Twenty-Two Years After Black Monday: Newspaper Stocks Look Sickly

By: Mark Fitzgerald Monday was a big day for newspaper stocks, with Gannett Co.'s (NYSE: GCI) expectation-busting Q3 earnings fueling the red-hot rally the sector has enjoyed since mid-summer.

But recall back to another Monday exactly 22 years ago, and newspaper stocks look like a spectacularly bad investment.

In the 22 years since the Dow plummeted 22.6% and the S&P 500 20.5% -- the worst one-day performances ever for both indexes -- the wider market has more than recovered. The Dow marked the Black Monday anniversary by hitting another high for 2009. Since the '87 Crash, the Dow is up 475%, the S&P 383%, and the Nasdaq Composite up 499%.

And newspapers? Well, look at how the few stocks that were listed on the Big Board in 1987 have fared -- even with the big gains of this Rally Monday. In every case, they are trading far below the value they held when the markets closed on Black Monday.

Gannett led the sector with a rise of $1.05, or 8.2%, to close at $14.06 after establishing a new intraday 52-week high. But at the end of Black Monday's trading session, GCI was worth $24.45 a share.

Gannett was actually one of the few newspaper stocks still around that was hurt on that Crash day, losing more than $6 a share from its open of $30.61.

Lee Enterprises (NYSE: LEE), for instance, closed Oct. 19, 1987 unchanged at $18.14. Twenty-two years later, it closed Monday at $3.87, on a gain of 2 cents, or 0.5%.

Similarly, The New York Times Co. (NYSE: NYT) was barely fazed by the carnage of the wider market. NYT closed that day at $28.40, off just 49 cents from its open.

Monday, NYT was up 5.1% on the day -- and has nearly doubled since newspaper stocks began their rally in mid-July -- but its share price is far below 1987's, at $8.91.

Many of the newspaper stocks listed on the New York Stock Exchange on Black Monday are gone, either by bankruptcy (Journal Register), going private (Tribune Co.) or being bought up in the buying fever of the last decade (Knight Ridder, Pulitzer Inc., Dow Jones & Co.).