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For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $12.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 19.0% return in just four weeks as long as NYT is above $12.50 at August expiration. NYT would have to fall by more than 4.3% in the next few weeks before we would start to lose money. Learn more about this type of trade here.

NYT hasn't been below $12.08 at all in the past year and has shown support around $12.50 recently. This trade could be risky if the economy continues to worsen, but even if that happens, this position could be protected by the support the stock might find at its year low just above $12.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in NYT.

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Tribune, formerly a public newspaper and broadcast company, lost the publisher of its largest newspaper, the LA Times, and the editor of its flagship, the Chicago Tribune. New controlling shareholder Sam Zell is in trouble, burdened by buyout debt he may not be able to pay.

Most analysts saw another modest drop in newspaper ad revenue this year. It has been much worse than that. At some companies in the industry, ad sales are off nearly 15%. An analyst recently dropped his price target on The New York Times Company (NYSE: NYT) to $8 and said the firm would have to cut its dividend. The stock currently trades at $13.21.

The two public companies which are at most risk for not making it another year are Gatehouse (NYSE: GHS) and McClatchy (NYSE: MNI). Both took on big debt loads buying newspaper properties. Both are seeing operating income chopped by falling sales. Either could hit debt service problems which could force them to sell properties of file for Chapter11.

Gatehouse dropped as low as $1.11 in the last few days. Its 52-week high is $19. McClatchy is down to $4.93 from a 52-week high of $28.65. Gatehouse is the most troubled with a high dividend and $1.3 billion in long-term debt.

Newspapers companies have gone from being in a tight spot to being candidates for liquidation. They are a short-seller's dream.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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MOST NOTEWORTHY:

• Credit Suisse upgraded Lam Research (NASDAQ:LRCX) to Outperform from Neutral citing margin expansion and valuation. Lam was named the firm's top pick in SCE names for 2H08.
  
• JP Morgan upgraded shares of Deutsche Telekom (NYSE:DT) to Overweight from Neutral as they expect a stronger second half of the year for the industry.
  
• France Telecom (NYSE:FTE) was upgraded to Buy from Neutral at Merrill and to Buy from Hold at Societe Generale after the company walked away without bidding for Sweden's TeliaSonera.

• UBS upgraded American Express (NYSE:AXP), Capital One (NYSE:COF) and Discover (NYSE:DFS) to Neutral from Sell.
  
• New York Times(NYSE:NYT) was raised to Hold from Sell at Deutsche Bank.
  
• RBC Capital raised Sanmina (NASDAQ:SANM) to Sector Perform from Underperform.
  
• Merrill upgraded Sirius Satellite (NASDAQ:SIRI) to Buy from Neutral.

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From TheStreet.com Network

• McClatchy to Cut 10% of Staff
• They Just Don't Get McClatchy!

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The Tribune is not a public company anymore, but CEO Sam Zell says enough about his plans that it might as well be.

According to The New York Times, Zell "announced a set of deep cuts, saying that shrinking revenue left them no choice." One of the things that means is fewer pages devoted to news as newsprint use is reduced.

The Tribune carries a lot of debt, so it is in more trouble that other chains such as The New York Times Company (NYSE: NYT) and Gannett (NYSE: GCI). But, other large paper operations including McClatchy NYSE: MNI) and Gatehouse (NYSE: GHS) also have massive debt burdens from money they borrowed to expand their empires.

What all of this means is that more reporters and editors will lose their jobs and the typical reader will get a newspaper that is thin as toilet paper. For newspaper company investors it means that stocks, some already down 50% to 70% in the last year, are going down even further.

The trouble also may spell the end of nearly a century of big papers like The New York Times being the news sources of record. The company recently cut 100 people, most of them from the news operation. Covering major national and international stories is becoming more difficult and at some point it may be impossible.

There is always CNN.

Douglas A. McIntyre is an editor at 247wallst.com.

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MAJOR PAPERS:

• Chip suppliers for cellphones including Qualcomm Incorporated (NASDAQ: QCOM), Texas Instruments Incorporated (NYSE: TXN) and Nvidia Corporation (NASDAQ: NVDA) are moving aggressively to make products for Intel Corporation's (NASDAQ: INTC) new breed of pocket-size portable devices, called MIDs, the Wall Street Journal reported.

