Hiatus II

Nobody's working this week, and now that includes Fitz & Jen. Have a happy New Year's and we'll see you on the other side, with any luck.

Tuesday Morning Links

World-wide, advertising is back, baby. ZenithOptima figures global ad spend will grow 1.6% in 2010 and another 4.3% in ’11. Not bad considering advertising contracted 8.5% this year. (via The Economist)

So why is online advertising less profitable than newspaper advertising for retailers,  even with its better ability to target audience? MIT Sloan School of Management Assistant Professor Alessandro Bonatti explains:  “From a profitability point of view, competition for advertising between two super-targeted online media is worse than competition between The New York Times and The Wall Street Journal. “Instead of competing for one large pool, one big market, you will have price war in each targeted segment as the slice gets more and more narrow.”

Yes, but what do Tina Brown and Harold Evans think about pay walls? (Journalism.co.uk)

After The Bell Monday: Starting A Short Week Slowly

Fitz: Nobody works this week, of course, if by nobody we look only at the universe of employed and otherwise office-bound salarymen -- forgetting folks like the People’s Gas crew that labored all day amid the snow outside my house to reconnect natural gas to my neighbor’s home.

So Monday was a predictably desultory session with low trading volumes. The newspaper sector ended the day broadly but modestly down despite the good new about holiday retail sales.

Lee Enterprises (NYSE: LEE) led the decliners with a 15-cent, or 3.9%, decrease to $3.67 a share. Widely held Gannett Co. (NYSE: GCI) dialed back 40 cents, or 2.6%, to $15.23.

The New York Times Co. (NYSE: NYT) was the only Big Board gainer Monday, adding 6 cents, or 0.5%, from the open to end at $12.22, holding to a level it established Christmas Eve and hadn’t previously achieved since the beginning of October 2008.

Helping Retailers Beat The ‘Wal-Mart Effect’

Fitz: Hat tip to Crain’s Chicago Business’ Enterprise City blog for pointing out a fairly recent study out of Dartmouth’s Tuck School of Business on the impact of a new Wal-Mart on local retailers. No surprise, it’s big. But implicit in the study by marketing Professor Kusum Ailawadi are suggestions newspapers can make to protect their long-time retail advertisers when Wal-Mart, a notorious non-advertiser or seldom advertiser, arrives in their market, or expands its SuperCenters.

Her biggest advice is the obvious: Don’t try to beat the Beast of Bentonville at its own game. Advice, she adds, that retailers don’t often follow: “Even though we know we shouldn’t fight price wars with Wal-Mart, that seems to be exactly what we do.” More observations are on this video interview with Ailawadi:

Monday Morning Links

As The Wall Street Journal beefs up its general news coverage – Monday’s front page was lead by stories of the Nigerian plane bomb suspect and protests in Iran – Bloomberg News is taking the opposite tack, dismantling its World News team of 22 journos, Gawker reports. “Reports of natural disasters, plane crashes and the like will come from the AP, The New York Times, the Washington Post or Britain's Daily Telegraph,” one source tells Gawker.

Are we entering the Year of the Pay Wall? Sure, judging by the end-of-decade talk anyway. Seeking Alpha surveys the paid online content landscape, as does The New York Times, which quotes the Newsosaur: “Content providers see that the idea that everything has to be free, supported by ads, isn’t working well, and they’re trying to put the toothpaste back into the tube, but only partially,” said Alan D. Mutter, a media consultant and blogger who has been an executive at digital media companies. "So we’re looking at some sort of an inflection point, at least in attitude. But I haven’t seen much realistic, hard-headed thinking about how that’s going to happen, so I don’t know how much is really going to change.”

De-contenting montetizing: The Wall Street Journal, which this year started a wine-selling business, is dropping the couple who wrote its “Tastings” wine column. Dorothy J. Gaiter and John Brecher's last column appeared Dec. 26.

First Gannett Blog, and now McClatchy Watch. It wasn't just newspapers that folded in '09.

Web Break: Fitz & Jen Take Some Holiday Downtime

[Reprinted (re-posted?) below is the Christmas Eve 2008 message on our holiday hiatus. We don't want to get all Wall Street Journal Thanksgiving-editorial-reprinted-every-year-since-1961 on you, but it still seems pretty relevant. The fact that Editor & Publisher itself now hangs in the balance, with some serious interest by possible bidders, takes a little of the third-person perspective off it.]

