Gannett: 'top of the heap'

Dateline: Wed 20 Apr 2011

Thanks to Mike Kent for sending this my way:

http://www.marketwatch.com/story/gannetts-top-pick-among-newspaper-analysts-2011-04-19?d=nbst

Marketwatch reporter David B. Wilkerson says Gannett is now the best newspaper stock to own, according to Wall Street. That, despite a 23 percent decline in first-quarter profits.

And this (on why Gannett outperforms New York Times at this point -- Wall Street says NYT is 'hold' while Gannett is 'overweight' in Wall Street's world):

"Jim Goss of Barrington Research Associates, who has an outperform rating on Gannett with a price target of $22, said Gannett’s digital approach is noteworthy at a time when most industry-related focus has been on New York Times Co.’s decision to put up a pay wall at its flagship newspaper’s Web site.

"For customers who don’t subscribe to the print paper at home, NYTimes.com and a smartphone app will be priced at $15 a month. All NYTimes.com users can view 20 articles a month for free; after that, they must pay for site access.

“'Gannett hasn’t opted to do that. What they’ve tried to do is expand into a multimedia content platform,” Goss said in an interview. “That’s been a long haul, but now we’re beginning to see it pay off. Digital revenues are growing not only within the digital segment but in areas usually thought of as traditional media.”

Here are Kent's thoughts -- he worked in digital media for the Star as a systems analyst:

"I would agree that Gannett is getting positioned for digital growth. Not sure where Gannett is now, but at one point Gannett sites made up 14% of the Internet, and both Gannett and The Star have long known that it's cheaper to grow digital news sites than shoulder the costs of printing newspapers. 

"Many readers may not realize that a Gannett site like indystar.com is primarily hosted in Virginia, but getting that master site up and running was a real struggle that involved adding live servers like crazy. The initial effort wasn't that well planned, but by the time I left The Star in 2007 it was working fairly well and can only have improved since -- though there's still some irritating lag time.

"What makes the future look really good is the age of tablets and e-readers. That's always been the holy grail for newspaper delivery, and with Amazon planning to add web features to its $139 Kindle ($114 if you can stand the ad-supported version), they're getting affordable. The real key is getting a tablet (Kindle or an Android-powered device) down to $99 or less, which is usually the tipping point for a mass market.

"Combine that with clickable ads and higher ad rates as the digital market expands, and you've got the base for earning real revenue and eventually phasing out print. That assumes newspapers will put the revenue gains back into rebuilding their news credibility and staffs -- and not big executive pay. That could lead to a new "golden age" of profitable news and ads without the expenses of printing and distributing paper. I don't expect that "golden age" to be reached in my lifetime, but then I didn't expect affordable digital news readers to evolve so soon, either.

"The one thing that's pretty clear is that a pay wall like The New York Times and Rupert Murdoch want will be very, very difficult to achieve. The best example is The Wall Street Journal, which has had a pay wall for years -- but for really useful and unique information. A pay wall for general news is DOA. For local newspapers, credibility and digging real local stories to attract readers and advertisers have always been the key, and sooner or later they'll have to rebuild those -- or someone else will.

"Along the way, it would be nice if Gannett and other news executives cut their big salaries and focused on the real business of news."

Kent is now an editor at News Factor Network and a principal at Macsultants. Here's his linked-in info if you want to keep fresh:


Thanks to Mike for providing perspective. As for what would be "nice" for Gannett, it's wishful thinking; we all know that. But I have to hand it to Gannett -- when it comes to making money, they rule.

Comments

Tom Greenacres [unverified] said:

Describing Gannett as the "best newspaper stock to own" is like describing a low mileage Yugo as a collectible car.

2011-04-20 08:12:55

hendy [Member] said:

He's not very good in his recommendation. We know that there are some fundamentals that Gannett has glossed. Their product is actually deteriorating, and they can't form a paywall because NO ONE WOULD PAY FOR IT.

This is an organization that has a shrunken value proposition, and commands markets only because they're a monopoly in their respective geographic areas. When the Indianapolis Times died, there was no alternate voice in the community, and this single fact swayed politics and advertising, marketing, and community growth in the greater Indpls area.

Quality is an anathema at the IndyStar website, no matter where it's hosted. Their RSS feeds are non-existent, and they have barely any community building online at all. Worse, if you go at their content management system (meaning the website) with the Safari browser, used by Macs as their default browser, you'll note that the webmasters can't even get lede tags set-- and so datelines are corrupted... and it's been this way for years.

