For Immediate Release
Chicago, IL – October 16, 2017 – Today, Zacks Equity Research discusses the Industry: Publishing, Part 1, including The McClatchy Company (NYSEAMERICAN:MNI – Free Report), The New York Times Company (NYSE:NYT – Free Report), Gannett Co., Inc. (NYSE:GCI – Free Report) and New Media Investment Group Inc. (NYSE:NEWM – Free Report).
Industry: Publishing, Part 1
Is Diversification the New Mantra?
The U.S. newspaper publishing industry has long been grappling with sinking advertising revenues, and the global economic slowdown has only worsened the situation. The downturn in the newspaper publishing industry witnessed over the last few years was aggravated by a decline in print readership. More and more readers started opting for online news, thereby making the print-advertising model increasingly irrelevant.
Changing consumer preferences and the advent of new and innovative technologies have been altering the way news is offered and read. Readers now have myriad choices when it comes to collecting and reading articles or news through devices such as netbooks, tablets or other hand-held devices. Advertisers are now tapping the online video boom to reach their audience.
These factors have been weighing on the print industry, as advertisers now get low-cost avenues to reach their target audience more effectively. We believe that an alternative and stable source of revenues is needed to salvage the dwindling print newspaper industry. To deal with the situation, newspaper companies are trimming their operations, resorting to restructuring, revamping their print editions and investing in digital initiatives.
Declining Newspaper Advertising Revenues
Advertising remains a significant source of revenues for the industry that in turn depends on the health of the economy. Macroeconomic factors such as sluggishness in business spending, high unemployment and falling home sales may affect the level of national, retail and classified advertising revenues, as advertisers cut their budget in response to soft economic conditions.
Advertising volumes remain under pressure as advertisers still deter from making any upfront commitment in an economy under recovery. The McClatchy Company (NYSEAMERICAN:MNI – Free Report) witnessed a 15.6% drop in print advertising revenues during the second quarter of 2017, preceded by a decline of 17% in the first quarter. Print advertising revenues fell 10.5% in the second quarter, following a decline of 17.9% in the preceding quarter at The New York Times Company (NYSE:NYT – Free Report). At Gannett Co., Inc. (NYSE:GCI – Free Report), print advertising and circulation revenues declined 16.8% and 7.4%, respectively, on a same-store basis.
Newspaper Companies Keeping Up Changing Trends
Newspaper companies have now been remodeling and restructuring themselves to better align with the growing need of marketers, targeting younger people, affluent households and other demographic groups with multiple web and print publications. Publishing companies are adapting to the changing face of the multi-platform media universe, which currently includes Internet, mobile, tablet, social media networks and outdoor video advertising in its portfolio.
McClatchy launched a new digital advertising agency, ‘excellerate,’ to provide marketing solutions to local and regional advertising clients. The company’s digital-only advertising revenues surged 10% in the second quarter of 2017, while total digital advertising revenue fell a marginal 0.9% from the year-ago period. The New York Times Company’s digital advertising revenues jumped 22.5%, while New Media Investment Group Inc.’s (NYSE:NEWM – Free Report) digital revenues increased 9% during the second quarter.
Publishing companies have been disciplined buyers of local media assets. New Media Investment Group has been continuously looking for strategic buyouts. The company concluded the acquisition of Harris Enterprises, Inc. in November 2016 and also completed the buyout of the Ohio publishing division of Wooster Republican Printing Company in January 2017.
The company recently entered into an agreement to buy many of the newspapers and related assets from Morris Publishing Group for $120 million and also teamed up with online employment marketplace, ZipRecruiter, which is now the exclusive provider of recruitment advertising to all its print and online newspaper pages.
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New York Times Company (The) (NYT) : Free Stock Analysis Report
Gannett Co., Inc. (GCI) : Free Stock Analysis Report
New Media Investment Group Inc. (NEWM) : Free Stock Analysis Report
McClatchy Company (The) (MNI) : Free Stock Analysis Report
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