Morningstar, a stock analyst company, told Editor and Publisher the company’s equity stock could be valued as “worthless.” In May, Morningstar changed its fair value estimate for Gatehouse shares to 0, down from $3. Sigh, talk about depressing.
In his report, Morningstar analyst Corbett said GateHouse’s concentration in small markets with long-established monopoly papers has not insulated it from a flawed strategy of taking on big debt for acquisitions, and paying out large amounts of free cash flow for higher-than-average dividends.
Got to love the part saying GateHouse has a “flawed strategy of taking on big debt for acquisitions.” Umm, yeah. When overworked, underpaid reporters are getting e-mails the company bought another paper and we’re in a hiring freeze, something seems wrong. (By the way, there is only one reporter per paper at this point).
Then yesterday, GateHouse was kicked off the New York Stock Exchange floor because shares were selling for less than $1.05, reported another Editor and Publisher article. In order to return to the floor, the company’s shares have to be more than $1.10 for an entire day.
What’s scary to me is that I don’t know what this means for my paper and my job. If the company goes into debt, it could face liquidation. I can’t honestly believe there won’t be local town papers, but that could be the future. I’d hope a private company would pick up some of the papers but Boston suburbs might be doomed to only have the Boston Globe for news. And with the way the Globe is doing, who knows how long that will be going for.
All I know is that no local papers mean residents won’t get news about where they live in as in-depth of a manner as they do now. While some people might not open up the paper, choosing to simply drive over the one in their driveway, many other people do care and read the papers. I hope they’d miss it if that happened.