Fed president Richard Fisher says there is no need for QE3. (Reuters)

Panasonic posts a quarterly loss of $2.6 billion. (Reuters)

Martha Stewart Omnimedia (NYSE: MSO) says a provision in its deal with Macy’s (NYSE: M) would let it move ahead with its new JCPenney (NYSE: JCP) deal. (Reuters)

The U.S. plans to spend $2.8 billion to upgrade the F-16. (Reuters)

The Senate will pass a bill that makes it illegal for members of Congress to engage in insider trading. (WSJ)

Glencore and Xstrata may merge because of the rise in value of natural resources. (WSJ)

Bank “rainy day” funds may be run down by a need to boost earnings. (WSJ)

PetroChina (NYSE: PTR) will buy into Canadian shale assets to ensure future supply. (WSJ)

Corporate profits have risen but the portion paid out in taxes has fallen. (WSJ)

The Government Accountability Office says many hospitals overpay for devices. (WSJ)

The Obama Administration will accelerate the approval of wind farms off the East Coast. (WSJ)

Facebook will push advertisers to use its Sponsored Stories to increase its revenue. (WSJ)

Google (NASDAQ: GOOG) will try to add to the security of its Android mobile-device software to combat hackers. (WSJ)

The head of Dow Chemical (NYSE: DOW) says Europe is in a recession. (WSJ)

New York Times (NYSE: NYT) profits fall as digital revenue fails to grow enough to offset print. (WSJ)

CME Group (NASDAQ: CME) will set an insurance program to help farmers after the collapse of MF Global. (WSJ)

A St. Louis Federal Reserve report shows that startup growth has slowed. (WSJ)

Excess natural gas supplies could cause a price crash in the spring. (WSJ)

The Securities and Exchange Commission allows big banks to avoid some sanctions. (NYT)

The National Institute of Economic and Social Research says the UK will be in recession this year. (NYT)

Greek tax reform has not overcome the nation’s inability to collect taxes. (NYT)

China may put money into the European Stability Mechanism/European Financial Stability Facility to help the region. (FT)

In testimony before Congress, Bernanke expresses concern about the growth of the economy. (FT)

Greece faces more trouble in its effort to remain in the eurozone as its rescue falters. (Bloomberg)

Deutsche Bank will not take European Central Bank loans in a move to protect its reputation. (Bloomberg)

Douglas A. McIntyre

The analysis of display advertising market share rarely mentions the tier of sites below the largest ones by audience. Those most likely to be hurt badly, if they have not already been, are the online sites of old-line media companies. The New York Times (NYSE: NYT) has had trouble with its very modest online ad growth. Among sites measure by Comscore, it had 76.4 million unique visitors in December to Facebook’s 152.5 million. And Facebook’s audience continues to grow quickly. The New York Times’ does not. Gannett (NYSE: GCI), which announced earnings yesterday, has confronted the same challenge. Its increase in internet ad revenue last quarter was depressing and hardly enough to offset drops in traditional print advertising. It had 44.1 million unique visitors in December, despite the fact that it owns the giant national newspaper USA Today. Scripps Networks (NYSE: SNI) and the Washington Post (NYSE: WPO) are in a position that is just as difficult.

Facebook has not only started to squeeze out the major portals. It takes an ongoing piece of a market that has thousands of websites in it. This display advertising market, which appeared so promising just a few years ago, is hardly promising at all.

Douglas A. McIntyre

Shares in companies such as the New York Times (NYSE: NYT), Gannett (NYSE: GCI) and McClatchy (NYSE: MNI) moved up sharply early on. But those stocks are down between 10% and 50% for 2011. The balloon of hope that digital revenue and lower costs would rescue the industry has popped. Digital sales have not nearly matched the attrition in print revenue. Some newspaper companies have had difficulties driving digital revenue up compared to numbers from 2010.

The theory behind the aggressive purchase of newspaper stocks actually fails into three areas. The first is that large companies like the New York Times would make share market gains in the revenue from online ads and digital subscriptions — the so-called pay wall. The next is that newspapers could shrink their print subscription bases and retreat to geographic areas in which only subscribers who would pay premiums reside. The third, and most radical, is that some papers could discontinue seven-day-a-week delivery schedules. These papers could keep print subscribers if they only printed and delivered papers three or four days a week. Readers would go online to get news on the other days.

The weakness behind these notions has to do with the way people get news now. There are enough news sites, many of them local, that readers have a number of options when they look for news and entertainment content. The other expectation of publishers is that they could shrink their way to profits. However, print revenue continued to fall more rapidly than costs. Papers have to keep some level of newsroom staff in order to remain viable sources of local news. Presses still have to run. Trucks still have to deliver.

The hope that digital media would save newspapers turned out to be false. If anything, the availability of large amounts of information online undermined the industry as much as anything else.

Douglas A. McIntyre

The NYT local media group had $60 million in revenue last quarter, which was down about 6%. The Times has already taken a $152.1 million impairment for the division, a sign that it does not have much of a future. Considering the cost structure the Times probably employed at most of its local papers to keep them up to Times’ standards, their future profitability was at risk. However, Halifax Media will cut costs sharply to fit its model of inexpensive editorial.

