E.W. Scripps Stock in Freefall
On July 1, E.W. Scripps, the venerable company that owns the Rocky Mountain News and the Boulder Daily Camera, among other newspapers around the country, officially spun off its most valuable properties, including HGTV, The Food Network and the Shopzilla website, into a separate enterprise christened Scripps Networks Interactive (SNI). Upon doing so, Scripps execs knew that the bottom would drop out of the stock pertaining to the original firm, and at this writing, its value is even lower than anticipated. Prognosticators expected that it would trade for around $3 a share, down from $38.62 -- and at this writing, it's going for $2.89. Click here and type "E.W. Scripps" in the "Get Quotes" search bar for an updated total.
People heavily invested in Scripps needn't make their way to the nearest skyscraper ledge -- at least not yet.
As pointed out in a correction to a June 27 Rocky article, current shareholders received stocks in both companies, and their sum should be at least close to the trading value of Scripps prior to the split. The new SNI stock began the day at $38.35.
More worrisome, though, is the impact this move will have on Scripps' newspapers. If the E.W. Scripps stock continues to sink, the parent firm may decide to cut its losses and break up the old company. Of course, this plan only works if there are buyers willing to pick up the properties, and with the print medium in desperate shape these days, that may be a long shot. As a result, simply shutting the doors at some papers may be the most financially sensible option.
The presence of a joint-operating agreement in Denver complicates such a development at the Rocky. Indeed, an eventual merger of the Rocky and the Denver Post seems like the most likely possibility -- not that anyone at either Scripps or MediaNews Group, the Post's parent, would admit to considering such a thing at this point. Even so, rumors along these lines have been running rampant over the past month or so, and a report, mentioned in the Rocky piece linked above, that MediaNews is at risk of defaulting on its debt by year's end hasn't exactly squelched speculation.
Whatever the case, plenty of people at the Rocky will be watching the Scripps stock numbers very, very closely. -- Michael Roberts