By KEITH J. KELLY July 10, 2008 -- Hours after The New York Times Co. suffered the embarrassment of a third person scaling its Eighth Avenue headquarters in recent weeks, the company got pounded by Wall Street, which sent its shares tumbling when an analyst said its stock was pricey relative to its peers. The stock sank 7 percent, or $1.05, to $14.01 yesterday, near its lowest point in 10 years and 77 percent off its 52-week high of $24.76. The drubbing came after Lehman Brothers analyst Craig Huber slammed the Times' shares for being too expensive, compared with Gannett and McClatchy. Huber also ratcheted down his previous price target to $8 a share from $12 a share, due to the industry having deteriorated faster than he earlier predicted, adding, "We think the shares have significant further downside risk over the next year as the stock is the most expensive in the [newspaper] group, plus Street estimates remain way too high in our opinion." He urges the company, which is run by CEO Arthur "Pinch" Sulz berger Jr., to cut its dividend, claiming it should utilize the money to pare down the company's $1.05 billion debt.

Originally Posted by obvious Child So? Would you like to post the financials for the entire newspaper industry? Or are you going to fraudulently argue that NYT's slant is what is causing its demise? "You reap what you sow." Perhaps, but that ain't the real reason for the decline of the newspaper industry.

Originally Posted by DarkWizard12 The entire newspaper industry is slanted (liberal reporters ratio to conservative reporters have remained consistent sine the 1960's, Media Bias Basics) And our own NYT even admits the whole industry is failing http://www.nytimes.com/2008/02/07/bu...yt&oref=slogin

Originally Posted by obvious Child I disagree. The WSJ is facing much of the same problems, abet to a lesser degree then the rest of the industry and their bias at least in the opinion borders often on Neoconservatism. The Chicago Tribune, a conservative leaning paper is facing record years of declining ad revenue and readership. The whole industry is failing due to changing consumer trends towards how they get the news. One of the bright spots for newspapers or at least news sources is how well they can leverage the internet. Ruetuers last I recall is not having a problem as it has been selling its news reports to information portals like Yahoo and MSN. Slant has virtually nothing to do with it. Interestingly enough, one of the bright spots in print are tabloids.

Originally Posted by DarkWizard12 I've got 30 full boxes of different tabloids snce the 1970's. I think its been having an uptrend because most people like to collect them, eh?

The printed newspaper sector is going through a secular decline due to the rise of electronic technology (including the Internet), changing lifestyles and habits with respect to seeking news, increased emphasis on customized news that fits one's interests, etc. Indeed, there is an inherent clash between the information/news content a reasonably informed public needs and the news one desires based on one's interests. The Internet with its specialty sites, blogs, etc., has tilted the balance toward the latter. However, significant political, international, and economic events have been "pushing back" in the other direction. Just as is the case with the business cycle where conditions alternate between booms and recessions, there likely will be a periodic shift in demand for the news one needs and the news one seeks based on interests. The Internet coupled with the journalistic caliber of leading newspapers might ultimately help them cater to both types of customer demand. For now, the situation is still fluid.

There is also much greater competition than in the past, as the Internet has eliminated competitive barriers and is now being harnessed by a huge and rapidly growing population of competitors, including newspapers, TV/radio stations, blogs, etc. The Internet has some large sites. It is also very dynamic and highly fragmented.

Clearly, The New York Times has experienced some transitional difficulties with the magnitude of industry change that has occurred and is ongoing. It is presently having some difficulty in transforming its assets into the value added necessary to generate new streams of cashflow in this environment. That's why the newspaper's stock was described as "expensive" relative to its peers. Its price-earnings ratio was out of line with industry norms given the nature and prospects of its current operations.

Nevertheless, whatever one thinks of its editorial page, the fact remains that the newspaper still possesses some enormous strengths:

1) Its name carries weight worldwide.
2) Its journalists are widely viewed as credible.
3) Its journalists possess access to key industry and government sources.
4) Its content is substantive, and much more so than the "lighter" fare one finds on many blogs and TV stations.

Worldwide, The New York Times, Times of London, The Globe and Mail, The Washington Post, etc., are viewed as authoritative journalistic sources precisely because of some of the above attributes I cited. However, in the industry as it presently exists, journalistic authority is necessary but not sufficient to achieve the competitive success required to command high price-earnings multiples and high stock prices. Expected persistent growth prospects that are above the industry norm are necessary to build and sustain a higher price-earnings multiple.

The current business models employed by most newspapers do not yet provide such prospects for the newspaper industry. But opportunities are present and the world's leading newspapers, of which The New York Times is one, have some pretty significant strengths. For the longer-term, one should not write them off.

Originally Posted by American Link You reap what you sow.