Newspapers' bleak picture be damned

A securities analyst who goes by the name Ugly Duckling wrote for Seeking Alpha June 11 that stock of Tribune Publishing, which in May bought the Union-Tribune, could go up while stock of New York Times goes down.

Both companies are in the same business but took completely different routes to growth, writes the analyst. The Times company sold most businesses except its flagship paper, the international edition, and online assets.

Tribune Publishing owns a number of large papers and is buying more.

(The Times is concentrated in the largest U.S. market, New York, with a population of 20.1 million. Tribune Publishing dominates the second- and third-largest markets, Los Angeles and Chicago, with a combined population of almost 23 million, and operates in other markets such as San Diego, Orlando, and Baltimore.)

Both metro daily newspaper companies, however, paint a "bleak picture," says the author.

The bottom line is valuation. The Times sells for 1.4 times sales and Tribune Publishing only 0.2 times sales. The Times's dividend yield is 1.2 percent and is in danger, while Tribune Publishing's yield is 4.6 percent. Ugly Duckling says he would short Times stock (bet it will go down) and buy Trib Publishing stock, although he doesn't say why he would buy any stock with a "bleak picture."

Defying Ugly Ducklng, Trib Publishing stock closed down 1.95 percent today (June 15) while Times stock dropped 0.36 percent.