Bringing It All Back Home

By: Jennifer Saba Lauren Rich Fine makes it no secret that she loves newspapers. The Merrill Lynch analyst is perhaps the most influential outside observer of the newspaper industry, but some experts can study a subject all day without much caring for it. For Wall Street types in particular, the main show is the money, and the industry generating the profits is often relegated to sideshow status.

Fine is different ? not because money doesn't matter to her, because it does. She's just passionate about the industry, in ways even some insiders are not.

In Fine's world, everything is tied to newspapers.

When she travels, no matter where she lands ? mid-sized cities or tiny towns ? she immediately picks up the daily newspaper and plays a game. She takes a quick look and then guesses the ownership before flipping to the masthead to see if she got it right.

Another example: A conversation about the trend of people waiting later in life to get married turns into an analysis of why the newspaper industry is failing to nab thirty-somethings, then morphs into the missed opportunity of retail advertising.

"My husband is like, 'Everything you do is about newspapers!'" Fine says while paying a mid-October visit to Merrill Lynch headquarters in New York. "We check into a New York hotel and I immediately ask for an upgrade to The New York Times. I'm walking around New York this weekend thinking how come [the Times] isn't making boatloads of money, everybody is out shopping."

A series of non-sequiturs snap into a tight observation. "One of the biggest triggers of why somebody reads the newspaper is twofold: They want to be part of the community, and they want to know what to do with their children over the weekend."

Fine has been covering newspapers (along with the advertising, for-profit education, and online sectors) for Merrill Lynch since 1994. She leads a New York-based team of four analysts and one administrative assistant from her at-home office in Cleveland and follows roughly 30 companies, including Google and Yahoo, which were recently added to her watch.

Fine is considered one of the best in her field among her peers and the companies she covers. Institutional Investor Magazine continually lists her as one of the top "All-American" analysts. This year she was ranked number one in her sector, a spot she has held in either the advertising or combined advertising and publishing category for seven years.

As one of the industry's reigning powerhouses, Fine has the ability to move markets. "If somebody gets downgraded, the price of the stock inevitably falls, particularly if it's [from] one of the leading analysts, which [Fine] is," says Tony Ridder, CEO of Knight Ridder, adding that the same effect holds when a stock is upgraded.

And when an analyst makes a call, there's little a company can do about it. "It's like when you get a bad grade in school," Ridder explains. "You can't go back and say, 'why did you give me a B when I deserved an A?'" He notes that analysts, like professors, are more than willing to explain why they rated a company a certain way but they never change a call.

Because Fine is such a force in the industry, her thoughtfulness is even more important. "She's an outstanding analyst with a lot of consistency," says Jerry Labowitz, director of Americas equity research at Merrill Lynch. Labowitz has been working at Merrill since 1975 and, until two years ago, was Fine's peer until he was appointed head of the research division. "I've known her for several years and I've seen her get more and more seasoned with experience and age. I wish I had 20 Laurens working for me."

It's no wonder that Labowitz wants several duplicates of Fine. At 45, she has the energy of an eager college grad without being in your face. On the day we met in a Merrill Lynch conference room, she was wearing a pink sweater, black pants, and black patent leather shoes with a square one-inch heel. She looked polished yet youthfully laid-back. Only the gray that streaks her long black hair betrays her age. She's someone, to use the presidential yardstick, you'd want to have a beer with.



Early bird gets her news

A typical day for Fine starts at her home in Cleveland at 5:30 a.m. when she starts reading The Wall Street Journal and The New York Times. (She takes The Plain Dealer on weekends). She then checks e-mail ? she receives about 200 non-spam messages in any given day ? and gets her three children out of bed and down to breakfast. "Before 7, I'm pretty well educated about the news of the day," she says.

The Merrill Lynch daily conference call, where all the analysts go over their agendas and "big ideas," starts at 7:30. This is where Fine, in her third-floor home office, talks about research or any notes that she might have sent out. After seeing her three children ? an 11-year-old son and two teenage girls ? off to school, she spends the rest of her daylight hours with the phone attached to her ear. "I would say during the course of any day you're typically trying to manage the number of minutes you're on the phone with clients and companies," she says, adding she gets anywhere between 10 to 30 calls a day.