Wilkerson recommends this bottom-feeder, lackluster, captive-by-default market sucker for his own reasons, short-term return on investment. It might be good for that. But quality counts in the end, and an investment made today will eventually deteriorate, just like it did with GM, and for similar reasons.

2011-04-20 09:19:59

Tell The Truth [Member] said:

Hendy is right. The Old Gray Lady is a worldwide brand. Has been for over a century. Wil continnue to be. They can take liberties with their media products, that others cannot take.

I wouldn't liken it to GM, though.

It's a brave new world.

2011-04-20 10:09:21

hendy [Member] said:

Consider, TTT:

1) GM got to where it was by killing off its biggest competitor, public transportation; sound like killing off the Indianapolis Times?

2) GM didn't listen to outsiders and was highly insular in culture, with lots of yes-men (and few women). Sound familiar?

3) GM's quality was only as good as it didn't hurt their bottom line. They didn't even know how to use the tools they had to improve quality because they just didn't care.

4) The sales department ruled. While not a bad idea, it is a bad idea when the tail wags the dog and you start believing your own PR.

5) Top execs were unbelievably overpaid, and capital outlays robbed shareholders excessively.

6) Unions were the enemy, from day one, until and through this day, April 20th, 2011. Anything that could be done to cripple unions was done with a smile.

7) Numerous products were made in an effort to target every possible market segment for dominance, even if it meant losing money on killing off small competitors.

8) Management was inbred. Not-invented-here was the rule of the day.

9) Innovation was to be stolen from others and delivered only under market pressure.

and finally

10) They believed they were leaders, rather than statistical successes.

2011-04-20 11:04:53

ruthholl [Member] said:

I think newspaper stock analysts must be a breed apart; no reality checks?

2011-04-20 11:40:34

George Stuteville [unverified] said:

Hendy: Brilliant distillation of GM. Wow!

2011-04-20 11:55:35

Tell The Truth [Member] said:

Hendy: My dad is a GM retiree, tool-and-die maker, shirt-tail union member (Die Sinkers Union honored UAW picket lines, not vice-versa).

So my recollection is biased, and does not match yours. Entirely.

Their biggest crime in my estimation: getting those folks in Tennessee to believe that they had any long-term loyalty to the Saturn brand. It was the first brand that started from whole-cloth and used outside execs. At a brand-new plant in Tenn. No cross-training, extreme pride in new vehicles, etc. Supposedly a whole new culture.

When times got tough, it was their top-performing service model (highest customer satisfaction), but not enough profit. They dropped it like a bad habit. Because folks held onto them too long.

I haven't seen Gannett do anything remotely new and similar.

And they still need better proofreaders. Although the Sunday Golden Wedding Anniversary lady finally got the hint that you don't make "Sullivan" plural by adding an apostrophe and an "s."

It took eight shots across the bow, and a hand-delivered copy of the AP Stylebook, to convince her, though.

2011-04-20 13:13:39

Seneca [Member] said:

How much compensation (monetary and otherwse) did Wilkerson receive for writing the laudatory piece?

"GM . . . was highly insular in culture, with lots of yes-men (and few women)."

Would GM be any better with a lot of yes-women?

". . . newspaper stock analysts must be a breed apart; . . ."

It's doubtful that newspaper stock analysts take into consideration the number of Pulitzers won (New York Times recently won 2, as did the LA Times), or other considerations of "quality" journalism. Money (ever-increasing amounts, of course) seems to be the only thing that counts.

2011-04-20 13:30:29

hendy [Member] said:

Proving that a stopped clock is right twice a day, I got to read the obituary of Jerry Booth, the best frontman I ever played for. Steve Slosarek did it at http://blogs.indystar.com/events/2011/04/19/tribute-to-late-jerry-blues-booth-at-slippery-noodle-on-wednesday/ and it made me feel good; he captured Jerry's majesty-with-self-deprecation personality perfectly. I watched Jerry and his bands play countless times, and had the good fortune to be one of his bandmembers on occasional gigs. Steve did well by Jerry.

There are people trying at The Star, but the madness is overwhelming. The blustery PR stock-baiting drivel passing for analyst's vomitus is just revolting, however. What you're seeing is typical, here, where corporations are looked at strictly in the narrow lens of return. How they got there, how the employees are treated, their five-year outlook, their organizational values, the quality of their products, each and every one of these are ignored in such "tomes".

