of the $1.46 billion it paid for the Pulitzer newspapers in 2005.
Although they did not entirely escape the drubbing occasioned by the accelerating declines in advertising and circulation at most newspapers, the shares of the most broadly diversified publishers fared the best of the group. The value of Scripps (SSP), which is spinning its non-newspaper assets as of July 1 into a separate company called Scripps Network Interactive (SNI), fell a cumulative 12.4% in the 3½ years. Next best were the Washington Post Co. (WPO, down 23.5%) and News Corp. (NWS, off 32.5%).
In addition to Knight Ridder and Pulitzer, two other publishers that were publicly traded in 2004 have disappeared from the market. They are Dow Jones and Tribune Co., which respectively were acquired in late 2007 by News Corp. and a private transaction helmed by Sam Zell on behalf of the company’s employees.
Beyond the 11 publishing companies that have been continuously traded since 2005, the list below includes the performance of two relative newcomers. GateHouse (GHS) has lost 72.0% of its value since its initial public offering in November, 2006. A.H. Belo (AHC), the pure-play newspaper spin-off created by Belo (BLC), has slid 68.7% since its debut in mid-January, 2008.
Mere words cannot do justice to the carnage. You can click on the image to make it bigger, but the numbers won’t get any better.
Disclosures: I own shares of JRC, MNI and SSP and consulted for SUTM in 2007.