Fine's family plays an important part in her life, and she's always trying to balance her insane schedule with school activities. If there's a soccer game going on, Fine takes phone calls at the field; she shutters any work between 6 and 9 p.m. to eat dinner with her family and help her kids with homework, then finishes her research reports between 9 and 10.

"Lauren is very good at multitasking and handling priorities," says her equally affable husband Scott Fine, a professor at Case Western Reserve University's Weatherhead School of Management and a former investment banker at Goldman Sachs. He says that he's in awe of the way she takes on a stressful job while raising a family: "I could never do her job ? it's highly competitive, and you have to be confident about your own means. But she's able to turn the switch off, even when we go on vacation. She's very good at balancing things."

When she travels ? which is less frequently now ? she tends to write whenever she can before she steps onto a plane. This is where she reads, usually a book a week. On this trip it's a novel called The Mammoth Cheese, or varied magazines like Business Week and The New Yorker.

Despite the hectic schedule, she's enamored with what she does. "It's a great job in that you are paid to know about the industry and understand the positions of the company within the industry. You're hanging out with Tony Ridder and it's a lot of fun," she says by cell during a cab ride on the way to San Jose International Airport.

"I don't sit there and drill him on what the next quarter is going to look like. I sit and say to him, 'Let's talk about five years out. What's the industry going to look like and how are you going to fit in? Daily newspaper circulation is declining and the return on investment on all these new products is lower,' and he'll come back and challenge all these notions. It's just a fun conversation because there is no right or wrong. I'm lucky to talk about these things."



Telling it like it is

There are various approaches to equity research, the part of a financial house that provides information to those buying specific stocks. Many of those approaches have come under fire in recent years, and some analysts once treated like rock stars are now considered pariahs. Unlike some of her more storied colleagues, Fine remained unscathed and retained her power. Perhaps it's because she takes the long view.

"I think if anyone knows Lauren, and if they have worked with her a long time, she is very fair and very thoughtful," says Janet L. Robinson, COO and executive vice president of The New York Times Co. "She never jumps to a conclusion, and she approaches her work with a degree of openness and willingness to engage in conversation. It's a wonderful trait."

It speaks volumes that a woman who could quickly cut a newspaper company's market value is apparently thought of so highly by those she covers. The same description of Fine emerges no matter who is doing the talking. Gary Pruitt, CEO of McClatchy, says: "She knows our company very well, and has spent time to learn and understand it. She has done her homework. I don't get the sense that she is influenced by anyone. She has her own judgment and sticks with it."

Though Pruitt is very aware of the effects of her calls, like Tony Ridder he accepts it as a part of doing business even when she might downgrade his company. "Sometimes I think it's a positive, and sometimes it's a negative," he says. "She is recommending stocks to potential investors and that's very much a numbers game. And she understands for many investors, the decision goes beyond the short-term numbers. She incorporates a broader view."

Fine is academic without being pedantic, and that's how she's gained so much ground. She has a natural love of learning ? the editorial as well as the business side ? so when the Poynter Institute asked her to join their advisory board, she leapt at the chance.

"It's perfect for me because I have the chance to really meet the leaders in these organizations, whether it's the head of the newspaper division or the head of the broadcast division," Fine says. "You really come in and talk about the struggle they face trying to maintain a certain level of journalism, yet understand the value of the organization in terms of what they are trying to deliver."

Though advisory members' terms vary (hers is up in 2006), Fine is one of the few business voices amid the chattering newsroom mob. Her views on editorial quality for example, aren't exactly going to endear her to the ink-stained set. "As a financial investor, anything is fair game in the sense that if its selling papers, it's OK," she says. Though she's aware of the drive for a high-quality product (she cites Rick Edmonds' efforts at Poynter as way of example), she doesn't believe there's a proven correlation between better quality and higher readership.

This could become semi-hostile territory, but "her ideas are so well thought-out and expressed, they are received well," says Karen Brown Dunlap, president of the Poynter Institute. "It's invaluable to be able to turn to her. As the circulation crisis unfolded this year, she and I had a long talk about what she is seeing in the industry and the effect it will have. You're looking at a triple blessing ? a board member, a teacher, and a source."



Finding her niche

While Fine seems like a natural to cover the industry, it took a while for this woman, who comes across as one of those people who had already mapped out her life as an adolescent, to find her place.

Fine had always harbored a curiosity about newspapers. At the age of 10 her father, a furniture manufacturer rep who is now deceased, bought her a printing press: one of those little numbers with a rack of rubber stamps that allowed Fine to publish community news as well as a comic strip.