When I look at the disappointment of one of my childhood heroes, GM, and the ideals I put in newspapers, I find it so easy to draw instantly definable parallels in despair.

2011-04-20 13:36:30

news junkie [Member] said:

You only have to visit the Web sites of other Gannett-owned newspapers to see how similar the landing pages, navigation tabs and other infrastructure is exactly the same. So much for a newspaper having a distinct personality.

2011-04-20 17:33:41

escapedbeforebeinggannettized [unverified] said:

This is laughable. I was at the Star years before, during and after Gannett purchased the Star. At its peak, before the paper was sold & just after, the Star's stock was hovering around $75 per share. Now it is less than a 1/3rd of that. Talk about spin.

2011-04-20 19:34:49

ruthholl [Member] said:

Spin it is.

2011-04-20 20:34:23

Tell The Truth [Member] said:

So, "spin" is the term we use in polite society now?

2011-04-21 05:23:21

Jason [unverified] said:

Playing catch-up here. Saturn is the only brand that I can think of where every single owner I knew personally was completely satisfied with every single interaction they ever had with any employee at the company on any level. They really did reinvent the wheel.

They had their target demographic and they didn't try to branch out. They actually sold their cars for face-value, there was no dickering or wining and dining. This according to my father anyway, a brand loyalty guy if ever there was one, who went through 4 Chevy Cavaliers before converting. They were cheap, home-grown cars that were built to last. To a one they got great mileage too. Their death knell hurt, for a guy who never even owned one.

Back on topic. If Gannett actually delivered good media content I might buy the sales pitch. They get consistently scooped by Channels 6 and 59 online, and the whole damn website moves around so much it usually takes me two tries to click on the hyperlink I was seeking. I think their real business model is getting people to accidentally click on advertising.

2011-04-21 09:52:15

Tell The Truth [Member] said:

LMAO. Jason may have hit a home run! The Accidental Clicker.

2011-04-21 10:42:53

hendy [Member] said:

Saturn was an exception, and it had to be killed, no murdered. You see, what happens when you have differing models of quality, you eventually screw your value proposition. Brands thrive on marketing self-identification. You wanted a Cadillac because you perceived it to be desirable. Same thing with Pontiac, or Buick, or Chevy. Saturn, like Geo, broke all the rules. You should treat your customers one way: the best. Your production quality should be one level, with high assurance-- not to make your dealers service revenue.

Ever notice that the real estate at a dealer site is divided handily into new car sales, used car sales, service (and maybe body)? It's CRIMINAL that vehicles have such a finite after-sale lifecycle that service is such a revenue maker.

Worse is when Toyota, Nissan, and others built luxury brands like Lexus and Infiniti. Something for Everyone- A New Car Today! Hucksterism. The level of quality should be the best. Not just adequate. But you don't sell cars that way, so the denominator sunk and sunk until American cars just couldn't be sold in the late 1970's. The Japanese got their first taste of blood. They kept reduced models, limited features, and drove quality sky-high.

The Europeans knew that retooling for every new model year was ludicrous. They focused instead on value. Why does a BMW or Mercedes get 250,000 miles on an engine? Because they can. Could you embarrass US car makers with these statistics? Excuse me while I ROFL.

The second oil crisis in 2008 humiliated them, and with good reason. They were selling hummers and Escalades when fuel went to $4+/gal. Now we're back, and we have well, yeah, the Chevy Volt-- which GM lied through its teeth about. We expected a fully electric vehicle at a somewhat rational price. We got a bad, unproven hybrid design that caught no one's fancy at any price-- even the high one at launch. Great white hope? This is how they hoodwinked the US Government into letting them go Chapter 11, screw their unions, screw their suppliers, shed their ugliest non-producing assets (and their nightmare of liabilities) and "restart".

GM is the quintessential US disaster. Look for more at a self-deluded corporation near you.

p.s. my parent's Saturn was wonderful. And every day, I drive my beat up old 1993 Geo Metro, the one that gets 42mpg. At $3.94/gal, I go to Indy and back from Bloomington for about $8. Prius? Why? Volt? You must be stoned.

2011-04-21 13:39:56

Whitebeard [unverified] said:

Hendy, your remarks about your Geo Metro made me grieve (smile) for the Chevy Sprint I bought back in 1986 for somewhere around $5,000.

