Newspaper Stocks Surge on Optimism Over Ad Spending

By: The stocks of newspaper companies surged Wednesday on optimism that advertising spending may be, if not recovering, then at least not declining faster than before.

A report from market research firm TNS Media Intelligence said the rate of decline in overall advertising spending held steady from the first quarter to the second.

Also, early data for the current quarter "hint at possible improvements for some media" because they will be comparing against steep declines a year ago, according to Jon Swallen, senior vice president of research at TNS.

Shares of The New York Times Co. were up 88 cents, or 11.2 percent, at $8.76 in afternoon trading.

The stock of Gannett Co., publisher of USA Today and other papers, rose 92 cents, or 10 percent, to $9.98.

The E.W. Scripps Co., publisher of 13 daily newspapers, was up 72 cents, or 9.1 percent, to $8.67.

The McClatchy Co., publisher of The Miami Herald and 29 other daily newspapers, rose 9 cents, or 3.4 percent, to $2.70.

The report from TNS bolsters positive signals for the industry recently. On Tuesday, News Corp. CEO Rupert Murdoch said advertising spending has improved from four months ago, echoing comments from CBS Corp. CEO Les Moonves earlier.

"There are some hints that things are getting better," said Dave Novosel, media analyst at Gimme Credit. He cautioned against making too much of a rise in newspaper stocks since several are so low that any rise at all appears outsized.

Longer term, Novosel said newspapers are not likely to see the level of advertising spending they enjoyed four to five years ago.

"They do have the same problems, in terms of advertising," he said. "I don't think it is coming back because people are finding alternative forms of advertising."

Swallen at TNS also put the advertising report in perspective.

"While it's tempting to interpret this as a positive indicator that things aren't getting worse, the fact remains that the market has been steadily tracking at around 14 percent declines for several consecutive months and this represents billions of lost revenue," he said.