• According to the UK Times, Barclays Plc (NYSE: BCS) and The Royal Bank of Scotland Group Plc (NYSE: RBS) were raided by the Office of Fair Trading as part of the investigation into price fixing loans to professional services firms.

• Almost three dozen of the largest U.S. companies may have to slash their dividends, since the dividends greatly exceed their cash flow, Bloomberg reported. Large companies in this situation include General Motors Corporation (NYSE: GM), Motorola Inc (NYSE: MOT), and The New York Times Company (NYSE: NYT).
• China Telecom Corporation Limited (NYSE: CHA) may announce today that it has bought the mobile phone assets of China Unicom Limited (NYSE: CHU) and its parent company for more than $14.4B, Bloomberg reported, citing the South China Morning Post. China Unicom could say that it is merging with China Netcom Group Corporation (NYSE: CN) as early as today, the newspaper added.

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Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

While lenders and builders have been cruelly battered by a real estate market that seems to have no bottom, there's another industry group that suffers as much if not more: the newspaper business.

First, newspapers were hit by the Internet, taking readers faster than rebate checks are spent. Now it's real estate ads, and their complementary advertisers such as home furnishings. Another weak advertiser: automobiles. All ads have decreased to a point where some publishers are laying off employees every month, trying to cut costs fast enough to offset lower revenues.

Looks pretty awful, doesn't it? Not if you're an investor with a longer term horizon.

Newspapers aren't going away. They are the local web that ties a community together, a source to stay in touch with what's going on as well as a venue for local advertisers to find buyers. Newspaper publishers may shrink more, but they're not disappearing. The community relies too much on them. Furthermore, astute newspaper management isn't publishing and hoping someone will buy their papers. The best ones are going into other media, especially television, radio and the Internet.

Newspapers are evolving. They have to for survival. Just putting out the newspaper every day is a sure way to oblivion as readers get more and more news, ads, and information from other sources. And advertisers are using other media, away from newspapers, to get their goods sold, finding the Internet a powerful resource. It's only natural that newspapers go with the flow, go where the money is.

Costs are another reason for the evolution. Newspaper print costs more, though increases haven't been as strong as you might expect since less of it is being used. Shipping costs (think national dailies like the Wall Street Journal or USAToday) are higher as trucks fill up with expensive fuel. Newspapers are getting squeezed on both sides: lower revenues and higher costs. Sounds like a recipe for disaster.

For the moment it is. Many of the newspaper publishers have seen their stocks cascade more than 90% as investors voted with their shares as to how they think the industry will do. They are right for the moment.

But if you believe the economy is going to return to somewhat normal over the next 12 to 18 months, you'll want to spend some time digging into newspaper publishers. Several still have good earnings, even in these difficult times. Some have high dividends, well covered by earnings, that should keep the stock price propped while you wait for better times. All the good ones have Internet connections, either directly or through joint ventures with established sites.

Examples of Web deals: Yahoo! brought several regional dailies online, featuring local content. That boosts the reach of the newspapers and should help sell more ad space. Another one: Monster Worldwide is in collaboration with many newspapers so employers in the local papers have a wider audience for their ads. Another: cars.com has partnered with many dailies to boost its content and in return give local car ads a bigger audience. On the television and radio side, many newspapers bought local stations, broadening the universe for ad revenues.

So the smart ones are surviving. When the economy recovers, and more specifically when real estate and auto industries come back, ad revenues will as well. And the first few months of the recovery will show extraordinary returns as publishers will have lower labor costs as well as lower operating costs (because of Internet and broadcast efficiencies).

When this will happen is the big question. If it takes too long, more damage will be done to balance sheets as losses grow or at best, profits shrink. If no recovery comes (which has never happened in U.S. history), then all stocks are not worth owning. If the recovery comes four or five years down the road, then everybody from the government to corporate leaders has been asleep at the switch. My best guess is that within the next two years, the economy will be chugging along, taking many industries from the depths of despair to strong profitability. One of those industries will be newspaper publishing. It will take patience, but that patience should be well rewarded.

Some names to consider: A.H.Belo Corp. (NYSE: AHC); Gannett Inc. (NYSE: GCI); Gatehouse Media Inc. (NYSE: GHS); Journal Communications, Inc. (NYSE: JRN); Lee Enterprises Inc. (NYSE: LEE); McClatchy Co. (NYSE: MNI) - see new column this week For Aggressive Investors for more on MNI); Media General Inc. (NYSE: MEG); New York Times Co. (NYSE: NYT); The E.W.Scripps Co. "A" (NYSE: SSP); The Washington Post Co. (NYSE: WPO).

