For Immediate Release
Chicago, IL – April 1, 2010 – Zacks.com announces the latest Industry Outlook. Today, Zacks Equity Research discusses the Publishing Industry, including News Corporation (NWSA), The New York Times Company (NYT), Google Inc. (GOOG), McClatchy (MNI) and Washington Post Company (WPO).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/32364/Publishing+Industry+Stock+Review+-+April+2010.
Throughout 2009, newspaper companies have transformed their business models to better position themselves in a multiplatform media universe. Although the U.S. economy is witnessing signs of recovery with a sluggish improvement in the advertising environment, we believe 2010 will not mark the resurrection of the publishing industry. However, it is expected to fare better than 2009, as steps taken to curb the mayhem will start paying off.
With steadying newspaper budgets, we could see fewer layoffs, more focus on web and local content, reduction in print pages dedicated to business or sports content, increase in subscription and concentration on profitable circulation.
Newspaper companies’ strategic plans involve improving advertising pricing and rates structures. The companies are now even considering charging visitors for accessing articles online.
News Corporation (NWSA) has taken a leap towards an online subscription-based model for general news content. News International, a subsidiary of News Corporation, will soon begin charging readers for online content for The Times of London and Sunday Times of London effective June 2010.
Rupert Murdoch, the Chief Executive Officer of News Corporation, has long been pushing for the online subscription model for all general news websites. But newspaper companies have been reluctant to tow the line for fear of losing readership and in turn, advertisers.
Business newspapers, such as Financial Times and The Wall Street Journal (owned by News Corporation) have long been following an online pay model. But levying access charges on readers for online access to general news content is a first for any news publication.
Another media giant, The New York Times Company (NYT), plans to introduce a ‘pay and read’ model for NYTimes.com in 2011. The company will adopt the Financial Times’ metered system, where readers after browsing a certain number of free articles, are being asked to subscribe.
However, we believe, people will be reluctant to shell out if the content is available free of cost elsewhere. To combat this, Rupert Murdoch has been devising ways to obstruct Google Inc. (GOOG) from accessing News Corporation’s articles or content through its Internet search engine.
OPPORTUNITIES
Despite the economic downturn faced by the publishing industry, there are defensive stocks. Companies are radically changing their business models to fall in line with industry trends. McClatchy (MNI) is transiting to a hybrid format of print and online. Management has acknowledged that McClatchy’s ultimate business model will be nearly half Internet-based.
New York Times Company’s effective cost-cutting measures and increase in newspaper price has resulted in an improved financial position. The company also plans to introduce a paid model for NYTimes.com in 2011, which will bring the media conglomerate on par with The Wall Street Journal and Financial Times.
WEAKNESSES
Weakness persists across Washington Post Company (WPO). Online classified advertising revenue on washingtonpost.com fell 24% in fiscal 2009, whereas print advertising revenue tumbled 23%. Washington Post’s magazine publishing division, whose fortunes are tied to the advertising market, is also struggling due to lower advertising revenue at Newsweek.
The newspaper industry has long been grappling with plummeting advertising revenue due to economic headwinds. Although murmurs about advertisers returning to the market are gaining ground as the economy gradually braces itself, but the positive effects have yet to be realized. The picture will become clearer as the year progresses.
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