Newspaper Stocks Jump on Ad Trends

The stocks of newspaper companies surged Wednesday on optimism that deep cost cuts will let them benefit from the economic recovery, even as advertising and readers move online.

A report from market research firm TNS Media Intelligence said the rate of decline in overall advertising spending held steady from the first quarter to the second.

Also, early data for the current quarter "hint at possible improvements for some media" because they will be comparing against steep declines a year ago, according to Jon Swallen, senior vice president of research at TNS.

Shares of The New York Times Co. rose 94 cents, or 12 percent, to close at $8.82.

The stock of Gannett Co., publisher of USA Today and other papers, rose 93 cents, or 10 percent, to $9.99.

The E.W. Scripps Co., publisher of 13 daily newspapers, rose 88 cents, or 11 percent, to $8.83.

The McClatchy Co., publisher of The Miami Herald and 29 other daily newspapers, rose 5 cents, or 1.9 percent, to $2.66.

The report from TNS bolsters positive signals for the industry recently. On Tuesday, News Corp. CEO Rupert Murdoch said advertising spending has improved from four months ago, echoing comments from CBS Corp. CEO Les Moonves earlier. Federal Reserve Chairman Ben Bernanke said Tuesday that the recession was likely over — which is especially good news for companies like publishers, who are sensitive to business cycles.

"There are some hints that things are getting better," said Dave Novosel, media analyst at Gimme Credit. He cautioned against making too much of a rise in newspaper stocks since several are so low that any rise at all appears outsized.

Longer term, Novosel said newspapers are not likely to see the level of advertising spending they enjoyed four to five years ago.

"They do have the same problems, in terms of advertising," he said. "I don't think it is coming back because people are finding alternative forms of advertising."