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Display ads are hurting while online search ads remain strong, the New York Times reports today. Specifically, PubMatic, an advertising-technology company in Palo Alto, CA that runs an online-pricing index, found the prices paid for online ads bought through ad networks dropped 23% from March to April 2008.

This drop in pricing has hurt some companies' results:

• Time Warner Inc. (NYSE: TWX)'s AOL, parent of BloggingStocks, saw an 18% decline in display advertising revenue to $191 million.
• The New York Times' (NYSE: NYT) Internet ad revenues increased 16%; a year earlier, though, they increased 20%.
• WebMD Health (NASDAQ: WBMD) revised down its 2008 revenue guidance to a range of $380 million to $395 million, from a range of $395 million to $415 million thanks to lower expected ad revenues.

The good news? Surprise! -- Google Inc. (NASDAQ: GOOG). In the most recent quarter, Google had a profit of $1.31 billion on revenues of $5.19 billion. Its United States revenue was up 30%. The reason is that display ads don't offer a tangible payoff to advertisers whereas search ads do.

Advertisers are simply trying to maximize their returns on the advertising investment (ROAI). If someone comes along and offers a higher ROAI than Google, advertisers will switch to that provider. Meanwhile, those stuck with display advertising will suffer at Google's hands.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Fortune and BusinessWeek are piling on the story of Harbinger Capital Partners, a $19 billion hedge fund, seeking to take over the New York Times (NYSE: NYT). Harbinger now owns 19% of its Class A shares. Of course, Harbinger is not the only threat to management of the Times -- News Corp.'s (NYSE: NWS) Rupert Murdoch is doing his part as well. Will Steve Rattner, a long-time friend of Times publisher Arthur Sulzberger and Managing Principal of Quadrangle Group, come to the rescue and take the Times private?

In play here are Phillip Falcone, a Harbinger partner who made $1.7 billion last year, and the quaint idea of protecting a media company's founding family by maintaining two classes of stock: Class A for the public to make insiders liquid and Class B for the insiders. Murdoch and Sulzberger enjoy protection for their family dynasties thanks to that two-tiered structure.

Falcone thinks that the Times is leaving huge amounts of money on the table by not "monetizing" all the comments on its stories. What sparked this idea was a January opinion piece by Caroline Kennedy comparing Barack Obama with her father, President John F. Kennedy. There were only a few comments about the article on the newspaper's Web site, nytimes.com, but there were hundreds on Huffington Post and Digg.com. BusinessWeek quotes Scott Galloway, founder of hedge fund Firebrand Partners and Falcone friend who said: "We came to the collective conclusion that there was so much upside in terms of billions of pages the paper wasn't monetizing. He [Falcone] never looked back."

Falcone recently got two of his allies onto the Times' board. How did he do it? This January, with the stock trading at $15, Falcone bought a 4.9% of the publicly traded Class A shares for $105 million over several weeks. (The Class B shares are held privately by the extended Sulzberger family, allowing them to retain control of the company.) Falcone and Galloway quickly launched a proxy assault, pushing the Times board to add four of their picks as directors. They only backed down in March when the Times agreed to accept two of the nominees for its 15 person board.

If the Times was doing well financially it might not be so vulnerable. Earlier this month, the Times reported that it lost $335,000 in the first-quarter 2008 in a performance that fell far short of both analysts' expectations and its $23.9 million profit in the 2007 quarter. Its newspaper and online advertising revenues were down 10.6% and digital advertising growth slowed to 16% from 21.6% a year earlier.

Last year newspaper industry ad revenue fell 8% while the Times' ad revenue fell 4.7%. So it looks like the industry and the Times are doing worse. And its stock has fallen 15% in the last year. Although since Harbinger bought in, the stock has risen 33% to $20.58.

Nevertheless, the Times is under siege and it could use a savior. Will Rattner ride to Sulzberger's rescue? Rattner is a former Times reporter and Lazard Ltd. (NYSE: LAZ) executive who now runs the $6 billion Quadrangle Group. Vanity Fair reported that Rattner, who raises money for Hillary Clinton, persuaded Sulzberger to endorse Clinton -- overruling the Times editorial board.

