Please ensure Javascript is enabled for purposes of website accessibility

A Rap on a Paper's Wrapper

By Rich Duprey - Updated Apr 5, 2017 at 7:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Journal's ad scheme adds to bird cage liner pile.

With seemingly every industry these days claiming the mantle of being too big to fail, and thus entitled to a government handout, shouldn't newspapers have first dibs on the title relative to economic importance? After all, it was Thomas Jefferson who said, "If I had to choose between government without newspapers, and newspapers without government, I wouldn't hesitate to choose the latter."

Unfortunately, it seems like we will be getting the worst of all worlds. Fitch Ratings reports that it expects newspapers to start defaulting on their debt next year, and as they fold, several major cities may be without a daily paper. Fitch has rated the bonds of both McClatchy (NYSE:MNI) and Tribune (NYSE:TXA) as junk with serious potential for default. I pegged McClatchy as a deathbed stock earlier this year.

There's no doubt that newspapers are a hard sell these days. Advertising revenue fell more than 18% in the third quarter, the largest decline ever in the 40 years that quarterly numbers have been tracked. At New York Times (NYSE:NYT), while circulation numbers inched upwards, ad revenues were down 15%. Gannett (NYSE:GNA), the media giant that owns the country’s largest newspaper, USA TODAY, is cutting 2,000 jobs after slashing 1,000 jobs in August. Maybe Google (NASDAQ:GOOG) will be the next media mogul.

Yet, do declining ad revenues and rising newsprint costs mean that News Corp (NYSE:NWS) has to take liberties with The Wall Street Journal? If you got your copy today, you probably didn't know what to do with it. The paper that typically doesn't change its style on a whim wrapped today's edition in an ad for Dell (NASDAQ:DELL) that covered the entire back of the paper and one-third of the front.

While the Journal's "What's News" column still appeared on the front flap (the rest of Dell's ad ran behind), you couldn't even hold the section when you folded it back, making it a useless appendage. Like all those subscription postcards inside a magazine, that piece got tossed away.

Certainly, papers need to take creative measures, and advertisers do too, for that matter. The Times and the Journal are said to keep a close eye on each other's advertisers, plundering them if they can, but you have to wonder whether Dell got its money's worth from the attempt. While I fretted that Rupert Murdoch would turn the Journal into a tabloid when he first had designs on acquiring Dow Jones, I still don't think we'll see a "Page 6 girl" gracing the gray pages of the paper, whatever it may do for circulation. Jefferson might very well have opted for "none of the above" if it came to that.

Dell is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers selection. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey subscribes to the Wall Street Journal but does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Twenty-First Century Fox, Inc. Stock Quote
Twenty-First Century Fox, Inc.
Alphabet Inc. Stock Quote
Alphabet Inc.
$121.68 (2.39%) $2.84
Dell Technologies Inc. Stock Quote
Dell Technologies Inc.
The New York Times Company Stock Quote
The New York Times Company
$33.74 (-3.74%) $-1.31
The McClatchy Company Stock Quote
The McClatchy Company

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.