The U.S. newspaper publishing industry has evolved from being a sole provider of news content and advertising on print publications to much more due to changing consumer preferences and innovative technologies. Readers’ preference for accessing news online, mostly free, has made the industry’s print-advertising model redundant. Now as readers have swarmed to the Internet, advertisers followed suit and so did newspaper companies.
It is pretty obvious that newspaper companies cannot solely rely on print or digital advertising but have to diversify their revenue streams focusing on video content, events and paid-for-products. However, the outcome of this approach is dependent on the newspaper companies’ efforts to effectively capitalize on the growing use of Internet as a medium to reach business-to-business and business-to-consumer markets.
Newspaper companies are altering their business models to gain an edge in the current multi-platform media environment, as people now stay updated about current affairs via smartphones, social media and other interactive platforms. For this reason, companies are focusing on creating content for mobile devices, online advertising based on user experience and personalized content to lower their dependence on traditional advertising business.
Newspaper companies are fast acclimatizing to the changing face of the multiplatform media universe. The strategic endeavors undertaken has led the industry to outpace the broader market. The Zacks Publishing - Newspapers Industry has outperformed the Zacks S&P 500 Composite over the past year. While the stocks in this industry have collectively gained 40.4%, the Zacks S&P 500 Composite advanced 14.3%.
Moreover, based on an impressive earnings outlook, the industry occupies a favorable position in the list of Zacks industries. The industry currently carries a Zacks Rank of #116, which places it at the top 45% of more than 250 Zacks industries. We have highlighted two stocks from the industry that have advanced approximately 40% in a year.
New Media Investment Group (NEWM - Free Report) is one of the prominent publishers of locally based print and online media in the United States. The company is taking the consolidation route to create economies of scale, widen reach and become an all-in-one destination point for advertisers. The company has been constantly on the lookout for strategic buyouts. The latest in the list are Akron, OH Beacon Journal, Palm Beach Post and Daily News and Austin, TX American-Statesman. New Media’s digital revenues rose 23.3% during the first quarter of 2018. The company’s UpCurve division, which provides marketing, digital solutions and cloud services to small and mid-sized businesses, is gaining traction. This Zacks Rank #2 (Buy) stock has gained 40.7% in a year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The New York Times Company (NYT - Free Report) strategic initiatives have helped propel the stock roughly 50% in a year. The company is diversifying business, adding new revenue streams and restructuring its portfolio. It had offloaded assets in order to re-focus on its core newspapers and pay more attention to its online activities. These endeavors have helped the company to deliver seventh straight quarter of positive earnings surprise, when it reported first-quarter 2018 results. The New York Times Company is concentrating on online activities, as evident from its pay-and-read model. The company notified that the number of paid digital subscribers reached 2,783,000 at the end of the first quarter of 2018 — rising 139,000 sequentially and 25.5% year over year. This Zacks Rank #3 (Hold) company is not only gearing up to become an optimum destination for news and information but is also now focusing on service journalism, with verticals like Cooking, Watching and Well.
Other publishing companies such as Gannett (GCI - Free Report) and McClatchy are also trying to adapt to different revenue generating ways. Shares of these companies have increased 18.1% and 13.3% in a year.
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