I don't think Falcone will be able to reverse what ails the Times with his plan for digital advertising -- there's just not enough revenue there. But he's already made a nice profit on his shares. Meanwhile, Rattner appears to be the only source of capital who would protect the Sulzberger family in a going private transaction. But I don't know if the banks have an appetite now for such a deal.

I don't know what will happen next but it seems clear to me that the Times needs a change in management if it's going to remain a viable business.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Rupert Murdoch is facing off against the Federal Communications Commission (FCC) as he seeks to take control of two TV stations and three newspapers in New York -- including Newsday -- The New York Times reports. A December 2007 FCC rule allows a company to own just one paper and one television station in the same city in the top 20 markets so long as there are at least eight other independent sources of news and the station is not in the top four. (The stations that News Corp. (NYSE: NWS) controls are the fourth- and sixth-largest in the New York market).

Meanwhile, I am fascinated by the Wall Street Journal's [subscription required] coverage of the departure of its own managing editor, Marcus Brauchli, yesterday. The punch line was that everything is fine because Brauchli was simply doing what the boss wanted. Brauchli's new role? Providing "guidance to senior management in a wide range of areas," including whether Murdoch's Star-TV service in Asia should launch a business-news channel. Sounds like a good fit.

In contrast to the Journal's corporate press release on its page one, The New York Times reported that Brauchli was fired. It noted that a few weeks prior to his departure, Murdoch's henchmen indicated they were unhappy with the pace of change at the Journal. The Times wrote: "At some point, They told him, 'We don't think this is working,' and Brauchli replied that in that case, he should consider leaving."

If Murdoch succeeds in taking over Newsday in a $580 million deal, he'll control three papers in New York -- he already owns the New York Post and the Journal. So the question is whether FCC Chair Kevin Martin who championed the new rule will grant Murdoch a waiver. And the answer probably depends on whether Martin was really serious about his new rules or whether they were just intended to keep media consolidation away from the hands of those who might oppose Republican candidates.

Democratic Representative Byron Dorgan defended the new FCC rules noting, "free flow of information in this country is not accommodated by having fewer and fewer voices determine what is out there." Will the FCC agree with its recently passed rules to inhibit that flow or will it grant Murdoch a waiver -- acting to enhance Republican power by boosting the control of a reliable Republican party booster?

This will be the ultimate test of whether Murdoch is more powerful than the FCC or whether they're really on the same side.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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It appears that News Corp (NYSE: NWS) will buy the largest newspaper on Long Island, Newsday, from The Tribune Co., increasing pressure on The New York Times Co. (NYSE: NYT) in its home market. News Corp already owns The New York Post. Recent press reports indicate that News Corp is adding more political and international content to The Wall Street Journal to better compete with the Times.

According to The Wall Street Journal, the price for Newsday could be about $580 million, and final details of the purchase or lack of government approval could still kill the deal.

Tribune needs to make the sale to cover debt it took on in its LBO.

The news is especially bad for The New York Times Co. While the Post does not take much advertising from the Times, it does have a circulation of over 600,000 in New York City. Newsday has a daily circulation of about 400,000 in the well-to-do area of Long Island, just east of New York.

The New York Times is already in enough trouble. It posted a loss last quarter, and in March advertising revenue fell about 11%. The firm's stock trades at $20, but many observers believe that it it were not the target of investors who hope to break it up or sell it that the shares price would be much lower.

The value of the company just got undermined again.

Douglas A. McIntyre is an editor at 247wallst.com.

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The New York Times reports that Marcus Brauchli, managing editor of News Corp'.s (NYSE: NWS) Wall Street Journal is leaving his post. It does not appear to know whether he resigned or was fired. But a quick look at this morning's Journal tells me that Murdoch is determined to take business news out of the Journal and cover politics.

This morning's Journal doesn't have a single business story on the front page of its first section. The one business-like story, about Saudi Arabian oil supplies, is a thinly veiled defense of record high oil prices.

Increasingly since Murdoch took over, the Journal has featured stories on domestic and international politics on its first section. And it seems to have cut back on the kind of in-depth analysis of business stories or identification of new business trends that made the Journal a must-read for me.

