The company's shares just closed at $1.95, marking the first time in the newspaper industry crisis that the stock has ended a trading day below the $2 line. Gannett's market capitalization has now fallen to only $445 million. Reflecting the free-fall in newspaper values, GCI's new market cap is within striking distance of the $410 million the company got less than two years ago, when it sold just four papers to GateHouse Media.
Monday, March 09, 2009
Urgent: Gannett dives 11%, closing below $2
The company's shares just closed at $1.95, marking the first time in the newspaper industry crisis that the stock has ended a trading day below the $2 line. Gannett's market capitalization has now fallen to only $445 million. Reflecting the free-fall in newspaper values, GCI's new market cap is within striking distance of the $410 million the company got less than two years ago, when it sold just four papers to GateHouse Media.
22 comments:
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How bad things are, consider what Martore and Dubow could have done when the stock was at $90. They could have floated a new stock issue, and raise the $4 billion necessary to retire the debt. Then we would have not be beholding to anyone but ourselves. It would have diluted current stockholders, but it would have secured GCI's future.
ReplyDeleteI just check MSN to see how much the stock tanked. The after hours trading si showing an increase of over $33. That can't be right???
ReplyDeleteIt's time to rename this blog. Gannett Death Watch.
ReplyDeleteThing are bad and it appears may get even worse.
ReplyDeleteThere are many more people's lives that will be effected by the poor decisions and greed of a few entitled souls.
4:29 No chance
ReplyDelete4:29
ReplyDeleteIt could be if they did a 20 for 1 reverse stock split
There is a difference between market cap and enterprise value. Right now, the MC of many giant companies has tanked. Doesn't mean it will stay that way.
ReplyDeleteCan someone explain in practical terms what this falling stock price means for the average Gannett employee?
ReplyDeleteI am also interested in hearing a layman's explanation of all this. I work at USA Today and don't know whether to feel more protected here or more vulnerable than GCI employees elsewhere.
ReplyDeleteAny feedback would be appreciated.
Explanations:
ReplyDelete1. Debt: The $4 billion in debt is weighing down the company, as investors question whether GCI can put together sufficient revenues to make debt payments. Any leveraged company in this market is being murdered.
2. Industry: Wall Street is clearly pointing to the death of newspapers and GCI has only TVs and newspapers in its composition. There is clearly a trend of advertisers to take their ad money elsewhere because they get either a better accounting on how many readers see it, or they find it more effective and cheaper.
3. Demographics. Younger generations are not interested in reading newspapers, and newspaper readership is now concentrated among older generations who don't spend as much on goodies. The industry previously has not cared about young readers. It is paying the consequences for this strategy.
4. Loss of monopoly. For years, community newspapers held a grip on local advertising. Need to sell something, you need to buy a classified ad. Craigslist and other Internet services have siphoned off readers. Look at the pages of classified ads, and you will see the consequences. Blogs, and local news sites have also provided alternative news.
5. Rising costs. We may be in a deep recession, but the costs of newsprint is going up. The cost of keeping an emplyee is also increasing, in spite of furloughs and wage freezes.
6. Lack of interest. Wall Street analysts no longer follow newspaper stocks, because the industry has been so beaten down and viewed as having no future. With no one showing interest, why should investors?
6:21 PM
ReplyDeleteI'd like to know your stats and source for #3 please. Something like "everybody knows this is true" won't do.
Thanks.
6:48 Age gap of newspaper readers is increasing.
ReplyDeletejournalism.berkeley.edu/conf/conference2003/present/sweep.ppt -
"Where Young Adults Intend to Get News in Five Years,"
by Seth C. Lewis. Jan. 2009.
http://www.newspaperresearchjournal.org/
6:48 The link to the berkeley conference on declining readership didn't work properly. I wanted to steer you to the Duane Sweep powerpoint. The others are also interesting, and on point.
