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With Things This Bad, What Happens If a Recession Hits?

Magazine article Editor & Publisher

With Things This Bad, What Happens If a Recession Hits?

Article excerpt

Many analysts note that so far this year, newspaper ad revenues have deteriorated at an accelerating rate -- even as the economy in general was in decent shape. What, they wonder, would happen if the country were to face a recession?

Says Goldman Sachs analyst Peter Appert, "When the recession hits is when the s**t really hits the fan. You have been able to protect margins through cost cutting. There is a great concern if we do have an economic downturn, do you see 15% revenue declines? I don't care how good you are managing your costs to offset that decline -- it's very scary."

Moody's Investors Services crunched the numbers for that scenario -- and the results aren't pretty for the biggest newspaper chains. In a report to investors, Moody's identifies three chains as having the "greatest potential rating vulnerability" should a recession hit: Belo Corp., The New York Times Co., and Gannett Co.

Dow Jones & Co., already downgraded once this year by Moody's, is also at considerable risk to further downgrading in a recession, the agency says. …

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