As Public Newspaper Companies Hold Their Annual Shareholder Meetings The Ghost of Knight-Ridder Newspapers Is There, Too.

And as for a forced sale actually occurring, FitzSimons said 35% of Tribune is owned by three shareholders very friendly to the company’s present management – exactly the opposite of the Knight-Ridder situation -- “But still, it’s very possible.”

And with Tribune closing at $28.09 on Wednesday it’s share price is very perilously close to being near levels that some Wall Street analysts believe could put the company in play.

And so to prove to shareholders that it really is watching its pennies these days this $8.5 billion capitalized company gave up a fancy hotel ballroom and satellite transmissions of its annual meeting instead for a large room – former TV studio – in its headquarters and provided a web cast instead. Savings, which really count these days: some $200,000.

The New York Times is under attack from one of its main shareholders, Morgan Stanley for a share price that is down 50% in four years. And the investment house takes umbrage that as the share price has gone down the salaries of top Times’ executives have risen appreciably. In 2005 publisher Janet Robinson’s restricted stock award jumped nearly fivefold from the year before, and Chairman Arthur Sulzberger’s stock award doubled.

The reason that newspapers are in such a panic is that no matter what they do they can’t get the share price up. Wall Street prices usually include how analysts think the company is going to do in the year ahead and with share prices dropping all the time the obvious belief is that the newspaper business is not going to pick up in the short-term.

Everyone realizes that the future is the Internet, and Internet revenues are growing greatly, but the problem is that the losses from the print side because of higher costs, and lower circulation can not at the moment be made up as quickly by increased revenues on the Internet side.

Some people believe newspapers are a doom and gloom business – they’ll still exist in the future but in a very different form to how they are today. Others, like Dean Singleton, CEO of Media News, believes newspapers are just going through a cyclical downturn, and things will pick up in three or four years.

But in the meantime, managements of public newspaper companies are wary. Even in the case of the Times, where there are two share issues with the Sulzberger family owning most of the board controlling shares, for Morgan Stanley to go public as it did with its unhappiness with management’s failure to increase the share price must at the very least have caused some embarrassment in the boardroom. If nothing else, it’s a wake-up call.

Mind you, with the Times’ share as low as it is today it would be as good a time as any if the Sulzberger clan ever had any thoughts of taking the company private again, even though Sulzberger said earlier this year he intended for the Times to remain a public company.

ftm background

The Popular Spin Is That Newspapers Are Still A Great Business, Just Not As Good As They Once Were. So How Come Moody’s Downgrades Dow Jones, and Puts New York Times and Tribune Under Credit Watch, and Knight-Ridder Sold for Basically No Premium?
Newspapers are a business that on average still produce operating profit margins of around 19% in the US – some countries even more -- and that kind of figure is the envy of many other business sectors. But the margin has been dropping through the years and the main question Wall Street is asking is where does it stop?

Now That Knight-Ridder Is Officially For Sale, Two Questions Emerge: Who Would be Foolhardy Enough to Buy Newspapers These Days and Which Major Media Group Will Next Feel Shareholder Pressure To Sell Itself?
Knight-Ridder didn’t have much choice. With its three largest shareholders representing some 36% of the shares telling the company to explore ways of selling itself and threatening board changes if it didn’t, it hired Goldman Sachs to scout out the market.

Wall Street Says That Newspaper Industry Valuations Are Underperforming the Market. But Don’t Buy, It Says They’re Going Down Even More
Even though newspaper industry shares have underperformed the US markets by some 10%, looking like a buy bargain, Merrill Lynch has issued a report that says the shares basically have only one direction to travel and that’s down.

A Newspaper War In Geneva – Not Exactly the World’s Most Flamboyant Newspaper Market -- And Yet Two Major Publishing Houses Are Fighting for Supremacy in the Free Newspaper Arena
The Tribune de Genève was having a real problem. With no free newspapers in town, but with Geneva’s residents itching to get in on the “free” newspaper craze flowing across Europe it was just a natural to lift the unlocked lid of the honor boxes around town and take a newspaper (in the old days it wasn’t necessary to have locked boxes for the scrupulous Swiss would never think of stealing a newspaper – must now be the foreigners in town!) The situation got so bad that the newspaper devoted a couple of front pages to the fact it was not free, and it posted signs on its boxes declaring it was not free.

London Gets a New Free Financial Daily That Distributes At the End of the Commute While In Geneva, Where There Is No Free Daily, The Tribune de Genève Tries to Persuade Readers It Is Not a Freebie
With the Financial Times seeing its UK circulation hovering around 121,000 and if anything decreasing the last thing it really needs is a new free financial tabloid newspaper distributing some 60,000 copies in the city’s major financial centers and aiming to get those numbers up to 100,000 within three months.

Back in Chicago, Fitzsimons said that Internet revenue already made up 6% of company revenues and he wanted that figure to be 12% in three years. Currently, Tribune earns about 65% of its revenue from newspapers and close to 30% from broadcasting – and both of those mediums are losing advertising revenues to the Internet. But even though its own Internet revenue grew strongly on the back of CareerBuilder.com (owned jointly with Gannett and Knight-Ridder – unclear about McClatchy’s possible role) overall revenue last year dropped by 2.3% with profit down 3.8%.

And with the company reporting that its Q1 profit was down 28% from a year earlier there is little good to be seen on the horizon, except for a possible sale, that would rocket its shares up in the near-term.

It was clearly difficult for FitzSimons to be upbeat about the future. The best he could manage was “2005 was clearly a difficult year for Tribune. A choppy advertising environment and continued competition from all media posed additional challenges. Nonetheless, as the media landscape evolves, newspapers and broadcast television remain very valuable tools for marketers.”