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Zacks Industry Outlook Highlights: McClatchy, Gannett, New York Times and New Media Investment Group

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For Immediate Release

Chicago, IL – Feb 14, 2018 – Today, Zacks Equity Research discusses the Industry: Publishing, Part 1, including The McClatchy Company (MNI - Free Report) , Gannett Co., Inc. (GCI - Free Report) , The New York Times Company (NYT - Free Report) and New Media Investment Group Inc. (NEWM - Free Report) .

Industry: Publishing, Part 1

Link: https://www.zacks.com/commentary/149191/publishing-industry-stock-outlook---february-2018

Steadily declining advertising revenues and print readership have emerged as enduring features of the U.S. newspaper publishing industry. Readers’ preference for accessing news online, mostly free, has made the industry’s print-advertising model increasingly irrelevant.

Changing consumer preferences and new technologies have altered the way news is offered and consumed. 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 thus tapping the online video boom to reach their audience.

This has forced the newspaper publishing companies to diversify their revenue base, trim their operations, revamp their print editions and make their digital offerings more compelling. These appear inevitable in the wake of declining print advertising revenues.

The McClatchy Company witnessed an 18.7% drop in print advertising revenues during the third quarter of 2017, preceded by a decline of 15.6% in the second quarter. At Gannett Co., Inc., print advertising and circulation revenues declined 18.7% and 7.6%, respectively, on a same-store basis. The New York Times Company print advertising revenues fell 8.4% during the fourth quarter of 2017.

Newspaper Companies Fast Adapting to Changing Dynamics

Newspaper companies have been remodeling and restructuring themselves to better align with the growing need of marketers and 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 digital advertising agency Excellerate to provide marketing solutions to local and regional advertising clients. The company’s digital-only advertising revenues increased 8.2% in the third quarter of 2017. New Media Investment Group Inc.’s digital revenues increased 11.1% during the third quarter. At Gannett, digital revenues jumped 3.7% on a same store basis, with growth in areas such as mobile, audience extension, digital marketing services and branded content.

Companies are increasingly relying on the pay-and-read model. The New York Times Companystated that the number of paid digital subscribers reached 2,644,000 at the end of the fourth quarter of 2017 – rising 157,000 sequentially and 41.8% year over year. Revenues from digital-only subscriptions products surged 51.2% during the quarter. Management now projects total subscription revenues in the first quarter of 2018 to increase in mid to high-single digits.

The industry has been witnessing increasing consolidation activity. Publishing companies continue to be disciplined buyers of local media assets.

New Media Investment Group has been continuously looking for strategic buyout targets and partnerships. The company acquired certain newspapers and related assets of Morris Publishing Group for $120 million and also teamed up withonline employment marketplace, ZipRecruiter, which is now the exclusive provider of recruitment advertising to all print and online newspapers.

New Media Investment Group also acquired a 20% stake in an opt-in text-based platform, TapOnIt. The platform lets consumers receive offers from local businesses directly on their phones. The company has also entered into an alliance with Houzz, a home improvement and interior design site. The collaboration allows New Media readers to gather information on home renovation and design as well as other local real estate content and homes for sale.

Notably, Gannett has been aggressively expanding its digital presence, as evident from its acquisitions of ReachLocal, Golfweek, SweetIQ and Grateful Ventures. This diversified publishing conglomerate,in October 2015, entered into a deal to acquire Journal Media Group, Inc., theowner of the Milwaukee Journal Sentinel and other newspapers. In April 2016, the company completed the acquisition of all of the remaining shares.

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