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SG Cowen, the securities and investment banking company, last week initiated coverage on five newspaper and multimedia firms, noting that it believes that "fundamentals may fall short of expectations" and that it is therefore cautious on the outlook for the industry.

Nonetheless, analyst James Marsh -- an experienced media stock handicapper who has previously worked at such firms at Robertson Stephens and Prudential Securities -- said in his report that three of the companies he'll now track are in good positions.

The Cowen report cited The E.W. Scripps Co. as the "best positioned" in the group to grow quickly and gave it a "strong buy" rating. The report detailed Scripps' efforts in the cable television network business (HGTV, Food Network) as well as positive results from the company's entering into a joint operating agreement in Denver, giving its Rocky Mountain News profits where there used to be losses.

And though Cowen thinks highly of the Cincinnati-based Scripps, Smith Barney's William Bird last week downgraded the company to "in-line" from "outperform," suggesting that the market has priced the cable assets efficiently.

Also high on the Cowen list were Gannett Co. Inc. and Tribune Co., both highlighted as "outperform."

Gannett, the report said, "combines premium assets with proven management," while Tribune "is well positioned to benefit from [the] deregulatory environment," a nod to the recent FCC cross-ownership rulings.

The Cowen report was less impressed with Knight Ridder and The New York Times Co., which both received "market perform" ratings. The Times Co. was hit for its concentration in the Northeast as well as the fact that national advertising in its flagship paper has been "reflected in the price."

It's welcome to see Marsh back in the game -- his analysis has been pretty good over the years. These five companies all have strengths and weaknesses and it's nice to see another respected analyst covering our neglected market who understands those strengths and weaknesses.
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Geographic Code:1USA
Date:Jul 7, 2003

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