Merrill Lynch downgraded New York Times Co. and two other newspaper chains Monday, following a recent pattern for analysts covering the beleaguered industry.
Analyst Karl Choi cut his rating on New York Times to “Sell” from “Neutral.”
Choi also lowered his rating to “Sell” from “Neutral” for McClatchy Co., publisher of The Miami Herald, Sacramento Bee and other daily papers in the U.S.; and made the same call for Lee Enterprises Inc., a smaller chain that publishes the St. Louis Post Dispatch.
Newspapers have come under increasing pressure in recent months as Internet outlets and cable television continue to take advertising revenue away from traditional media.
Last week, the New York Times said overall ad revenue for its News Media Group, which includes its newspaper properties, fell 4.6 percent in August, continuing a pattern seen for more than a year.
The Newspaper Association of America reported an 8.6 percent drop in ad revenue at newspapers for the April-to-June period. Print-only advertising at newspapers skidded 10.2 percent to $10.5 billion in the second quarter, the fifth consecutive quarter of declines, the industry group said.
The Merrill downgrade follows a “Neutral” call on the sector last week from Banc of America Securities, when a new analyst took over coverage of the industry. Goldman Sachs analysts cut the Times and McClatchy to “Sell” in July. Lehman Brothers maintains an “Underweight,” or “Sell” rating on the stocks and a “Negative” rating on the industry.