Wednesday, September 14, 2005

Follow up on GCI and newspaper stocks

GCI and TRB jumped on rumours that Icahn or other financiers may come in and scoup up the companies because they are cheap on EV/EBITDA basis. I have laid out why newspapers companies are not cheap (July Archive) even though they are trading near their median valuation for the following reasons:

1)revenues may weaken (a surprise to many bull pundits that expect economy to recover all prior to Katrina)
2)legacy revenues losing to upstarts like Yahoo and Google with a double whammy on increased legacy costs such as newsprints.

GCI just announced its Aug results, missing its estimates citing exactly the above reasons. Stock tanks hitting 52 week low. For media bulls out there, buyers beware, we ain't seen nothing yet!


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