“The magnitude of the recent declines is extraordinary for a non-recession period and provides concrete evidence, in our view, that the share shift from print to online in the publishing industry is accelerating,” said Goldman Sachs analyst Peter Appert.

McClatchy and The New York Times Co. earned “sell” ratings because they are “particularly vulnerable” to changes in the industry. By contrast, Journal Communications, which sold some of its titles in Connecticut, Vermont, and Louisiana, saw its rating raised from “sell” to “neutral” due to its reduced “exposure to newspaper publishing” and newly diversified portfolio. 

The research firm described the continuing transition from print to online as “painful” and “extended” over the next few years due to losses in classifieds and shrinking margins.  Appert foresaw Internet growth offsetting print losses by 2011 at the earliest.

Nevertheless, the future of newspapers is not completely bleak; Appert’s analysis seems more a forecast for growing pains than a death sentence.  “Ultimately, we believe newspaper publishers will re-emerge as very healthy and dominant players in the local media marketplace,” wrote Appert, underlining the ubiquitous conclusion that for the time being, newspaper publishers should continue their transitional efforts if they hope to weather the current print-to-online storm. 

Source: The Chicago Tribune, Forbes, and Editor & Publisher