Everybody Hates Old Media

• Email
• Share
• Print

From Wall Street to stock speculators, everyone's taking shots at traditional media these days. On Feb. 27, the highest short interest ratio on the New York Stock Exchange belonged to struggling newspaper publisher McClatchy (NYSE: MNI). Two notches lower, you'd find shopper periodical giant Harte-Hanks (NYSE: HHS). Topping NASDAQ's list is Hallmark Channel's Crown Media (Nasdaq: CRWN). Two notches below that, you'll find terrestrial radio station operator Cumulus Media (Nasdaq: CMLS).

Did I lose you at "short interest ratio?" It's a popular gauge to measure market pessimism. You take the number of shares currently being shorted in a particular company, and divide it by the average daily volume. The result is a stock's short interest -- theoretically, how many days at current trading levels it would take for shorts to cover their positions, i.e. buy back all the shares they borrowed.

Let's go over a few of the old-media companies in Mr. Market's crosshairs.

Company	Short Interest	Avg. Daily Volume	Short Interest Ratio
Crown Media Holdings	3,959,318	27,908	142
Cumulus Media	5,198,296	73,691	71
McClatchy	16,620,719	271,608	61
Harte-Hanks	6,755,826	237,286	28

The short interest ratio is more important than just the sheer volume of shares sold short. Sirius XM Radio (Nasdaq: SIRI) has 170.9 million shares sold short -- the most of any NASDAQ-listed company -- but the satellite radio operator has been going through a whopping average of 95 million shares on a typical trading day. That yields a short interest ratio of 1.8. But 170.9 million shares are also a far cry from the 271.9 million shares being shorted a month ago, indicating that shorts moved on after it became clear that the company wouldn't file for bankruptcy in February.

The same can't be said for the old-school media operators, where the pessimism has remained fairly constant lately. With newspapers scaling back on their circulation and the sucker-punched ad market bruising media sponsorship opportunities, the shorts might have it right here. The best old-media companies will evolve, but the rest of their peers will just fade away into irrelevancy.

Even the larger newspaper companies like Gannett (NYSE: GCI) and New York Times (NYSE: NYT) are sporting high short interest ratios of 10 and 9, respectively. The vultures are circling. Who will be left to report the carnage?

Extra Foolishness! Read all about it:

• 4 Stocks You Love to Hate
• A Better Plan for the Newspaper Industry
• It's So Much Worse Than You Think