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Ben Cheng FP Newspapers Inc FP-X HOLD May 29, 2007

Had a fairly decent run and has come back and little bit on the back of a lot of M&A activity. M&A and consolidation in the space will continue. This is trading near fair valuation but has limited downside.

Ben Cheng

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$11.510

Stock price when the opinion was issued

communications media

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TOP PICK

Like because it’s a boring stock. An income trust. Based in Winnipeg, which is the best newspaper market in Canada. The payout is conservative, yields about 10.75%. The only independent big market newspaper left in Canada, likely to be bought around $15-16

BUY

The holding company for Winnipeg Free Press, Brandon and other papers. Winnipeg right now is the best newspaper market in the country and the Free Press is probably the best performing intercity newspaper, gaining circulation and advertising. 10% yield. Once it is not an income trust, it will probably maintain the same payout.

HOLD

(Market Called Minute.) Big in Manitoba and includes Winnipeg Free Press and Brandon Sun. Founder owns about 51% of it.

DON'T BUY

Winnipeg free press, dominant paper. Like all newspapers went south, advertising vaporized and stock came down, since recovered. Cut its distribution once or twice. Expected when they convert they will cut distribution again. Small cap and thinly traded.

DON'T BUY

Wouldn’t go near this one. Newspaper business is very challenging. Successful ones will start to earn digital revenues and will probably be okay. The smaller ones readership is getting old and probably won’t go online to read them. 15% dividend tells you there is a lot of risk..

WEAK BUY

Cyclical company, pure value stock. Declining business. Risky, nice dividend that is probably ok. Yield under 14% is signaling a cut. It might be priced in, however.

DON'T BUY

The holding company for the Winnipeg Free Press. None of the newspaper companies are a good place to be, due to the problems of shifting from paper to digital.

BUY

Considers it a big community news paper. Won many awards for content. Older readers. Been accumulating shares for years. Technology is having an impact but their subscriptions are stable. Dividend is very high and very safe. Management has managed the company well. One of his biggest holdings.

BUY

He has a big position. Very well managed. It is News Papers so they are under pressure for advertising revenues. The dividend is very sustainable now. Yield is 12% and they should be able to sustain that for years.

DON'T BUY

Thinks the newspaper business is going to have some fundamental issues going forward that are going to be fixable. None of the younger generation take newspapers.

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Ben Cheng FP Newspapers Inc FP-X HOLD May 29, 2007

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