Halifax Media knows how to bring expenses down to the bone, as many similar companies like Gatehouse and Journal Register have. Newsrooms at the papers these firms own are staffed by a very few people. “Citizen journalists” contribute free blogs. Full-time reporters record their own video and camera shots. It is a world of journalism that reporters and editors at the New York Times would not recognize.

The Times most likely could not stand the damage that would be done to its reputation if it cut a huge portion of the workers at its local papers. That would be a signal that quality journalism had met its match at the local level, even for the New York Times.

Local newspapers operate with several advantages. Internet competition in local markets is not as strong as its is on the national news stage. Local TV does not exist in some smaller markets. Many local newspapers no longer deliver seven days a week. Some have cut to three or four days, which forces readers to online editions.

The local newspaper business can be very profitable. But the costs to run these businesses must be very low. The Times was not willing to match what companies with comparable products will do.

Douglas A. McIntyre

Apple (NASDAQ: AAPL) wins a patent case over HTC in the smartphone wars. (Reuters)

Olympus will sell shares to Sony (NYSE: SNE) and Fuji Film to help its battered balance sheet. (Reuters)

A new set of loans to the IMF will be set to help struggling EU nations, but the UK did not contribute to the 150 billion euro fund. (Reuters)

In a sign of worsening trouble for the financial firm, Bank of America (NYSE: BAC) shares trade below $5. (Reuters)

LightSquared, Falcone’s wireless company, is nearly out of money. (Reuters)

Sony sold 321,000 PlayStation Vitas in its first two days on sale. (Reuters)

A tax increase in the U.S. for 2012 is more likely as Congress wrangles over a budget. (WSJ)

An ITC ruling against HTC may hurt the efforts of Google’s (NASDAQ: GOOG) Android. (WSJ)

Google and KKR (NYSE: KKR) will invest in a new solar venture. (WSJ)

The U.S. Army Corps of Engineers granted ConocoPhillips (NYSE: COP) permission to drill in northern Alaska. (WSJ)

Caterpillar (NYSE: CAT) says its sales growth has improved. (WSJ)

FBI reports show crime dropped for the fourth straight year. (WSJ)

Spain will try to cut its deficit by more than $21 billion next year. (WSJ)

The number two executive at Cablevision (NYSE: CVC), Tom Rutledge, leaves for Charter (NASDAQ: CHTR). (WSJ)

Winn-Dixie is taken private by BI-LO  for $560 million. (WSJ)

The New York Times (NYSE: NYT) may sell 16 local newspapers. (WSJ)

Procter & Gamble (NYSE: PG) has set plans for online coupons. (WSJ)

China may allow its citizens to invest more overseas. (WSJ)

A new UK plan will make banks and investment houses legally different entities by 2019. (NYT)

Japan will buy a new F-35 fighter jet from Lockheed Martin (NYSE: LMT). (FT)

The European Central Bank says contagion remains the greatest risk of the EU financial crisis. (FT)

Douglas A. McIntyre

Janet Robinson, the CEO of the Times since 2004, announced she would leave in two weeks. The decision seems abrupt. It is as likely that she was pushed out as that she left on her own. The plans she has set to help the firm’s digital revenue overcome the drop in print sales has not worked. But the same plans have been a failure at every other newspaper chain.

One of the most telling details of the demise of the New York Times is the weakness of its digital revenue. Its About.com division’s sales dropped from $32.5 million in the third quarter of 2010 to $25.7 million in the most recent quarter. The firm has made no statement that would indicate this About.com drop will abate. Revenue at the company’s media group, its newspapers, fell from $522 million last year to $512 in the third quarter of 2011. Ad revenue was down 10%, and the new paid subscription business at the flagship paper has barely made up for that.

Digital ad revenue at the papers grew only 6.2% in the third quarter. That was the most critical number of all. The growth rate is not nearly enough to counter the attrition in print ad sales.

The New York Times has managed to slow the drop in its sales compared to its competitors. This may be because of its large size. It could be because the paper is considered a prestigious place to market products and real estate. But the fall-off has been relentless and the New York Times, with all of its resources, has not found a solution to the problem.

The greatest asset the Times has is its editorial staff. It will not be long, though, before the company has to cut that staff sharply. The trouble that begun under Robinson will continue, and it will not matter who is CEO for the next several years. The destruction of the New York Times Company has started in earnest.

Douglas A. McIntyre

Time Inc., like every large, medium and small print firm, has tried to move its subscribers from paper products to ones on PCs, tablets and smartphones. Publishers like the Wall Street Journal and the New York Times (NYSE: NYT) have had some success. They also have hundreds of thousands of customers who get printed versions every day. Advertisers have moved away from those print products to online-only media like Yahoo! (NASDAQ: YHOO) and Facebook. Print advertising’s market share of ad dollars shrinks each year.

