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Friday, July 14, 2006

Most Widely Traded 48 Hour Clock: Yahoo! And Old Media

Stocks: (YHOO)(GCI)(MNI)(JCR)

24/7 Wall St. has begun coverage of the 36 most widely traded stocks, eighteen each from the NYSE and the NASDAQ. Most of these stocks trade over 50 million shares a week. This new feature will highlight each of the 36 stocks at least every 48 hours giving investors fresh infomation and perspective on the companies whose shares are most likely to move the broader markets.

Word comes out of BusinessWeek that Yahoo! is having talks with several newspaper groups about joint ventures on local news and classifieds. The move might drive more traffic to Yahoo!'s HotJobs site, and one would assume that the newspapers would get a piece of the action. The report is short on details, but it appears that the executives from Hearst and MediaNews have been hanging around Yahoo!'s headquarters.

It is about time. Second quarter earnings reports from Gannett, the Tribune Company, McClatchy, and the Journal Register make its clear that the fall-off in circulation figures compared to last year is running in the 2% to 3% range. Ad lineage at most of the papers is flat to down. The Journal Register is a telling example. Ad linage for the four weeks ending June 25 dropped 3.4%. Although growth at the company's online properties was up almost 41%, it was only to $1.3 million for the four week period. In other words, online revenue is not growing fast enough.

Most public newspaper stocks are near multi-year lows. The largest chain, Gannett, trades at $54. In the Fall of 2004, the stock was near $90. Gannett has a market capitalization of $12.8 billion on 2005 revenue of $7.6 billion and operating profit of over $2 billion. By contrast, Yahoo! had revenue of $5.3 billion in 2005 and an operating profit of $1.1 billion.It has a market cap of over $45 billion, or 3.5 times Gannett's.

Although a company like Yahoo! receives most of its content from companies that would be classified as old media, its means of distribution over the Internet clearly makes it more attractive to investors than companies with newspapers, television stations and radio.

If the old media does not make more profitable alliances with new media soon, it may be too late.

Douglas A. McIntyre can be reached at He does not own securities in companies he writes about.

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