Posted by: Ben Steverman on May 12, 2008
Ouch. Of all the insults newspaper stocks have had to put up with in the past year or two, this might be the most cutting.
The Sun-Times Media Group (SVN) is being kicked off the New York Stock Exchange.
Among the problems for the publisher of the Chicago Sun-Times and several other papers in the Chicago area, the NYSE says: For more than a month the Sun-Times Media Group’s market capitalization has languished under $75 million while its shares have traded under $1.
Also, “the Company informed the NYSE that it does not expect to submit a business plan to bring it into conformity with continued listing standards.” The company CEO says the delisting doesn’t affect “the way we conduct our business” nor its plans “to explore strategic alternatives for the company.”
To say the least, the market seems skeptical of the Sun Times’ ability to find a buyer. Trading at 40 cents, Sun-Times shares have plunged 93% in the past year.
Compare the Sun-Times’ market value of $75 million to the $650 million that Cablevision (CVC) will pay for suburban New York City newspaper Newsday, owned by the Tribune Company. (Rupert Murdoch’s News Corp. reportedly offered $580 million but withdrew its bid over the weekend.)
Like other newspaper companies, the Sun-Times faces declining advertising revenue. But in addition, the Sun Times must deal with the legacy of the ownership of Conrad Black (recently convicted for his crimes), the fallout from a circulation scandal (which also hit Newsday), and a tough competitive position as the number two paper to the Chicago Tribune.
The Sun-Times’ best but fading hope is a deep-pocketed buyer, a company like News Corp. or Cablevision betting that the decline of the newspaper business is a temporary rough patch rather than a long slide toward extinction.