I have been nursing the theory that one of the big newspaper stories this year is whether buyers will emerge for the many papers openly for sale (and others being shopped around quietly).
When Dow Jones announced last week it was
pulling its eight Ottaway dailies off the market, it wasn't a stop-the-presses financial story -- but maybe an indicator that some sellers cannot get anything like the price they are looking for and will wait for better times.
I got a second for that in a phone conversation this morning with David Clark at Deutsche Bank Securities (who moved up to head of the firm's media analysis unit as Paul Ginocchio departs to cover business services). "We hear that the Landmark papers (in Norfolk and Roanoke, Va., and Greensboro, N.C.) are having the same problem," Clark said, "and the Blethens are having a hard time with their Portland (Maine) papers."
There is a union contract issue in Portland, and credit markets are far from strong now, but Clark said the essence of the problem is that potential buyers "don't know what to pay."
From his chair, Clark added, the newspaper market has "a binary feeling." There is a chance that properties are "going to zero," but if they get past the current down cycle, they are already "deeply undervalued." Buyers are unlikely to make that sort of all-or-nothing bet.
When will fair values become clearer? A rule of thumb is that newspaper advertising picks up one quarter after the end of an economic downturn, Clark said. That probably gets us into late 2009 to see how much of the current revenue trouble is cyclical. That would also be a time to assess whether the industry has come through cost-cutting without mutilation and has begun to capture substantial new revenue streams.
Meanwhile papers like
Journal Register's 22 dailies are in limbo. The parent company is functionally broke because of debt and a cratered share price. The papers are going ventures, but may have difficulty for now finding a new owner at any price.