Fitz & Jen will be off for the next few days, reappearing bright and bushy-tailed on Monday the 29th. the 28th, 2009.

We wish you the peace and joy of the season. Happy Christmas. Chanukah Sameach. However you celebrate this time of year, blessings upon you.

All the world over, fellow man needs our prayers, our reflections, our good thoughts. For our industry, keep in mind: The pressmen made redundant when their printing plant closed. Inbound classified ad salespersons whose jobs were outsourced to India. Carriers whose revenue is cut with the frequency of the newspaper. Day workers who lose hours with fewer inserting jobs. Reporters who dreamed of someday being a reporter on a great metropolitan newspaper pink-slipped or bought out with years left in their careers. Designers with last assignments to create workflows that need fewer designers. Commission-only display salespeople reading headlines of slumping auto sales, housing starts, retail sales.

And a thought, too, in this season of miracles -- whether of Christmas, the lamps or Festivus -- for the thousands of men and women still on the job producing liberty’s signal achievement: The Daily Miracle.

A bleaker time in American history produced some of the greatest Christmas songs. As a Fitz & Jen You Tube Christmas card to you and yours, Judy Garland singing one of those songs in its original melancholy -- yet defiant -- context, “Have Yourself a Merry  Little Christmas.

GCI, NYT Leap As Analyst Turns Bullish On Newspapers

Fitz: There’s life in the newspaper industry yet, a respected analyst who had been skeptical about the sector concludes in a note to clients Wednesday.

Wells Fargo Securities analyst John Janedis upgraded Gannett Co. (NYSE: GCI) to “outperform” from “underperform,” and The New York Times Co. (NYSE: NYT) to “market perform” from “underperform.”

In mid-morning trading GCI jumped 6% to establish a new 52-week high of $15.49 a share. GCI has gained more than 700% since its low during the financial meltdown.

NYT also hit a new 52-week high, gaining 7% to $11.99.

"After years of downward revenue estimate revisions, it appears as though the newspaper ad market is improving more quickly than we previously anticipated, particularly in December," Janedis wrote.

Of course, “improvement” has been defined down in the newspaper industry, notes Janedis, who expects ad revenues across the sector to fall by the high single digit percentages in 2010. That’s better, though, than the 25% to 30% declines newspaper publishers reported through ’09.

Wednesday Morning Links

Some E.W. Scripps Co. (NYSE: SSP) top executives could be selling off company stock under the so-called “Rule 10b5-1” trading plans that let offers make arrangements at a time when they have no insider information about the stock for the later automatic sales of shares.

Scripps officers -- including CFO and Treasurer Timothy Stautberg, Senior Vice President/Newspapers Mark Contreras and  Senior Vice President/Television Brian Lawlor – are parrt of a larger group of executives who will be receiving Class A Shares in 2010 as restricted awards vest. The sales, which depend on certain criteria set  by the executives, may begin in February and would be completed by June. The sales “under these trading plans are intended to help diversify the officers' personal investment holdings and fund the payment of tax liabilities created by the vesting of the awards,” Scripps says in a statement.

Canada’s Supreme Court has early Christmas gifts: Rulings in separate libel cases against The Ottawa Citizen and The Toronto Star that significantly increase libel protection for journalists. The court even concurred with the contention of journos in Canada and U.S. that the nation’s libel laws are more restrictive than even Britain’s. (New York Times via Media Decoder)

Economist Robert G. Picard on the business implications of becoming a multi-platform deliverer of news and information. (Hint: simple repurposing of material devalues it.)

In a bad year for gay newspapers, Chicago may lose one of its GLBT weeklies. Chicago Reader media writer Mike Miner reports much of the staff of the Chicago Free Press has walked off the job in protest of a missed paycheck and other grievances. This is a feisty group that walked out of the rival Windy City Times, which continues to publish, to form the Free Press.

After The Bell Tuesday: Surge In Home Sales Gets Mixed Reception

Fitz: The encouraging news about existing home sales propelled the Dow to its third consecutive up session Tuesday, but did little to move the needle among newspapers that have been battered by the disappearance of real estate classified.

