By: Jennifer Saba
Merrill Lynch said in a note released today that it’s too soon to tell the damage wrought by Hurricane Katrina but clearly there are near-term implications.
Merrill Lynch estimates that Knight Ridder’s Biloxi newspaper, The Sun-Herald, generates about $32 million in total annual revenues. Though the paper has started to carry some advertising, Merrill forecasts roughly two weeks of very modest total revenue — for now, the paper is also distributed for free — followed by a little more than a month of half the normal revenues. With this in mind, the research firm believes that Biloxi will lose $3 to $3.5 million of revenues. With no change to cost, it lowers Merrill’s 2005 earnings per share estimate by $0.03 per share.
Initially the paper will lose advertising but will get a boost as rebuilding gets underway.
Additionally, Merrill points out that Tribune will also be affected. The company has two New Orleans TV stations that generated revenues of about $24 million in 2004 ($14 million for the ABC station and $10 million for the WB station). “It is impossible to know at this time how long the TV stations will be dark or when the market could return to any sense of normalcy,” the note said. “If the station, for example, was to go six months with no revenues and maintain its cost base, we estimate a roughly $0.02 to $0.03 per share (1%) impact to our 2006 EPS estimate.”
The hurricane will not likely impact The New York Times, which owns two newspapers in Louisiana (Houma and Thibodaux) or Gannett, which owns newspapers Alexandria, Lafayette, Monroe, Opelousas, and Shreveport, La.