Monday, March 09, 2009

Fire sale: Gannett newspaper values, then and now

Reflecting a continued plunge in newspaper market values, Gannett's stock recently traded for just $1.94, down 12%, as company shares struggle to stay above the $2 line. "The sheer demise of the company's market cap is astounding,'' says Anonymous@12:33 p.m., who frames it this way:

May 7, 2007: Gannett sells four newspapers to GateHouse Media. They are Connecticut's Norwich Bulletin; Illinois's Rockford Register Star; New York's Observer-Dispatch in Utica, and The Herald-Dispatch in Huntington, West Virginia. Sale price: $410 million.

Today: The market capitalization of the entire Gannett company has plunged 96% since that deal. (And GateHouse is now a penny stock.) This means USA Today and 101 other U.S. and U.K. dailies, plus 23 TV stations, majority stake in CareerBuilder, and hundreds of other businesses, are now worth just $443 million.

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17 comments:

  1. I don't like all this negativity, but New York economist Nouriel Roubini (who has been right more than wrong) now is forecasting this downturn will last through 2010 into 2011. That means two more years of this. GCI might be trading at firesale prices, but there's nothing to stop it from going even lower. Look at the other newspaper stocks. Wall Street investors are saying there is no future in newspapers, and they are not going to invest in them. And that, in turn, means no white knight is going to come to the rescue and buy GCI. The bottom line is that we have as much misery in store for us as we have alredy seen in the last two years.

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  2. This is a sad case and this company does not deserve to be at these levels. Say what you want about the management of this company, but this stock price and valuation is a reflection on you too!

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  3. This is a sad case and this company does not deserve to be at these levels. Say what you want about the management of this company, but this stock price and valuation is a reflection on you too!

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  4. 1:53 What did I do to deserve this? I made no decisions in this company, and so I should not be held to account for the irresponsiblity and venality of those who did. As for the market price for GCI, it is a reflection of how the market is pricing newspapers today. That no one has come along and attempted to mount a takeover shows that many in the financial community believe GCI is still overpriced.

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  5. Army Timeser!3/09/2009 2:16 PM

    I think pro-Gannett trolls are beginning to turn up here.

    I find it a more than a bit of a stretch to believe that "this stock price and valuation is a reflection on you too!"

    I call bull pucky.
    In fact, that sound exactly like something my old ZengerMiller-indoctrinated bossie would say to me, back in the day. Along with, "This is a great place to work!"
    Coinkydink?
    Menothinkso.

    The present stock value -- what, a buck ninety four, is it now? -- is the market's performance evaluation of the leadership for their egregious mismanagement of a huge and valuable pool of material and human resources across time (and that includes assumed debt, which must be paid back.).

    The act of judging people by the value of their company's stock is a museum-quality anecdotal nugget of an example of why Gannett (The Company, Inc.,) is failing and failing Big.
    FAIL.

    Gannett is toxic in more ways than one. The stake through its heart will end worlds of suffering and clear the way for many welcome rebirths, both personal and professional.

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  6. That is astonishing, remarkable, any other superlative you can come up with.

    McClatchy, too: bought Knight Ridder in 2006 for what -- $4 billion plus? Sold one newspaper, the Star Tribune, in 2007 for $530 million.

    Now McClatchy -- with 30 daily papers, 50 non-dailies, other odds and ends -- is valued at about $35 million.

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  7. While market capitalization may determine "worth", one must keep in mind that actual "worth" is the market cap less the outstanding debt.

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  8. Charles Foster Kane: You're right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars *next* year. You know, Mr. Thatcher, at the rate of a million dollars a year, I'll have to close this place in... 60 years.

    Or less.

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  9. Gannett very recently was on a new printing press binge ... Indianapolis, Louisville, Honolulu, etc. The project in Detroit alone cost $177 million. Six state of the art presses designed to print 80 page, seven-section papers for the Detroit News and Free Press seven days a week. Now they will be printing 32-page one section papers most days and not offering home delivery. All those new presses cost more than the company is now worth.

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  10. Mr. Yesterday3/09/2009 3:01 PM

    At what point do we get where the stock price is below the actual real estate value of all the Gannett properties? I mean, could we get to a point where buying all the company stock and then turning around and selling the buildings across the U.S. that make up that company makes sense?

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  11. Mr. Yesterday: In a more normal commercial real estate market, it would be interesting to see what the Corporate/USA Today complex might fetch at McLean, Va.

    We have an idea: In the first quarter of 2008, the 10-K last year said, Gannett recognized "a gain of $26 million upon the final closing of the sale of certain excess land adjacent to its Tysons Corner headquarters in Virginia."

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  12. @Mr. Yesterday

    I doubt it. Buying the whole company means taking on Gannett's debts as well as its assets. You could sell off all the real estate and recoup your investment, but then you'd still have the debt to deal with.

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  13. Gannett will not be sold, whoever buys it gets $4 Billion in debt. Gannett is does not have enough postive cash flow to pay the $4B in debt. Not only that, Gannetts forward looking cah flow is worse than today.

    That is why the stock is dropping like a rock and will continue to drop like a rock. Gannetts future will be determined by either BK or a liquidation of asssets by it's creditors.

    Stop thinking someone will buy Gannett. Nobody wants the poison.

    NB

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  14. Never say never, Gannett's properties could be valuable for a group trying to influence public opinion, think Saudis, Chinese,etc.
    The web is killing the newspaper, but their is still some value in information and dissemination thereof.
    Also consider Gannett has 51% of CareerBuilder, Yahoo has the cash to buy that out as a compliment to their jobs website, Google could consider it if it wants to start setting up portals ala Yahoo and MSFT already has an ownership component may decide to increase it.
    Their assets aren't toxic like those in financial (insurance, banks, etc.) yes revenue is falling off the cliff but they still make a profit, debt is the issue no doubt but will credit markets improve 3 years from now, I sure hope so, if they haven't we'll have bigger issue to be worried about.

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  15. Say what you will, but those in corporate finance that re-negotiated credit terms and acquired the 1.8 billion dollar line of credit back in Oct 08 are geniuses. If not, Gannett would be default now due to the market cap being so low. Also, it looks like they did not use all 1.8 billion, so we should be ok when the 700 million (or is it 500 million?) comes due in May of this year. So, unless things get really, really bad, Gannett should be around until at least 2011 when the 1.2 billion loan is due.

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  16. A Nightmare Scenario...

    Emboldened by the Great Recession of 2008 and no majority in Congress to protect, Republican extremists make their move.

    Rush Limbaugh, backed by a consortium of Saudi investors, purchase GCI and turn the publications into extremist fodder (perfect for a downtrodden public).

    Rush Inc. sell the prize real estate holdings of the firm and simultaneously create a phantom porn business online (since Republicans are the largest consumers of pornography).

    The Saudis benefit from a controlling interest in the largest newspaper business in the country.

    Rush gets to be Rush...

    and is elected President 2012.

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  17. If I'm understanding ContentOne correctly, seems it would appeal to buyers with certain needs and agendas. It scares me to think about it, though. Guess I could have ContentOne all wrong, too.

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