The stocks of two of the world’s premier newspaper franchises, the New York Times and The Wall Street Journal, have been sagging under a combination of advertising revenue slides, higher newsprint costs, slower earnings growth and competition from the Internet, according to analysts and investors.

The New York Times Company’s class A stock – the class B voting stock is largely owned by the paper’s founders, the Sulzberger family – has drifted down to $38.80 from a six-month high of $44.04 in mid-July. Dow Jones, whose stock was as high as $45 in mid-November, closed yesterday at $39.02. Of the pair, the Times’ stock has been in a longer drought, off over 25% from its mid-2002 peak of $53.80.

A WSJ spokesman declined to comment. An NYT spokeswoman did not return a call seeking comment.

One Wall Street analyst, who spoke on condition of anonymity given his firm’s prohibition on commenting to the press, said that while the Internet is “a catch-all bogeyman for all the woes that newspaper’s have,” in the case of both the Times and the WSJ, “it happens to be true.” This analyst said it is very likely that the WSJ overpaid for the popular MarketWatch.com financial news Website “by about $200 million.” The analyst referred to Dow-Jones’s purchase of the site in November for $528 million. Moreover, to finance the purchase, the company had to issue about $425 million in short-term debt, issue 1.2 million additional shares to MarketWatch executives and will, according to several debt-ratings agencies, likely see its borrowing costs go up as its bond ratings get lowered.

Though Dow-Jones executives would not comment on these questions, the transcript of a January 27 conference call with analysts does illuminate their thinking on the controversial transaction. DJ chief operating officer Richard Zannino said that the actual economic cost to the company of the MarketWatch deal was $407 million because the MarketWatch had $75 million in cash on the books and tax credits worth another $46 million. He noted that many equity analysts had failed to account for lower earnings prospects when projecting earnings for this year. He outlined a scenario where the company might earn $1.35 per share; the Thomson/First Call consensus EPS is $1.51.

The Wall Street analyst said that the New York Times Company’s difficulties stem from its high cost structure and what he termed “the incredible diffusion of its competition.” Adding to this last point, a hedge fund manager who said he is contemplating a “small short position in the stock” said, “We are approaching the point where a majority of American news consumers get a percentage of their news online. That decreases the need to pay a dollar or more for it let alone buy ads.” Even online, the Internet is making its mark on the Times, with one analyst on a recent conference call asking an executive why Craigslist, a free online classified listings service popular in many cities, had more job listings last quarter than the New York Times.

Analysts see little growth opportunity for the Times. The company earned $293 million last year, 1% above 2003’s and more than 35% off of 2001’s earnings. Moreover, company revenues have been stuck between $3 billion and $3.4 billion for five straight years. The company recently told analysts that 2005 would be “difficult.”