Print companies must battle both the cost of physical products and the attrition of their largest advertising bases. They also must contend with large media, which range from CNN.com to ESPN.com to TMZ. The online content world is already almost too crowded for new media to enter in any force.

Time Inc. still has magazines with millions of consumers who read them via subscriptions and newsstands. The company cannot simply strand these customers and force them to consumer content online. Too many of these customers would reject such a move and argue that online media is not worth paying for in a world in which so much news and entertainment on the internet is free.

The costs to print and ship the number of magazines Time Inc. produces is well into the hundreds of millions of dollars each year. These magazines also have huge balance sheet liabilities. Their readers have paid for subscriptions upfront that are fulfilled by the publisher over several months or years. It is a contract that the publisher must fulfill once it has cashed each customer’s check.

Time Inc. would like to move magically from print to online, keep its current revenue base and have the advantages of the low costs of digital content distribution.

If wishes were horses, all the beggars would ride.

Douglas A. McIntyre

Publishers claimed that as the last recession deepened, their industry was in a cyclical decline. The industry would right itself financially when the economic trouble had passed. Most industry analysts disagreed. The problem was secular, they said. Online news outlets had taken away too many readers and too much advertising. Major newspapers had only a decade of life, if that.

The success of online subscription sales for some newspapers is the most positive change that has occurred. This is particularly true of the New York Times and the Wall Street Journal. They invest in news coverage that is broad and deep enough to make their content extremely valuable to large numbers of readers. Many subscribers recognize this value for these newspapers and are willing to pay to have access to articles online. This is an important point to consider since most online news is free.

24/7 Wall St. examined the fortunes of the ten largest newspapers in the United States by daily circulation. We have also looked at online visitors based on data from research firm Compete. What we found was that a small number of these properties have good financial prospects. The others are not much better off than they were at the depth of the recession, despite of the significant costs that they have cut from the business.

The FBI may investigate the fall of MF Global (NYSE: MF). (Reuters)

Sony (NYSE: SNE) cuts its annual profit forecast by 90%. (Reuters)

PIMCO’s Bill Gross says U.S. banks must raise more capital. (Reuters)

Bank of America (NYSE: BAC) drops a plan for $5 a month debit card charges. (Reuters)

Facebook continues to struggle to attract large branded advertisers, which use member pages to generate interest. (WSJ)

Banks across the world begin sharp cost cuts. (WSJ)

Yahoo! (NASDAQ: YHOO) discusses a plan with PE firms that would allow them to take a modest interest but not gain control of the company. (WSJ)

Electronic Arts (NASDAQ: ERTS) begins to compete with Zynga. (WSJ)

Pfizer (NYSE: PFE) will market branded Lipitor after the drug goes off patent. (WSJ)

U.S. auto sales rise 7.5% in October, which is below expectations. (WSJ)

Many wealthy Chinese want to leave the country. (WSJ)

Transocean (NYSE: RIG) increases legal action against BP (NYSE: BP) from events arising from Deepwater Horizon. (WSJ)

New data show that the News Corp.’s (NYSE: NWS) Wall Street Journal had the largest circulation in the U.S. in the most recent half year measured, followed by Gannett’s (NYSE: GCI) USA Today and New York Times Company’s (NYSE: NYT) flagship paper. (WSJ)

Many S&P 500 companies issue weak Q4 guidance. (WSJ)

The most distressed commercial real estate begins to draw investors. (WSJ)

A vocal minority in Greece want the nation to return to its own currency. (WSJ)

Douglas A. McIntyre

Interpublic’s earnings did not include about $132 million the company received from a private sale in August of about half the stock it held in Facebook. The buyer was not identified.

Interpublic also reiterated its outlook that revenue would grow by 4%-5% for the full year and that the company’s operating margin would be around 9.5%. WPP expects revenue growth for 2011 to be 5% and operating margin to reach 11%, up about 0.7% over 2010..

WPP notes the general state of the ad business this way: “Advertising as a proportion of GDP remains at depressed levels in mature markets post-Lehman and the faster growth markets remain under-branded and under-advertised.” Translated, that means going after markets in Brazil and China and other fast-growing developing economies. The company now expects to get 35%-40% of its revenues from the developing world, up from about 30% currently.

Online and mobile advertising is expected to grow by nearly 10% annually over the next five years. WPP said that it received 29% of its revenue from digital and interactive sources in the first nine months of the year.

That growth comes at the expense of print media, where ad spending continues to fall. Gannett Co. Inc. (NYSE: GCI) said that ad revenue for its newspapers fell -8.5% in the third quarter and The New York Times Co. (NYSE: NYT) reported a print advertising drop of -10% in the third quarter. Even though the Times got a boost from its online subscriber revenue and a boost in its online ad revenues, the percentage growth does not make up for the percentage losses in print advertising because the print chunk is so much larger.

WPP shares are up slightly in the first half-hour of trading this morning, to $55.08, in a 52-week range of $43.98-$69.50. Interpublic shares are up more than 14%, to $10.16, in a 52-week range of $6.73-$13.75.

Paul Ausick