1) Newspapers Generally
2) Journal Register Specifically
3) Journal Register's Debt
The first problem is self-explanatory and hasn't changed since early 2006. The second problem has to do with a bad acquisition made by the company that has changed what the company looks like. Journal Register was once focused on communities with excellent demographics and thus excellent economics for newspaper publishers. Now, not so much. The Michigan properties are a real problem.
Finally, the debt. The biggest problem with the debt is simply that it exists. Journal Register's market cap makes the company look cheap, but you have to take out the debt as well. Is the company worth much more than its debt load? No. Probably not.
If it weren't for the debt, Journal Register would actually be an exceptionally easy takeover target in the most anti-takeover of industries. The company doesn't employ the gimmicky protections most old media companies do.
The combination of a cheap common stock with a heavy debt load will amplify any changes in the value of the enterprise. We're not far from the point where a 10% change in the intrinsic value of the enterprise would lead to a doubling (or halving) of the value of the common stock.
In that sense, this is a highly speculative stock – for better or worse.
It would also be a good investment if I was sure the value of the enterprise is clearly in excess of the debt. As it is, I think there's a risk that the value of the enterprise and the value of the debt are too close for comfort. That doesn't mean I think Journal Register will fail to make its payments any time soon. It just means I don’t think there will be a lot left over for shareholders when you consider I expect the bottom line to decline in the long-run along with the industry.
Of course, it is tempting to take JRC's market cap and divide by what the company earned in the past. But, on an EV/EBIT basis the business isn't nearly as cheap as the stock. That's what I mean when I say this is a speculative stock – you only have to be right or wrong by a small amount in your estimate of the business value to make or lose a lot of money on the stock.
JRC 1-yr chart: