Another Paper in Trouble: Read All About It

WPOJust one day after Hearst announced that there will be significant job cuts at the San Francisco Chronicle in order to keep that paper afloat, there is more difficult news from one of the East Coast’s top papers. It does not appear that the Washington Post (WPO) is in as dire straights as the SF Chronicle which Hearst may have to sell or close, but clearly there is a major problem in the old school advertising and subscription based revenue model of newspapers. There are simply too many free news sources on the internet available outside of the traditional media and when consumers are as cash strapped, as they are now, there just is not the return on investment that consumers will demand from the paid services. The disappointing earnings were released to the masses via CNBC’s Closing Bell:

“The Washington Post reports its fourth quarter profits plummeted 77%. The company made $19 million. Due to another big drop in revenue from newspapers. The company’s ninth consecutive quarterly profits decline. Washington Post shares today were down $2.74.”

After today’s slight decline, the stock is trading at 18x trailing twelve month earnings. That is not exactly cheap in this environment, and with profits dropping in 9 straight quarters and this quarter falling to about a quarter of what the Street had expected, there could be further for this paper to fall.

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