It ran on 3 cylinders and got about 50 mph on the highway. Not much room inside and no bells-and-whistles, but I wish I had never traded that car in. I could have saved a lot of gas money over the next several years of its existence.

But we made a trip out East in it and it had to huff and puff to make it up the mountains at about 40 mph while people behind us were honking their disapproval.

I think maybe Chevrolet came out with Geo Metro to follow the Sprint, but I liked the Sprint better. However, Hendy, I an envious of your Metro.

2011-04-21 23:33:42

Tom Greenacres [unverified] said:

"They focused instead on value. Why does a BMW or Mercedes get 250,000 miles on an engine?"

American engines have been famous for decades for their longevity, something imports aspired to. We did with cubic inches ("there's no substitute for cubic inches") what imports had to do with overhead cams, turbos, multivalves and high compression, all of which make an engine more demanding of frequent service and attention. American V8s are like an AK47: you can abuse them and they keep doing what they are supposed to. My bought-new 1994 Impala SS with the superb LT1 engine has nearly 200,000 miles on it and I have no intention of getting rid of this quick, responsive car, though I wish it did a little better than 21 MPG (which in any case is worlds' better than the 11 MPG I get from my Silverado 2500).

2011-04-22 06:46:20

hendy [Member] said:

Although I have only the anecdotal information regarding every vehicle from GM, Ford, and Chrysler that I or any of my relatives have owned, Tom, they all died, even though they were maintained according to factory specs.

Let's take the current past five I've owned. 1992 Ford Pickup; had a new transmission at 75,232. Now at 151K. 1996 Ford Taurus, dead transmission at 92K; not worth fixing. 1995 Dodge Minivan, cracked crank at 82,338; 1988 Chevy AstroVan compression ring at 71,771.

I'm really glad about your LT1. The Metro has 134,100 as of yesterday when I refilled it. It has three cylinders as WB describes above, a carbureted Suzuki engine.

Abuse? You're not looking. The rotten metal of my Ford pickup doesn't show the shackle that rusted to bits, then conveniently evaporated into the ether. Or the disintegrated coil sprint mount than conveniently popped and then neatly turned into the tire next to it, shearing the tire like a bagel.

The statistics aren't with you, and the public's sentiment isn't with you either, Tom. I believe that quality has improved a bit. You do see some 1980 cars still on the road, but you can't find any of the late 60's-early '80s because they have uniformly rusted to bits because of the cheap metal that Detroit changed to during that period that conveniently caused people to ditch their rustbuckets for cars with real metal in them. Of course, Fiat, Renault, and others chose the same path. Then they left the US market in embarrassment.

2011-04-22 08:41:47

Tell The Truth [Member] said:

This is anecdotal only, but: the bigger the engine (V-8), the better the quality. On American cars, anyway, for the last 40 years.

The mind-numbing expensive repairs at 5K, 75K, outliend by Hendy above, will just not pass muster these days. People vote with their feet.

And, there are online discussion forums for every car, repair, and persistent problem. You cna log onto them via Kelly or CarFax or others, and pre-judge your potential purchase's liklihood to last.

I like that.


2011-04-22 10:56:37

mikeross [unverified] said:

I think one of your advertisements caused my internet browser to resize, you might want to put that on your blacklist.

2011-04-22 13:57:34

Tom Greenacres [unverified] said:

I was only addressing the relative longevity of American V8 engines, fellows. I otherwise agree that much of the fit and finish is crap. Detroit maintained the philosophy of what Vance Packard described as "forced obsolence" as generational doctrine. In the 1950s and 1960s, US cars were unabashedly supposed to last only a few years before collapsing in rust. New styling transcended last years styling.

Some of the blame still lies with how Americans care for their cars. In general, Asians and Europeans take much better care of their cars than we do. Rust buckets are against the law in Japan. Germans are verey particular. Italians are emotional about their wheels. We tend to use 'em and abuse 'em and subject them to climatic extremes not to mention salt. Despite this, they usually start. (Foreign electrics have for generations been a joke, e.g., "Lucas: the Prince of Darkness.)

My son says his Toyota Tundra is the best vehicle he has ever owned, and his list includes a new GTO and F150.

2011-04-23 09:04:01

hendy [Member] said:

Lucas: the prince of darkness.... yeah. I restored numerous Jags. VDO, Smith, anything but Lucas.

2011-04-23 14:01:39

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