Murdoch is now trying to take market share from the Times, which reports that Brauchli had been frustrated with some changes and seemed not to have the control over the newspaper that he was promised. It looks to me like Murdoch is trying to turn the Journal into the print version of Fox News. So when renewal time comes up next year, there's a good chance I'll be among those who cancel my subscription.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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The short interest in most large stocks traded on the NYSE increased as measured on March 14. The figures compare to February 29. Car stocks were hit especially hard. Shares short in Ford (NYSE: F) moved up 20.3 million to 248.9 million. For GM (NYSE: GM) the number was up 19.4 million to 85.9 million.

Despite the fact that many big financial stocks are already close to lows, traders were willing to bet that they would fall off further. Shares short in Washington Mutual (NYSE: WM) moved up 15.9 million to 168.8 million. The short interest in Citigroup (NYSE: C) jumped 7 million to 125.6 million. For Wells Fargo (NYSE: WFC) the number added 9.3 million to 117.5 million. For Countrywide (NYSE: CFC) the figure was up 9.3 million to 111.5 million and at Wachovia (NYSE: WB) shares sold short were up 2.2 million to 105.4 million.

Other notable financial stocks with large increases included Fannie Mae (NYSE: FNM), up 11.4 million to 78 million, Thornburg (NYSE: TMA), up 11 million to 25.8 million, and CIT (NYSE: CIT), up 10 million to 20.1 million.

Troubled firms that have recently had bad news were hit very hard. Shares short in Sprint (NYSE: S) moved up more than any other NYSE-traded company, jumping 30.1 million to 75.2 million. Shares sold short in Blockbuster (NYSE: BBI) increased 8 million to 57.8 million.

Shorts moved out of Micron (NYSE: MU) where the number fell 4.3 million to 87.5 million, Wal-Mart (NYSE: WMT) where short interest dropped 3 million shares to 45.1 million, CBS (NYSE: CBS) which lost 2.7 million shares short falling to 29.2 million, The New York Times (NYSE: NYT) with shares short dropped 2.8 million to 30.6 million, and Time Warner (NYSE: TWX) which saw its short interest drop 2.2 million to 38.5 million.

Source: NYSE and WSJ

Douglas A. McIntyre is an editor at 247wallst.com.

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MOST NOTEWORTHY:

• Goldman downgraded shares of Washington Mutual (NYSE: WM), Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) to Sell from Neutral on concerns of significant credit losses from the housing market downturn.
  
• Motorola (NYSE: MOT) was lowered to Perform from Outperform at Oppenheimer after Q1 channel checks indicated a material shortfall in Q1 handset demand. They no longer see support for shares on a sum-of-the-parts valuation.
  
• Deutsche Bank downgraded shares of General Motors (NYSE: GM) to Hold from Buy as they believe the cyclical North American downturn could be deeper and more protracted than previously expected.
  

• Aventine Renwable (NYSE: AVR) was downgraded to Sell from Hold at Soleil.
  
• UBS lowered James River (NASDAQ: JRCC) and Peabody Energy (NYSE: BTU) to Neutral from Buy.
  
• Deutsche Bank lowered New York Times (NYSE: NYT) to Sell from Hold.

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MAJOR PAPERS:

• According to people familiar with the matter, the Wall Street Journal reported that an investor group that includes Harbinger Capital Partners is expected to report a raised stake in The New York Times Company (NYSE: NYT). The raised stake is expected to be close to matching the 19% stake owned by the Sulzberger family.
• The Goldman Sachs Group Inc (NYSE: GS) has been spared many of the problems of the subprime mortgage crisis, but other areas where it's involved, such as investment banking and leveraged loans, are hurting the firms profitability, the Wall Street Journal reported.

• Cablevision Systems Corporation (NYSE: CVC) is seeking to put a valuation on its Rainbow Media unit, in order to possibly sell it, sources say. In the past, the unit, which consists of several cable channels, has been valued at $3B, but the Dolan family is hoping to obtain a higher price, according to the New York Post. Possible buyers include Liberty Media Corporation (NASDAQ: LCAPA) and News Corporation (NYSE: NWS).
• Elan Corporation (NYSE: ELN) is considering splitting its biopharmaceuticals arm, which markets Tysabri, from its drug technology division, the Sunday Times noted. The potential spin-off could unlock up to $1.5B to share holders.

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