Merrill Lynch Has Low Expectations for Q4

By: E&P Staff Merrill Lynch issued a note yesterday taking a neutral stand on newspaper stocks due to concern "that near-term revenue momentum has peaked and that our 2005 industry forecast of 5% could prove too high." It's recommending buys on three individual companies: E.W. Scripps, Tribune, and Washington Post.

The investment firm is predicting roughly 4% ad revenue growth for Q4 versus the estimated 4.5%-5% growth for Q3. Political advertising will help those newspaper companies that own TV stations, but that's the one of the few bright spots.

As always, the real kicker will be if advertising growth can maintain it momentum especially since holiday spending is still an unknown. It's expected that the national and classified categories will carry the quarter.