How will publishing companies perform in the new digital era?

By Louie Grint As you have probably heard, the newspaper publishing industry remains challenged. Not as many people buy newspapers anymore; instead, they just access a range of free content online. Hence, printed newspaper sales are dropping, and costs are tough to bring down without affecting the quality of the content. However, the companies in this industry are changing, and they look to become part of a broader multi-platform media universe. Diversification Gannett (NYSE: GCI ) holds 82 daily newspapers that include USA TODAY, as well as 40 TV stations. Unfortunately, the fourth quarter of 2013 was not impressive for the company. The bottom line fell 25.8% year-over-year, while the top line declined by 9.9% driven by soft advertising demand. Nonetheless, comparisons with the prior year are tricky, since the fourth quarter of 2012 saw heavy benefits from political advertising. However, despite the results Gannett’s digital segment is showing improvements. Strategy-wise, Gannett is diversifying its business model to add new revenue streams. It has done so by restructuring its portfolio while working on its cost structure to give its balance sheet a boost. Gannett’s shift in focus towards a subscription-based and geo-digital services model will help it lose its dependency on traditional advertising revenue. The company knows it has to be present on every platform, and now its portfolio includes the Internet, mobile, tablets, social media networks, and outdoor video advertising. Following this strategy, Gannett’s acquisition of Rovion, which holds a self-service platform for creating HTML5 ads, is increasing and diversifying its ad revenue. In addition, Gannett’s buy of Belo for $2.2 billion at the end of 2013 doubled its existing portfolio of TV stations as the company fully enters into media broadcast, which has better margins. Read the entire article here: http://www.fool.com/investing/general/2014/02/26/how-will-publishing-companies-perform-in-the-new-d.aspx

Tags: , , ,

Trackback from your site.