11 papers lose $23.7 billion in first half 2008

The value of 11 newspaper companies traded on the public market since 2005 dove a combined $23.7 billion in the first half of this year, falling almost as much in six months as they had in the three prior years put together.

Wall Street’s intensifying repudiation of the industry means that the companies in the group have lost a cumulative $49.7 billion in market capitalization in 3½ years, vaporizing 51% of shareholder value since Dec. 31. 2004.

As you can see in the table, Journal Register Co. and the Sun-Times Media Group (nee Hollinger) suffered the worst losses in the 3½-year period, respectively shedding 99.1% and 96.9% of their value.

Journal Register is deemed to have a 72.9% chance of defaulting on its crippling debt, which in all likelihood would render its shares valueless. Sun-Times, which has a legacy of tax and other issues resulting from the criminal mismanagement of former chief Conrad Black, has been for sale all year, with no takers identified at this writing. Both publishers were booted off the New York Stock Exchange earlier this year, because their shares fell below the minimum price required for listing. They now trade on the Pink Sheets under the symbols JRCO and SUTM.

While the stocks of Lee Enterprises (LEE) and McClatchy (MNI) remain in good standing at the Big Board because their shares trade well above the required minimum price of $1.10 apiece, their performance was not much better than that of the two publishers exiled to the Pink Sheets. Their market caps respectively have plunged 91.2% and 90.2% since Dec. 31, 2004.

MNI this year wrote off $2.8 billion, or 70%, of the $4 billion it spent to buy the bulk of the Knight Ridder chain in 2006, because the acquired assets were overvalued under the accounting rules described here. Required to undergo the same accounting exercise as McClatchy, LEE in May wrote off $862 million in the book value of its publishing assets, including nearly 53% of the $1.46 billion it paid for the Pulitzer newspapers in 2005.

In addition to Knight Ridder and Pulitzer, two other publishers that were publicly traded in 2004 have disappeared from the market. They are Dow Jones and Tribune Co., which respectively were acquired in late 2007 by News Corp. and a private transaction helmed by Sam Zell on behalf of the company’s employees.

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[Source: Allen Nutter in his blog Reflections of a Newsosaur]