Having once toiled as a journalism professor, I think that in my next life I'll open an orphanage for unwanted newspapers -- that is, if there are any papers still being published. This week, E.W. Scripps (NYSE:SSP) became just the latest company to indicate that it is less than enamored with the publishing portion of its business.
Speaking at Citigroup's media conference in Las Vegas, Scripps Chief Financial Officer Joseph NeCastro noted the troubled nature of newspaper publishing and said, "It's hard to call a bottom there." He also indicated that the Scripps management team and board of directors had spent considerable time discussing the subject, and that separating the newspapers would be "clearly the most advantageous route" to lifting the company's share price.
Scripps essentially dates back to 1878, when Edward W. Scripps borrowed $10,000 from his brothers to found a newspaper in Cleveland that was aimed at the emerging market of urban workers. Today, however, the company earns less than 30% of its revenues from the newspapers that it publishes in 18 markets. What pizzazz Scripps has today is more closely tied to its Scripps Network segment, which operates five national television networks: Home & Garden Television, Food Network, DIY Network, Fine Living, and Great American Country. Its television group operates 10 stations, of which six are ABC affiliates. Scripps also owns United Media, a syndicate that distributes Peanuts, Dilbert, and a variety of other well-known features.
Scripps follows Tribune (NYSE:TRB), which is soon expected to receive offers for its operations from some or all of the private equity firms that have been figuratively kicking its tires. In addition, a host of Los Angeles neighborhood billionaires have expressed interest in acquiring the company's Los Angeles Times newspaper, and one -- music mogul David Geffen -- reportedly has made a firm offer for the property. New York Times (NYSE:NYT) has similarly received an offer for its Boston Globe newspaper from a group led by former General Electric (NYSE:GE) CEO Jack Welch.
The Globe has suffered, as have most metropolitan newspapers, from declining circulation and advertising numbers. The difficulty, as Scripps' NeCastro noted in his comments, is in calling a bottom. Indeed, with the daily newspaper arguably descending into obsolescence, a bottom may occur many, many years from today. And as the City of Brotherly Love contingent that acquired The Philadelphia Inquirer earlier this year has discovered, local newspaper ownership (by what seems to me to be prideful area rich kids) is anything but an elixir for the advertising and circulation maladies.
But I still find Scripps interesting. Here's why: It seems to me that a Scripps organization shorn of its newspapers and perhaps its broadcast properties would make for a tasty morsel for Time Warner (NYSE:TWX), or Comcast (NASDAQ:CMCSA), or Verizon (NYSE:VZ), for instance. And even as a standalone company, those network properties are quite interesting. I'd therefore advise Fools to watch Scripps carefully and consider acquiring its shares if or when the newspapers are jettisoned.
For related Foolishness:
New York Times is an Income Investor pick, while Time Warner is a Stock Advisor recommendation.
Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your comments or questions.
