Don’t Listen to Searby

Or other Wall Street analysts about newspapers

The New York Times Co. reported yesterday that its second-quarter earnings fell from the same period a year ago. No surprise there.

But, please, don’t listen to Frederick Searby, a J.P. Morgan Securities analyst and all other stock analysts who applaud cost cuts.

“The big news is the cost cuts over the next two years. They’re finally biting the bullet and adjusting to the reality of an accelerating, secular decline in print.”

No, the big news is that online earnings are starting to make a difference. The group’s earnings rose 16% from a year ago and made up 18% of operating profits.

Searby et al., if they care about anything, care about profit in the near and intermediate term. My sense, though, is that most media analysts believe that the Times and other media companies can do very well in the digital future as long as they don’t gut the product during the transition. I have no special insight, but do we really think Wall Street’s threadbare prescription makes sense?

P.S. I own 100 Times shares at $35, which shows you what I know.

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.