I guess I simply don't understand the motivation of Tribune's (NYSE:TRB) soon-to-be leader Sam Zell or Morgan Stanley (NYSE:MS) money manager Hassan Elmasry, whose London-based fund owns about 7% of New York Times' (NYSE:NYT) shares. Both appear to be riding horses that cannot avoid coming up lame, and both may be forced to dismount from their steeds.
Indeed, last week brought further evidence that both Tribune and Times -- along with other major newspaper publishers such as Gannett (NYSE:GCI) and McClatchy (NYSE:MNI) -- continue to limp badly. Tribune, for instance, reported late in the week that its April publishing revenues declined 8.6% to $279 million, and that its publishing advertising revenues fell in the month by 10.3%. Contributing to the softening results were retail, national, and classified advertising, which fell year over year by 6.8%, 8.2%, and 14.9%, respectively.
Tribune is in the process of being restructured under the guidance of Zell, a Chicago real estate investor, who prevailed earlier this year over a proposal submitted by two Los Angeles-based billionaire bidders. The Zell plan includes the formation of a tax-advantaged employee stock ownership plan -- which will assume majority ownership at Tribune -- along with his assumption of the company's chairmanship once the restructuring has been completed.
Meanwhile, Elmasry and other holders of Times' freely-trading shares were figuratively treated to the news that the company's revenues from continuing operations decreased 2.2% in April, while its advertising revenues from continuing operations declined by 3.6% for the month. Its April retail, national, and classified advertising slid 4.7%, 1.2%, and 10.9%, respectively.
Elmasry has played something of a gadfly role at Times, including attempting to persuade the company's controlling Ochs-Sulzberger family to do away with the dual-class share structure under which Times -- along with several other big media companies -- operates. His efforts have been consistently rebuffed by the family.
So maybe Zell and Elmasry have an understanding of the world of newspapers that is beyond my ken. My belief is that we're clearly not witnessing a transitory phenomenon with the publishers' month-after-month reports of revenue slides. Rather, we're simply observing an intensification of a trend that began in the 1960s when, for whatever reasons, newspaper readership began to decline in the U.S. That slide has only picked up speed with the proliferation of the Internet, particularly in the current decade.
So Fools, with daily newspapers atrophying before our eyes while other forms of media -- cable, for instance -- achieve impressive growth, I hope the appropriate investment conclusion remains obvious.
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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments. The Motley Fool has a disclosure policy.
