Back to the future? Ariel's Rogers on newspapers

With advertising and readers fleeing to the Internet, it's hard to recall a time when newspaper companies were more out of favor among investors. So why would Ariel Capital Management pour more money into Gannett, the ailing publisher of USA Today, and 101 other dailies in the U.S. and the U.K.?

"Our firm is based on contrarianism," Founder John Rogers (left) once told the Chicago Tribune. "We often find that's where opportunity is.''

Today, the Chicago money management firm emerged as Gannett's new No. 2 stockholder, after it told federal regulators it had amassed 28.8 million GCI shares, more than double the 11.1 million it held on Dec. 31. The news electrified Wall Street investors: Gannett's stock rocketed to $3.75 a share, up a whopping 39%, or $1.06 a share.

In that Trib interview, Rogers said the industry's woes were about to bottom out, setting up pure-play newspaper stocks for a rebound. "When everyone decides an industry can only go down, usually that's getting close to a bottom," Rogers said in that memorable interview.

Memorable, of course, because it took place in late July 2007. Aerial had just boosted its stake in McClatchy Co. to 15.5% from 10.3% only three months before. (Aerial's share has grown still more; it's now 26.2%.) At the time, Miami Herald owner McClatchy's stock traded for $26.50 a share.

Yikes! Today, MNI closed at 61 cents, up 3 cents.

Memorable source, too!
There aren't many minority professionals on Wall Street, much less founders of investment firms. So, Rogers occupied a prominent if not lonely position on the various minority source lists I kept over the years as a Gannett reporter and editor.

[Photo: Aerial]