Merrill Cuts New York Times (NYT), LEE, MNI to “SELL”


Merrill Lynch cut its stock ratings on the New York Times (NYT), McClatchy (MNI), and Lee Enterprises (LEE) to SELL from NEUTRAL in the latest blow to the dying sector.  We’re glad Merrill agrees with us, because we lost hope long ago.  NYT’s stock is already down more than 60% from its peak four years ago, and Lehman, for one, thinks it’s headed to $10.  The company is not expensive relative to trailing EBITDA of $500 million–8x or so–but given the speed with which print advertising is declining, that EBITDA is likely to drop significantly.   

Death By Month: Tracking the Newspaper Industry’s Decline
Running the Numbers: Why Newspapers are Screwed
NYT: August Ads Drop Another -3.2%
NYT: The Picture Worth a Thousand Words


The Merrill downgrade follows a “Neutral” call on the sector last week from Banc of America Securities, when a new analyst took over coverage of the industry. Goldman Sachs analysts cut the Times and McClatchy to “Sell” in July. Lehman Brothers maintains an “Underweight,” or “Sell” rating on the stocks and a “Negative” rating on the industry.