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Newspaper Stocks Taking a Beating

Without question, 2008 was a terrible year for stocks. The Dow was down by 35% and the S&P 500 was off by about 40%. Yet, when it comes to getting hammered in the stock market, there's no business like the newspaper business.

A number of newspaper publishers have seen their stock value decline by 90% or more in 2008, having been or are on the verge of being delisted by the NYSE. Gatehouse Media, Journal Register and Sun-Times Media Group all have become penny stocks and been kicked off the big board.

The stocks for Gatehouse, which publishes nearly 100 mostly small-town dailies, are down 99.5%. Journal Register, parent company of 22 mostly suburban dailies, had a similar meltdown. Sun-Times, owner of the eponymous Chicago paper, is trading at about 5 cents a share.

Bigger chains are not faring much better. Lee Enterprises, with St. Louis Post-Dispatch its flagship, is trading at 40 cents a share. Media General, publisher of the Tampa Tribune, is at around $2.50. Gannett, the nation's largest newspaper publisher and parent of USA Today and Detroit Free Press, is at $8.50, down from around $37 in January 2008.

The New York Times Co., despite all the bad news and bad press, actually has held up better than most. The NYT is trading at about $7.60, down from the 2008 high of $21. The NYT plans to mortgage its Manhattan building and is actively trying to sell its 17.5% stake in the New England Sports Ventures.

According to a source, the NYT is asking around $350 million for its share in the Boston Red Sox, Fenway Park and NESN television network - though the actual worth of the stake is probably closer to $150-200 million. The company turned down an opportunity to unload the Boston Globe two years ago when it was valued at around $550-600 million. Today, the Globe is worth about $20 million.

The NYT has to sell something - anything - quickly. It is reportedly $1 billion in debt, with a $400 million credit line due to expire in May 2009. It might also want to think about selling about.com, which has been valued at around $600 million.