Buying newspaper stock a pledge, not an investment

Thursday, April 2, 2009 | 6:00 a.m. CDT; updated 8:58 a.m. CDT, Thursday, April 2, 2009

I’ve long believed that an opinionated person should be willing to put his money where his mouth is. Occasionally, I even act on that belief.

So when President Obama advised us the other week that now is a good time to invest in the stock market, I did just that. I decided that if I truly think, as I’ve written, that American newspapers are not doomed and are worth saving, I’d buy in.

That turned out not to be as easy as I’d expected. My first clue that something might be amiss came when I walked into the office of a stockbroker and announced my plans. (I’m not using his name because I might want to do business with him again some time.)

I want to buy 100 shares each of the New York Times, McClatchy and Lee, I told him. He professed not to know what McClatchy and Lee were. Uh-oh, I said to myself and explained that they’re big publishers, with the former owning the Kansas City Star and the latter owning the St. Louis Post-Dispatch. He had heard of the Times.

I’d done a little research beforehand, so I knew that I wasn’t risking a lot. I could buy a share of Lee for less than the cost of a copy of the Post and a share of the Times for less than I pay for the Sunday paper. It was not always thus. As recently as a year ago, Lee was selling for $12 a share and the Times for $21. This shows, among other things, what bad publicity will do, especially when you’re printing the bad publicity yourself.

After he’d done his own research, the broker called. Bad news, he said. He explained that these stocks had become so cheap they’re what the professionals call “penny stocks.” His firm doesn’t deal in penny stocks. I was dismayed but not deterred. He recommended a cut-rate broker who’d do the deal.

I shouldn’t have been surprised, I suppose. Friends to whom I’d divulged my intentions, and who have some idea of my financial acumen, had advised that I was being overly optimistic or — as one put it — “stupid.”

I plowed ahead. The other broker didn’t question either my wisdom or my check. (I did change course slightly along the way. McClatchy had the bad judgment to lay off my daughter from one of its other papers, so I switched my investment to Gannett, publisher of USA Today, the Springfield News-Leader and dozens of others.)

I prefer to think I’m not completely out of touch with reality. I understand that times are tough for newspapers, including in Columbia. I understand that the days of 30 percent profit margins are, for most publishers, gone forever. But I expect that most of the nation’s dailies will survive both the recession and the Internet. Some will go belly up. A few already have. Some will become online only. A few already have. I don’t expect either of those things to happen, though, to the Missourian, the Columbia Daily Tribune, the Post-Dispatch or the New York Times.

Today, I’m the proud part-owner of some of America’s most important newspapers. It’s not an investment, really, or even a bet. It’s a pledge of support and a statement of faith.

Still, as Warren Buffett might say, the bottom line is the bottom line. So far, so good. All my papers are still in business. And the last time I checked, I was up $19.04.

George Kennedy is a former managing editor at the Missourian and professor emeritus at the Missouri School of Journalism.

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Greg Collins April 2, 2009 | 8:43 a.m.

Perhaps as an owner, you can help these large dailies return to profitability by objectively reporting the news - not withholding to suit a political agenda, not opinionating and pretending that's news, and not making stuff up out of whole cloth.

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Ayn Rand April 3, 2009 | 12:07 p.m.

How many newspaper companies are a) profitable but not at the historically high rates that attracted investors and b) not profitable mainly because they gorged on debt the past several years?

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