After four years of cascading losses, the stocks of publicly-traded newspaper companies all posted substantial gains in 2009.
In fact, a bold investor who bought McClatchy, E.W. Scripps, Lee, A.H. Belo or Journal Communications at their low points early in the year could have realized a 10 times gain by cashing out at the end of 2009.
Tempering the good news, none of these stocks are close to their peak value of recent years, typically reached in spring 2005. But the results mark a real change in market sentiment. When the economy was in free-fall, investors feared that a number of the companies might be forced into bankruptcy. Now most are at least modestly profitable with improved, if not robust, prospects for 2010 and beyond.
Of course, it was a positive year for the market overall. The S&P 500 was up 20 percent for 2009; the Dow Jones index, 16 percent. But gains at the newspaper companies (except at The Washington Post, which held its value early on because of the strength of its Kaplan education division), were up much more than that.
I analyzed the rally last May
, citing a couple of technical factors, including these: Many institutional investment funds start dumping shares if they fall below $5. The funds are typically reluctant to hold stocks when there is a chance of bankruptcy, since losing their full stake would damage a fund's rating by services like Morningstar.
But the rally reflects improved basics as well -- particularly the success of companies in making deep cuts in expenses that come close to matching losses of ad revenues.
Better market performance does not equate to clear sailing, unfortunately. Ad revenues will probably continue to decline year-to-year in the first and second quarters, necessitating some further cutting. And once revenues do pick up, there will be competing demands for deploying the money -- rebuilding profits, improving print and online news reports, funding new ventures.
Newspaper organizations have had modest success picking winners in the new-revenue-stream derby. But they do start 2010 still in the game.
Here are company-by-company share price results:
|Newspaper stock prices, 2009
|New York Times