By: Jennifer Saba
In what?s becoming a regular refrain, third quarter earning results are expected to be disappointing with few if any surprises, said a new report from Goldman Sachs.
Even after chopping estimates for five newspaper companies, analyst Peter Appert wrote, “we expect further downward pressure on estimates coming out of 3Q results.” They forecast a 6% average year-over-year decline in the industry?s 3Q earnings per share.
The note waves off investors who might be attracted to the newspaper group?s low valuations and the financial restructuring of several companies. Goldman stamped the sector with an ?underweight? rating.
Analysts loweredtheir estimate for Belo’s quarterly revenue due to ?anemic revenue performance at the company?s newspaper properties,? noting that August revenue fell at all three of Belo’s newspapers.
Over at Dow Jones, while analysts point out there are signs that the company is in for a ?turnaround,? the current valuation of 12.7 times EBITDA already accounts for any rebound. Furthermore, September was a weak month for The Wall Street Journal?s advertising results.
It?s anticipated that every division at Journal Communications, save for broadcasting, will report revenue declines. Newspaper revenue is estimated to drop 2%.
The jury is still out on McClatchy, which is trying to swallow Knight Ridder. ?We expect further fine tuning of the McClatchy earnings model as the impact of the Knight Ridder acquisition and subsequent divestitures become more transparent following the release of the 3Q 10Q.?
E.W. Scripps is the only pick in the newspaper sector. ?Scripps remains our favorite growth story with the diversified publishing space, with an evolving business mix driving impressive secular growth dynamics.?