By: E&P Staff Merrill Lynch analyst Lauren Rich Fine met briefly with Knight Ridder management last week and found the tone of the meeting "fairly upbeat," as the company is expecting much stronger growth next year, according to a note issued today.
Help-wanted revenue remains strong while auto is soft. Knight Ridder is "holding its breath with respect to housing ads as they have been strong for some time." Retail is tepid and national is inching up a bit.
There are still some sticking points that the newspaper company needs to get through, including the circulation crisis hitting other papers. Though Knight Ridder remains free of any scandal, there is concern by management that advertisers will use circulation to their advantage when negotiating rates. If readership was an issue before, it's becoming increasing more important in light of the misstatements as Knight Ridder is "trying to push the industry towards adopting more frequent readership measures with which to present to advertisers."
Fine notes that Knight Ridder continues to aggressively pursue online opportunities through CareerBuilder and other ventures. ShopLocal, which was launched in late August by CrossMedia Services (in conjunction with Gannett and Tribune), is gaining traction mostly with big-box retailers rather than the local advertisers the service was intended. Even though competition is fierce for local advertising, Fine thinks that in the long run, Knight Ridder won't "cede much anytime soon."
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