Goldman Sachs Sees Papers Moving in Right Direction

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By: E&P Staff

Large newspaper companies experienced a mixed bag of financial results in the fourth quarter of last year, but, in general, the industry is moving in the right direction.

So say the research analysts at Goldman Sachs as January draws to a close with about three-quarters of the industry having released earnings reports for the fourth quarter and full year 2003. Several large newspaper chains — including Gannett, Journal Communications and Belo — will unveil their results early next month.

Bright spots so far have been Tribune Co., Pulitzer, Lee and The New York Times Co. — all of which significantly beat analysts’ expectations. Knight Ridder, however, missed estimates; Scripps was slightly below consensus; and McClatchy was slighty above. In other words … a mixed bag.

The best news, according to Goldman Sachs, is that help-wanted advertising revenues are picking up. “This bodes well for the 2004 earnings outlook and bolsters our confidence in prospects for improved sector stock performance in the months ahead,” the firm said in a report issued Thursday.

Perhaps most optimistic was Tribune Co.’s results. The Chicago-based company, one of Goldman’s top stock picks in the sector, has seen an ad-revenue resurgence. National and classified ads showed continued strength, and the 3% growth in help-wanted revenues in the fourth quarter was the company’s first increase in the category in three years.

“Tribune’s ad revenue growth is clearly moving in the right direction,” the report said, “and is consistent with our thesis that we are past the bottom of the current ad cycle.”

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