Last week at the Time Person of the Year luncheon Suze Orman cautioned the audience not to get their hopes up on days when the stock market rallied because it was not a sign that things were getting better. No fear of drawing that conclusion this week! Yesterday the markets tumbled again, closing below 8,000, and that includes media stocks. Does it ever. Yesterday, after Harbinger Capital Partners had reduced its stake in both Media Inc. and the New York Times Co., shares in both companies tumbled to their lowest point in decades.
Shares of New York Times fell 73 cents, or 10.3 percent, to $6.35 in Wednesday trading. The stock fell to $6.33, its lowest point in more than two decades…Media General’s shares slid $1.24, or 29.5 percent, to $2.96 in Wednesday trading and earlier in the session slid to $2.93.
Over at E&P Fitz & Jen are speculating that this may be a sign the newspaper sector is close to hitting a capitulation point “that moment when great numbers of investors simply give up on their stock portfolio and cash out, leading to bargain hunting and a new run-up in prices.” We asked our numbers man John Carney for his thoughts on whether this was a possibility.
I’d love to say that newspaper stocks had reached their bottom. I’m in the business of journalism and I want my media companies to thrive. Unfortunately, I don’t see it. Sure, there has been lots of selling. But much of this, including Harbinger’s sale, is based on poor fundamentals, mismanagement and entrenched boards of directors. What’s more, I think the rest of the market is still going down for some time. It’s hard to believe that newspaper stocks are going to lead the way up when we’re facing another year (at least) of economic trouble and lower ad sales.