By: Jennifer Saba Today is the deadline for the first round of bids on Knight Ridder but Merrill Lynch analyst Lauren Rich Fine is skeptical there's enough interest. "We are increasingly of the view that there are few bidders for the whole company and those that are interested are not likely to bid much above the current trading price," said a report released on Thursday.
The note mentioned that Knight Ridder executives could take the company private or that some companies could team up, which could include Gannett, to make the acquisition. "Cross-ownership restrictions could preclude Gannett from being aggressive on a stand alone basis," said the note. The strong guild across Knight Ridder -- especially in Philadelphia -- could throw up a roadblock.
Meanwhile, the research firm expressed surprise that during this week's media conferences in New York, newspapers executives were so aggressive with ad rate increases. "It almost feels as though they are trying to prove something to Wall Street who is increasingly wary that the circulation declines are yet to take a toll on rates," the report said.
Most publishers forecast 2006 ad revenue to grow in the mid to low single digits. Merrill Lynch estimates ad revenue will increase about 2% next year.
Furthermore the research firm disagrees with the Newspaper Association of America's outlook, which pegs ad revenue to gain 4% in 2006 (with print and online increasing 3.1% and 25.1% respectively). "We believe that some in the industry are forecasting gains and/or flat results from the department stores, which feels a bit aggressive, in our view."
For the week, newspaper stocks declined 0.6% compared with S&P500, which was up 0.6%.
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