The sector ended mixed, with modest movements either way. With trading slowing down going into Christmas, volumes were low in the sector.

One notable exception was The New York Times Co. (NYSE: NYT), which set a fresh 52-week high of $11.18 a share during the session, before settling back to a closing price of $11.03, up 24 cents, or 2.2%, from the open.

A.H.  Belo Corp. (NYSE: AHC) led percentage gainers with a 3.4% increase on an 18-cent gain from the open to $5.49. Lee Enterprises’ (NYSE: LEE) dip of 2.6% on a 10-cent decline to $3.80 was enough to lead the losing stocks.

Widely held Gannett Co. (NYSE: GCI) closed just below its 52-week high at $14.41, a gain of 38 cents, or 2.7%.

Buyer Gets ‘Room To Breathe’ On Empty Former ‘N.Y. Times’ HQ

Fitz: From Jerusalem, The Wall Street Journal’s Sara Toth Stub reports Tuesday that the owner of the old New York Times Building (left) has reached a deal with its creditors (pay wall alert) that slashes its debt load by about 60% to $267 and gives up 50% of its rights on the still-empty building.

Africa Israel Investments Ltd. bought the 15-story building in 2007 for $525 million, and then took on $715 million in debt with the intention of converting it into an upscale hotel with condos and retail. The Great Recession upset those plans.

Writes Stub: “The deal gives Africa Israel ‘room to breathe,’ and will allow it to focus on rebuilding its assets, said Yuval Ben Zeev, head analyst at Clal Finance Ltd., a Tel Aviv brokerage."

Heartland Hearts Pre-Packaged Bankruptcy

Fitz: U.S. Bankruptcy Judge Kevin Gross in Wilmington, Del., approved all of Heartland Publications’ first-day motions Tuesday, allowing the continued payment of employee wages and  benefits and ongoing expenses. Heartland became the latest casualty of debt, in its case $156 million in secured obligations.

Heartland said it defaulted on payments due on a total of $161 million in loans between last December and February.

Under a reorganization plan already agreed by its first-lien lenders, led by GE Capital Corp., and second-lien lenders led by Silver Point Finance LLC, $70 million in first-lien debt will be exchanged for two term loans of $60 million and $10 million, plus an additional $2 million revolving credit facility.

GE will become another of the increasing number of accidental publishers, (sub. still required) which Jen and I write about in the current and perhaps penultimate print edition of E&P. Under the plan to be submitted next week, first-lien lenders will get about 90% of the equity in a reorganized Heartland. “Holders of second-lien  claims would receive no distribution if they reject the plan,” Heartland said.

The plan also “calls for the full satisfaction of general unsecured claims,” the publisher of about 50 community papers said.

In its bankruptcy petition, Heartland reported $134.3 million in assets and $166.2 million in debts as of Oct. 31. Heartland added it has sufficient funds and positive cash flow to  pay its ongoing expenses for the foreseeable future.    

“The  only problem we have not been able to fix is our balance sheet, which was not predicated on either a  severe recession or substantial reduction in newspaper valuations,” President and CEO Michael C. Bush said in a statement. “With the support of our senior lenders,  we have voluntarily entered Chapter 11 as the most expeditious way to achieve the kind of balance sheet  we will need for future growth.  Once we have successfully delivered the company, we will seek new  opportunities to grow Heartland in current and new markets.”   

Could Tribune ESOP Suit Ruling Foreshadow Outcome in ‘Fraudulent Conveyance’ Bankruptcy Dispute?

Fitz: Even the Chicago press paid little attention over the weekend to U.S. District Judge Rebecca R. Pallmeyer's rulings on motions to dismiss charges and defendants in the lawsuit brought by six current and former Los Angeles Times reporters against Tribune Co. Chairman Sam Zell (left) and former directors of the Chicago media giant.

Yet, Pallmeyer's ruling, posted on her Web site late Friday, offers a hint of how the court overseeing Tribune's Chapter 11 bankruptcy case in Delaware may view the issue of whether the Zell-led deal that took Tribune private was a "fraudulent conveyance" -- that is, a transaction so loaded with debt that it made the company insolvent from day one.

