Trading Mixed on Newspaper Publishers

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Shares of newspaper publishers traded mixed on Thursday on a flurry of developments including a bid for Tribune Co. by its largest shareholder, a downgrade of McClatchy Co. and an analyst’s view that newsprint prices may be easing.

Tribune received a $7.6 billion buyout offer from the Chandler family that would include a spin off its broadcast division. The bid was disclosed in a filing with the Securities and Exchange Commission.

Prudential Equity Group analyst Steven Barlow maintained an “Underweight” rating on the publisher, saying in a client note that he feels there is at least a 50 percent chance that Tribune’s board will turn down the offer.

“The Chandler’s had no choice but to bid, and we think they hoped to be the cover bid. The auction limped to a close,” he wrote.

In a separate note, Barlow downgraded McClatchy to “Underweight” from “Neutral Weight” on industry concerns over revenue growth. He also trimmed his price target by $3 to $37.

Separately, analyst Lauren Rich Fine of Merrill Lynch said that newsprint prices seem to be falling, which is typically a boost to stocks. But she cautioned in a client note that the sector’s “valuations aren’t that enticing, in most cases, and the fundamental outlook remains cloudy with risk to the downside.”

Fine said there is some industry optimism for online initiatives, with blog traffic climbing and online ad revenue growing.

She affirmed a “Neutral” rating on the group.

Shares of Tribune gained 84 cents, or 2.8 percent, to $31.18, while New York Times Co. added 11 cents to $23.77 in morning trading on the New York Stock Exchange.

McClatchy’s shares declined $1.09, or 2.7 percent, to $40.05 on the Big Board. Dow Jones & Co. fell 17 cents to $39.01 on the NYSE.

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