After finishing high school in Cleveland, where she was born and raised, she headed to Tufts University outside of Boston where she got a dual degree in psychology (her mother is a psychologist) and economics. She immediately headed to New York University to study business.

Out of necessity she found a job with Merrill, working 35 hours a week in the economics department while carrying a full course load. Between sessions she married Scott, her high school sweetheart.

After school, the pair moved west to Palo Alto, Calif. Lauren took a job in the treasury department at National Semiconductor until Scott finished his MBA at Stanford. They headed back to New York and Lauren picked up again at Merrill.

Because of her work at National Semiconductor, Merrill thought Fine would be a fit in its treasury department, in which analysts work on special projects for the company. It was an accounting-driven job that attracted a lot of introverts. Fine's ease with people and outgoing personality went to waste. "I really didn't like being in [that area]. It was a very bad fit in terms of the people I was working with," she recalls.

Colleagues convinced her to look at equity research within Merrill, where she got a gig working under senior analyst Peter Falco. When he retired in 1994, Fine picked up his large sector, which included advertising, publishing, cable, broadcast, and online (she passed the latter on to Henry Blodgett).

By 1996, the Fines realized they didn't want to raise their children in New York ? they were living in Tribeca at the time ? and headed back to their hometown. Lauren convinced management to let her work out of Cleveland. The couple bought a three- story Georgian house; Fine's office, which she describes as "a mess," takes up the entire top floor.

But really, she just sort of fell into the job: "It was just by accident and me not liking something and [colleagues] saying something that I didn't see. What's amazing about it is you're juggling a tremendous amount in terms of your skill set. If you're lucky, the industry changes enough to stay interesting."



'You're selling advertising'

Since she's been covering newspapers, Fine thinks the biggest thing to hit has been the growth of the Internet, something that fundamentally changes the way people read and how a paper can make money.

It's not news that fewer young people are reading the paper these days. It's a charge that Fine herself takes up with her own children who, she fears, stand a shot of never reading a paper. "I try almost every morning that I'm home to find an article that my kids will think is interesting ? which means I've stooped pretty low, to reading Britney Spears reviews," she admits. "But I still want them to know the breadth of what is in a paper."

Fine's children are so entrenched in the digital world that when their modem went down one of her daughters refused to look up a movie time in the paper. "She said, 'Mom, I don't want to do it. I don't want to touch [the paper]. I said, 'OK, then we won't go to the movies,'" Fine recalls.

It's not that Fine's children don't read, they just prefer a screen to a piece of paper. And her kids' preference reflects a problem faced by the industry at large. "It's a challenge for newspapers," she says. "If you sit and think about some of the opportunities for newspapers ... I'm not ringing the death knell for newspapers. It's more watching management go through some pretty interesting transitions."

Fine thinks that newspapers have a role in the future. "I ultimately think that newspapers are an opportunity to bring together buyers and sellers," she says. "And you can do it under the auspices and provide the content that people care about. I know journalists don't like to hear this, but guess what? You're selling advertising. You call me an analyst and I sell stocks. We're all selling at the end of the day. My point is, you're still delivering content that people want but you have to find a different way to support it."

She envisions a future where a reader can log on and know everything that's necessary for the day provided by the local papers: school lunches, soccer practice times, things on sale to buy for a kid's birthday party. It sounds like a cross between a traditional paper and Microsoft Outlook. And she thinks that CrossMedia's ShopLocal.com is a good start.

Fine is aware that changes have to be made, and made quickly. "It's like you're going to accelerate into this brick wall; you don't know when you are going to hit it," she says. "Meanwhile, the question is, do you keep investing on a local scale and increase the number of outlets, weeklies, ethnically targeted newspapers?"

She thinks niche publications have a way to go before providing a good return on investment but, taking the long outlook, she says it's a good idea: "I think the big challenge is, are people willing to pay for it? I've always been astounded about people's unwillingness to pay for a newspaper."

But Fine being Fine, and always thinking of ways to push the industry further, she imagines her own marketing campaign, one that shows people just how much bang they're getting for their money. She describes a screen that starts filling up with stories ? essentially, a sped-up version of a newspaper's production ? until you get the finished the product. She's even thought of a tag: "All for you, for 50 cents."