Zell and his co-defendants offered numerous reasons why Pallmeyer should dismiss them from the complaint, which accuses them of breaching their fiduciary duty to the workers in setting up the Employee Stock Ownership Plan (ESOP) that provided a way of taking Tribune private without paying corporate taxes. After the December 2007 transaction, Tribune had nearly $13 billion in debt, and a year later sought bankruptcy protection.

Among the defense arguments was that the L.A. Times employees, who hope to represent the entire class of former and current Tribune workers, failed to "state a claim' by alleging sufficient facts to show a legal wrong was committed.

But in two key rulings -- keeping Zell and the ESOP's trustee, Greatbanc Trust Co., as defendants -- Pallmeyer addresses the same claims being made in the bankruptcy case by junior creditors who allege the senior lenders who hold most of Tribune's debt knew the deal was doomed from the start, but funded it anyway. If they are successful in this "fraudulent conveyance" argument, the junior creditors could replace the senior creditors in the line divvying up Tribune's post-bankruptcy assets.

Pallmeyer's opinion is below the fold:

Tuesday Morning Links

Just in time for the holidays, Heartland Publications declares Chapter 11. Revenue at the chain based in Clinton, Conn., is projected to decline 11% this year. (AP via E&P)

Meanwhile, AP does a yearly round up of newspapers that Heartland joined in bankruptcy.

Speaking of... the fascinating Philadelphia Newspapers bankruptcy case continues. This time management is asking the court to force their largest debt holders to give a full accounting of the debt each owes. (!) (Philly.com)

An ode to the newspaper carrier. (LAT)

After the shuttering of Window Media, two new gay publications rise again in Miami. (Miami New Times)

The presses were silenced at 140 papers this year, not in a good way. (Reflections of a Newsosaur)

FYI: In a move that more companies should embrace, Yahoo shuts down from Christmas to the New Year to save on costs. (Paid Content)

Some Dow Jones Local Sites to Charge for Content

Jen: News that some -- possibly all --  of the Dow Jones Local Media Group (nee Ottaway Newspapers) are starting to charge for content is flying around twitter today courtesy of Paid Content's Rafat Ali , Reuters' Robert MacMillan and DailyMe's Neil Budde.

The Stockton Record is going to put up a pay wall on Jan. 12 for an "all-access" description. Ditto for SouthCoastToday.com. From the looks of it, these sites are going to charge for pretty everything save for blogs, weather, classified and some national news. Good luck with that!

Monday Morning Links

Two airlines in Japan decide to cut distribution of newspapers for customers flying coach. (Pressnet via editorsweblog)

The Detroit Free Press and the Detroit News offer Kindle subscriptions for $6.99 a month. Amazon takes about 70% of that. (Detroit News)

David Carr reflects on a the year in media. (NYT)

Almost 2,500 News Challenge proposals have crossed the desk of the Knight Foundation. (Nieman J Lab)

Barnes & Noble has to pay through the nose for pushing back the release of the nook until after Christmas. For those customers who ordered the e-reader in hope of having it under the tree, B&N is giving them a $100 towards B&N.com. (Paid Content)

After The Bell Friday: New Share Highs On Easing Comparables

Fitz: Approaching Christmas 2008, newspaper share prices were in full collapse, with The McClatchy Co. and Lee Enterprises trading below the Big Board’s buck-a-share listing minimum, and other refugees from the New York Stock Exchange, such as Journal Register and American Community Newspapers selling below a penny and showing up on OTC tape as $0.00 a share.

So the six-month rally in newspaper stocks has an easier time looking robust these days when viewed through the prism of the 52-week trading range stat.

Friday, both Gannett Co. (NYSE: GCI) and A.H. Belo (NYSE: AHC) hit new 52-week highs, though both stocks eased off to close below the new peak. GCI, in fact, closed down 17 cents, or 1.2%, from its open at $13.98. AHC closed at $5.51, up 42 cents, or 8.3%. During the session it established a new 52-week high of $5.73 a share.

The sector closed mixed, but the gainers were far stronger, so in the holiday spirit, let’s stay with them. Journal Communications (NYSE: JRN) jumped 8.1% on a 31-cent gain to $4.14 a share.

Lee Enterprises (NYSE: LEE), which a year ago was scraping below a buck and about to get a delisting threat from NYSE Regulation, spiked 6.1% Friday on a 23-cent gain to $3.98. Lee’s 52-week low is 24 cents a share.