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Stock Strategist

Newspaper Stocks Are Value Traps

Their steep share price declines don't make them bargains.

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The paroxysmal changes rattling the beleaguered newspaper industry have coincided with unprecedented declines in publishing companies' stock prices. The decimation has affected newspaper publishers regardless of size, geography, or prestige of their mastheads. Driving this decline is a structural shift of epochal dimensions that is fundamentally changing the way we generate, compile, disseminate, and consume news and information, manifested largely by the rise of the Internet and the proliferation of alternative digital media choices.

 Newspaper Industry Revenue
YOY % Change 2004 2005 2006 1Q 2007 1H 2007 3Q 2007 4Q 2007 1Q 2008 1H 2008
Print Only 3.9% 1.5% -1.7% -6.4% -8.3% -9.0% -11.6% -14.4% -15.3%
Online Only 26.7% 31.5% 31.4% 22.3% 20.7% 21.1% 13.6% 7.2% 2.3%
Print & Online 4.5% 2.5% -0.3% -4.8% -6.7% -7.4% -10.3% -12.8% -14.0%
Industry figures from Newspaper Association of America (NAA)
 

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Tom Corbett does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.