Rick Edmonds of Poynter argues today that you could “make a killing on Wall Street” by investing in newspaper stocks. He offers the following table:
COMPANY - THREE-MONTH LOW - MAY 11 CLOSE
New York Times $3.50 - $6.81
Gannett $2.00 - $5.35
McClatchy $.40 - $.69
Lee $.40 - $1.65
Media General $1.40 - $3.40
Washington Post $308 - $370
E.W. Scripps $.80 - $1.96
A.H. Belo $.70 - $1.61
Journal Communications $.40 - $1.66
After presenting some disclaimers – “don’t try this at home”! – Edmonds concludes that well, maybe things are looking up after all.
I think some investors buy into my standard line when asked if there are glimmers of hope for the industry: “the recession will be over sooner or later.” Then advertising may bounce back, strongly in some categories like auto where nervous consumers have postponed purchases.
I hear this sort of logic a lot among old media-types (and, I admit, I used to believe it myself): “Everything will be OK if we can just ride out this storm.”
The problem is that print media’s woes have been brewing for decades. The internet is gaining readers, print is losing them, and newspapers don’t really have any plan to cope. Edmonds and his peers should be arguing the exact opposite: that journalists must ignore this uptick, assume the worst and respond to this recession with major efforts to innovate. Because eventually, there will be another recession, and journalism will need to survive that one, too.
There are several other problems here, some more minor than others: Edmonds’ table compares apples and oranges, since the first stock prices are from different dates during a three-month period; he assumes (wrongly, I’d surmise) that data from the past 90 days are indicative of future performance; and he assumes that rising stock prices suggest the newspaper industry is in better shape than it was 90 days ago (and it may well be, but a company’s health is based on much more than just its stock price).
The point should be that stock prices are irrelevant. A few – maybe most, and maybe even all – of the companies on Edmonds’ list are going to fail if they don’t make sweeping changes. This is no time to take a deep breath and relax.
