Analysis: McClatchy, Lee, and Journal Register in danger

The American Thinker blog takes a look at the recent Chapter 11 filing of Movie Gallery, the largest retail DVD rental operator, who’s business has been swept away by the internet and digital cable. Movie Gallery’s mistake was investing $1 Billion dollars into Hollywood video two years ago and never seeing the revenue come in as more people are finding other alternatives than the neighborhood video store.

Likewise many newspapers in the last few years have spent millions of dollars buying other newspapers, but as revenues have dropped, the return on investment has not been fruitful. She analyzed the 10k and 10Q filings of eight large newspaper chains: New York Times, Washington Post, News Corp, McClatchy, Gannett, Scripps, Lee, and Journal Register. Her findings indicate that papers that have diversified (News Corp, Washington Post, Gannet and Scripps) all scored well. The other players are pure newspaper companies that have invested heavily in purchasing other papers. She says McClatchy, Lee and Journal Register are at the greatest risk.

Hat tip: Dirk Deppey’s Journalista!