Tuesday, April 21, 2009

Can't afford a Sunday Star? Buy McClatchy stock

Posted by Scott Wilson on Tue, Apr 21, 2009 at 7:05 AM

click to enlarge starlogo_thumb_175x72_thumb_150x61.jpg

As the Star reported Friday, the paper's corporate parent, the McClatchy Company, is in trouble with the New York Stock Exchange. You can buy three shares of stock in the nation's third-largest newspaper publisher for less than the cost of a Sunday edition of the Star.

McClatchy has less than 45 days to avoid delisting of its stock by submitting a plan detailing how it will stop the bleeding.

It won't be easy. The company has taken a Wall Street-style beating: Its market capitalization, according to McClatchy's most recent Securities and Exchange Commission filing, is $52.4 million -- well below the $75 million required to play ball in the NYSE. And the company's stock has spent more than 30 days trading at an average of less than $1 a share, another no-no. The clock counting down to the stock's delisting started ticking April 14.

Step 1 of the plan seems to be in place, though: Raise the price of the paper. As of this past weekend, the Sunday Star now costs $2 at newsstands. (A home-delivery rate hike is being rolled out now, too.)

It's working! Monday, McClatchy shares closed at 59 cents -- up a penny from Friday.

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Is The Pitch worried about competition? I always beleive that you don't get ahead by making others look bad and that appears to be the case with this article. What you failed to detail are some of the reasons why the stock went down. First, some of the assets owned by MNI went bankrupt. Second, subscriptions fell off due to people having to make a choice between buying food or the paper. As the recession comes to an end (and it will) subscribers will once again increase. Why didn't you mention that MNI recently paid off a large chunk of their debt, something other companies are not able to due, and that they have no large debt load due until 2011.

Finally, making the claim that the increase of the Sunday paper contributed to their stock going up is not only ridiculous but shows this article was not written by anyone with common business sense. That would be like saying that crude is down to $40 a barrel so gas should be under $1! The stock has gone up because investors see a future in MNI. What is the price of Pitch stock right now?

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Posted by Gregg Katz on April 30, 2009 at 5:10 AM
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