There is a cartoon animation on the website of Ariel Investments of a turtle surrounded by woodland creatures with the motto: "Slow and Steady Wins the Race." That philosophy may explain the value investor's recent decision to double its position in the publisher Gannett Co. (GCI).

Shares of the publisher of USA Today rose 39 percent when the news was announced earlier this month. Even so, stock of the McLean, Va.-based company are down more than 50 percent. The company still trades for under $4.

The reasons for the decline of Gannett are obvious. The business, like other newspaper publishers, is in a tailspin from which it will be difficult to emerge. During the fourth quarter, publishing operating revenues plunged 18.6 percent to $1.4 billion. Advertising revenues plummeted 22.7 percent to $963.4 million. Circulation dropped 3.4 percent to $302.5 million.

"Gannett has made some drastic cost-cutting moves at its newspapers to keep costs in line with dwindling revenue, including multiple rounds of job cuts and two furlough programs forcing employees to take unpaid leave," reported the Wall Street Journal. "More changes could be in store, particularly as the outlook worsens for its flagship paper."

Investors are expecting the good times to come for Gannett. Last week, the publisher announced a private exchange offer for its 5.75 percent notes due 2011, and its 6.375 percent notes due 2012, when the company's entire debt structure is due to mature. But is it reason to boost shares of Gannett up 16 percent today? I don't think so.

Gannett's fundamentals are still poor. Analysts are expecting profit to fall to 25 cents from 77 cents a year earlier when it reports quarterly results April 16. Revenue may fall 13.3 percent to $1.45 billion, according to Thomson Reuters.

Unlike other investors who have ventured into the sector, Ariel knows -- or should know -- what it is doing. The investor was one of the biggest shareholders in Tribune Co., which along with publishers in Philadelphia and Minneapolis are in bankruptcy.

So what's the appeal of Gannett?

"If you look at the media space, there's a lot of negative sentiment out there," said John Miller, a portfolio manager at Ariel Investments, in an interview with Dow Jones [WSJ, subscription required]. "We feel investors have overreacted in some of these names."

Or may be not. I have contacted Ariel for a comment and will update this post.


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