WSJ downgraded; Are layoffs next?

Is it wrong to keep believing in newspapers?Apparently Wall Street thinks so.

Is it wrong to keep believing in newspapers?

Apparently Wall Street thinks so. And this time, the target is planted straight on the back of News Corp.'s Rupert Murdoch and his Wall Street Journal.

Peter Kafka reports on his Media Memo blog, which is run by the WSJ, that Pali Research analyst Rich Greenfield is throwing in the towel on News Corp., cutting his recommendation from "Buy" to "Sell" and expressed his frustration with the way Murdoch is running the company. He writes:

While we have long viewed Rupert Murdoch as the most visionary CEO in the media sector…we are increasingly surprised/frustrated with his lack of strategic direction related to News Corp’s television station, newspaper and book publishing assets... Our fear is that News Corp. is so committed to its existing businesses that it will be willing to sustain businesses that slip into negative profitability for years.

So what can News Corp. do to put Wall Street's fears to rest? When you can't increase the money coming in, you quickly take control of the money going out. And what's the most popular way of doing that these days? You know the answer, right?

Job cuts.

In his own blog post, Portfolio.com's Jeff Bercovici cites "multiple sources within and close to the Journal" to report that the newsroom will undergo a round of personnel cuts late next week - likely after new deputy editor in chief Gerard Baker starts his new job there. There's no hard numbers - though 50 is the one that he suggests. And, of course, there's no confirmation of that.

It's been a rough week for newspapers - and this is only January. The New York Times said this week that ad revenue was down almost 18 percent and the company is now seeking to sell its stake in New England Sports Ventures, which owns the Boston Red Sox and Fenway Park, among other properties. This week, employees of Media News publication in the San Francisco Bay Area, which includes Silicon Valley's San Jose Mercury News, were told about a mandatory week-long furlough later this quarter - and were given no promises that the savings would save jobs.

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