Through The Fly's Eyes: Tribune Company

from Theflyonthewall.com














Old Economy Losing To New Economy

This is the headline: "Tribune Restructuring Two Complex Partnerships With Chandler Family, Its Largest Shareholder" Does that sound like an enticing investment to you?

As the headline suggests, the largest shareholder in the Tribune Company (TRB) is the Chandler family and they are definitely not going to the poor house. But what the deal symbolizes is that the newspaper and broadcast television businesses are old media.

Why won' t investors buy old media stocks? Because they have either no revenue growth, declining revenue growth or revenue growth below the rate of inflation. If a company has either of those three, the stock market classifies you as old economy. This is the second massive restructuring within one year for Tribune.

There are opportunities to make money in old economy stocks, they are often very profitable companies and have the potential for large stock buy backs or Dutch auctions. But for the most part, the market forces you to look for new, higher risk ideas to make money. That is the American way.

The newspaper and local TV broadcast businesses continue losing out to the Internet.