I’ve said that if I owned a newspaper, I’d sell it (in fact, a prospective student at CUNY just quoted that back to me last night). And now Floyd Norris writes a column in the Times (behind the barbed wire; sorry) asking who would buy one.
There is a venerable Wall Street joke featuring an investor who, having accumulated a large position in an illiquid stock, decides it is time to get out. “Yes, sir,” replies the broker when he is told to sell. “To whom?”
The current situation of Knight Ridder, the owner of newspapers including The Philadelphia Inquirer and The Miami Herald, brings back that joke, albeit painfully….
Mr. Sherman’s problem is one known by many investors who look for cheap stocks: where they see value, others see problems. The consensus Wall Street view of newspapers now is that they are a dying breed, destined to wither under relentless competition from the likes of Google. Profits may be good now, but they will not last, as circulation declines and advertisers seek newer media. An index of newspaper stocks is down 22 percent in 2005.
As long as newspapers keep thinking of themselves as papers, they will shrink. Guaranteed. The question is whether they are the best positioned to get to the other side, to the future of news, and whether they can afford to get there. More on that later….