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

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Dec 10, 2014, 09:30 ET

CHICAGO, Dec. 10, 2014 /PRNewswire/ -- Today, Zacks Equity Research discusses the Publishing, including New York Times Company (NYSE:NYT-Free Report), McClatchy Company (NYSE:MNI-Free Report) and Gannett Co. Inc. (NYSE:GCI-Free Report).

Industry: Publishing

Link: http://www.zacks.com/commentary/35950/will-diversification-boost-publishing-industry

The U.S. newspaper publishing industry has long been grappling with sinking advertising revenues, and the global economic turmoil of the last few years only worsened the situation. The downturn in the newspaper publishing industry, seen over the last few years, aggravated as print readership declined with more readers opting for free 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 to collect and read articles and news through devices such as netbooks, tablets or other hand-held devices.

These have been weighing on the print industry, as advertisers now get low-cost avenues through which they can reach their target audience more effectively. We believe that an alternative and stable source of revenue is the demand of time, to salvage the dwindling print newspaper industry.

Waning Newspaper Advertising Revenues

Advertising remains a significant source of revenue for the industry that in turn depends on the health of the economy. The 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 weak economic conditions.

Advertising volumes are still under pressure as advertisers still deter from making any upfront commitments in an economy which remains in recovery mode. According to the data released by the Kantar Media Intelligence, advertising expenditures during second-quarter 2014 fell 9.7% at Local Newspapers and 15.8% at National Newspapers due to soft spending across automotive, financial service and retail categories.

Print advertising revenues at The New York Times Company (NYSE:NYT-Free Report) dropped 5.3% in the third quarter of 2014, while at The McClatchy Company (NYSE:MNI-Free Report) it dropped 11.2%. At Gannett Co. Inc. (NYSE:GCI-Free Report), publishing advertising revenue fell 4.9% in the quarter.

Newspaper Companies Adapting to Changing Trends

Newspaper companies have now been remodeling and restructuring themselves to better align to the growing need of marketers, targeting younger people, affluent households and other demographic groups with multiple web and print publications. The 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.

Newspaper publishing companies have been offloading assets that bear no direct relation with the core operations, diversifying revenue base and even separating their broadcasting and digital properties from the sluggish print business. Gannett has been steadily enhancing its presence in broadcasting and digital products to lower its dependency on its soft print media business.

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