Citi Initiates Coverage on The McClatchy Company (MNI) with a Sell

October 28, 2008 8:26 AM EDT
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Citi initiates coverage on The McClatchy Company (NYSE: MNI) with a Sell. Price target $2.

Citi analyst says, "All newspapers are impacted by the secular shift to the Internet, but McClatchy's 85 newspapers in 29 markets across the U.S. are particularly impacted by the cyclical slowdown hitting the local and classified markets. Nearly 30% of McClatchy's revenues come from classified advertisements, including real estate (~25% of total), automotive (~26% of total), and employment (~31% of total). From a geographic perspective, the company suffers from declines in advertising revenues in Florida (down from 26% of total to 14%), and California (down from 19% to 18% of total), where the company has its headquarters. In our view, advertising growth in these areas will lag economic recovery by six to nine months.

The McClatchy Company (McClatchy) is a newspaper company with 30 daily newspapers, approximately 50 non-dailies and direct marketing and direct mail operations located in 29 markets across the United States.

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