The Spiral Steepens

Ouch

Gannett Co. Inc.'s stock fell 5 percent Friday after the company announced its operating revenue fell in February, continuing the downward trend for the media company.

The nation's largest newspaper company, which owns USA Today and The Honolulu Advertiser, isn't seeing any let up in a difficult market for newspapers.

Its operating revenue was down to $528 million in February, a 7.2 percent drop from $569 million in the same month a year ago.

Monthly advertising revenue fell 8.3 percent to $347 million, which includes a 13.6 percent drop in classified revenue to $141 million and a 7.7 percent hit to its retail advertising to $149 million. Those numbers were offset by Gannett's national advertising revenues, which includes USA Today, which was up 6 percent to $57 million.

Comments

[ron]

I don't think that Gannett will get the benefit which Bear Stearns got this week. Which lead economist Willem buiter to make this observation:

"[T]he shareholders of Bear Stearns are eating their cake and having it. Shares may have dropped 43 percent in value, but what is left still beats nothing. And nothing seems the only possible fair value for what Bear Stearns would be worth without Fed assistance. Why was Bear Stearns not taken into public ownership, preferably at a zero price? One would hope that, as soon as the rescue was announced, the existing management and board of Bear Stearns would have resigned en-masse, and without any golden handshakes of the CEO of Citigroup and Merrill Lynch -variety. This should have been a condition of the loan being made. The argument that only the existing management understands the business well enough to see it through the storm is unconvincing, as these are the very people that screwed it up in the first place. Why are the old top management and board members still in their jobs?"

The last question might be asked of Gannett top brass as well.

[ron]

The collape of Bear Sterns and the downward trend of Gannett stock may be the least of our worries according to this quote in MSN Money news this morning:

"Today's moves by the Federal Reserve are the desperate acts of failing men," Peter Morici, professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission, wrote in a note to clients late Sunday. "The threat of contagion and wholesale breakdown is on a scale of 1929 is real."