Saturday, December 6, 2008

A Rap on a Paper's Wrapper

Rich Duprey writes:

With seemingly every industry these days claiming the mantle of being too big to fail, and thus entitled to a government handout, shouldn't newspapers have first dibs on the title relative to economic importance? After all, it was Thomas Jefferson who said, "If I had to choose between government without newspapers, and newspapers without government, I wouldn't hesitate to choose the latter."

Unfortunately, it seems like we will be getting the worst of all worlds. Fitch Ratings reports that it expects newspapers to start defaulting on their debt next year, and as they fold, several major cities may be without a daily paper. Fitch has rated the bonds of both McClatchy (NYSE: MNI) and Tribune (NYSE: TXA) as junk with serious potential for default. I pegged McClatchy as a deathbed stock earlier this year.

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