ReplyDeletehttp://journalism.berkeley.edu/conf/conference2003/present/
6:48 Also a 2005 conference at the American Press Institute:
ReplyDelete"Contrary to conventional wisdom, newspaper reading is a habit acquired in youth. But today’s young adults are reading newspapers at nearly half the rate of the previous generation. Industry leaders now know that capturing readers between the ages 18 and 34 is the key to survival, and some are actually moving the needle on youth readership. This seminar will focus on the latest research on this market and what the most successful news companies are doing to reverse the current trends. A highlight of this seminar will be a daylong workshop on developing a business plan for niche products that resonate with young adults."
6:48,
ReplyDeleteWalk on to any college campus.
6:48 Get on any public transportation system, and look at what young people are reading until they get to their stop.
ReplyDeletewhat young people are reading on the subways and buses are text messages on their cellular devices. Many also have internet access on these devices. They are not reading newspapers and they are not reading novels. This young generation is in their own world and it's not the world we knew (or think we know) in the newspaper industry. Go into a convenience store and watch who buys newspapers. They're older folks beyond the 34 age group. Sorry to say that it looks like it's over. One bright spot is tht people are living longer so maybe we can keep things going with today's seniors longer than we thought.
ReplyDeleteStill, no one has explained what this means to the average Gannett employee. If stock falls to 5 cents, what is likely to happen to Joe the Editor or Sue the marketing director? Are we going to lose benefits? Get more furloughs? Layoffs?
ReplyDeleteConversely, if stock goes up to 10 bucks, what should the average employee be looking for then? Will their jobs be more secure? Will they get some more help to deal with the increasing workload left by layoffs? Better computers?
9:06 PM -- This is exactly why we should be producing great newspapers. If 34+ age group is your core customer, then we have them for 30+ years!
ReplyDeleteEven myself, an over the hill 50 year old would be a customer for 10-20 more years. Hopefully more! :)
Let me just say this, the web isn't going to save Gannett. It's going to need to be a combination of web and print.
9:29pm, as much as I hate to say it, if the stock price goes down any more, I suspect Gannett will be forced to sell off, or shut down, any and all properties that are not USA TODAY and/or its top 3-4 performing TV stations. And even CBS could buy Gannett's flagship WUSA (just speculation). Belo split itself up into two companies: broadcasting in one and the papers (including flagship Dallas Morning News) in another. Hearst is not above totally shutting down the SF Chronicle which is basically Northern California's paper of record. I also see the Sam Zell "empire" as a Gannett-caliber zoo. I work at a Gannett site, one of the bigger ones, I'm 39, and the only time I read a print version of my paper is in the restroom or the breakroom. Liberals complain the content is too right wing and conservatives complain it's too liberal, and both groups are finding the news they want to hear on blogs (not to mention talk radio), and some of these folks are creating blogs. Also the alternative weeklies are seen as more reliable journalistic sources nowadays (Village Voice/New Times and the like). Many of them do the kind of investigative reporting that would make the mainstream papers (and their advertisers) squirm with discomfort. Younger readers (twentysomethings) have always been drawn to those.
ReplyDeleteWhat is depressing is how Gannett management chooses to sit on their hands and simply manage for decline. It's all notched in Gannett history how McCorkingdale-DuBow did nothing to position the company for the future, blew billions on disastrous stock buybacks, borrowed heavily for poor acquisitions, launched awful new products, sacrificed product quality for short-term profits, treated employees like costs of business, and failed to sell newspapers and TV stations while they were still worth something. It is hard to believe that Gannett directors haven't taken matters into their own hands (like they should have done all along) and replaced the fools in charge. They can blame the economy all they want, but McCorkindale-DuBow led us down this hole. Besides, good managers know how to manage for down times.
ReplyDeleteLow stock price does affect you, sort of. For sure, if you hold shares, and that's how the company pays into your 401(k). Also, low price leads to lowered bond ratings, already junk, which makes it harder to borrow and more costly because lenders will only lend at a higher rate to compensate the higher risk. Should the company need to borrow, it's expensive. If shares dropped too low too long and the company failed to meet NYSE listing requirements, it could be bumped off the exchange.
ReplyDelete