Newspaper Stocks Earnings Preview

Includes: DJ, GCI, JRC, JRN, NYT
by: David Jackson

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Newspapers Are Expected to Post More Weak Results for Quarter

  • Summary: Upcoming earnings results for newspaper and radio stocks do not look positive. Newspaper executives were relatively pessimistic at the Newspaper Association of America's Mid-Year Media Review in June, reporting that strength in ad revenue in May didn't last into June. The New York Times (NYSE:NYT) then warned in June that it expects earnings to show no year-over-year growth. Gannett (NYSE:GCI) reported that Q2 started off slowly. In contrast, Dow Jones (DJ) said it was seeing broad revenue gains across the consumer and enterprise segments. While print advertising is weak, companies are reporting growth in online advertising of 20-30%. Merrill Lynch analyst Lauren Fine expects E.W. Scripps (NYSE:SSP) to post 5% ad revenue growth and for Journal Communications (NYSE:JRN) and Journal Register (JRC) to post 3% declines. Stifel, Nicolaus analylst Kit Spring expects revenue from radio companies to be roughly flat year over year.
  • Comment on related stocks/ETFs: Despite the enthusiasm of some value investors for newspaper stocks due to their cash flow, they continue to underperform. The chart below shows the performance of NYT and GCI over the last year; click to enlarge:

    NYT GCI chart