Stocks to buy

The media business is in a tough spot.

The continued migration of news and information online has challenged traditional news outlets ranging from newspapers and magazines to television and radio. In recent months, The Los Angeles Times newspaper announced that it is eliminating 13% of its staff due to declining advertising revenue. BuzzFeed News announced it is shutting down its operations entirely. Hundreds of journalists who work for Gannett Co. (NYSE:GCI), the largest newspaper publisher in the U.S., have gone on strike to demand an end to ongoing cost-cutting measures.

According to a report from outplacement firm Challenger, Gray & Christmas, the U.S. media industry has announced more than 17,400 job cuts so far in 2023, the highest number of cuts on record. Many of the job losses have been at smaller community newspapers and local news stations, which are struggling financially.

Yet it’s not all doom and gloom. Amid the carnage, a select few media companies are thriving thanks to a combination of strong content and savvy business moves. These publicly traded companies are worth consideration, given the outperformance of their share prices. Here are the three best media stocks to buy for July 2023.

Thomson Reuters (TRI)

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Thomson Reuters (NYSE:TRI) is a highly successful global news organization despite a declining industry. Toronto-headquartered Thomson Reuters owes its success to the 2008 acquisition of the British company Reuters Group. This move gave it the Reuters News Agency, a newswire that spans the globe. It has 2,500 journalists and 600 photographers stationed at 200 bureaus around the world. Literally billions of people view Reuters news coverage each day. It clients include eight of the top 10 global newspapers and every U.S. TV network.

Media outlets are shrinking in size by closing news bureaus and laying off staff. Consequently, they are increasingly relying upon Reuters news stories to provide content. This has led to strong earnings and share price appreciation for TRI. For this year’s first quarter, the company reported that its revenue grew 4% year over year to $1.7 billion. Its operating profit increased 23% to $508 million, while its free cash flow rose 58% to $133 million. Thomson Reuters also maintained its 2023 outlook despite a slowing economy.

TRI stock is up 25% over the last 12 months and has gained 188% in the past five years.

New York Times Co. (NYT)

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Nicknamed the “Gray Lady” for its serious tone, The New York Times (NYSE:NYT) is one of the few media companies to have successfully transitioned its news coverage online. Currently, 9.7 million worldwide subscribers read the Times,  710,000 of whom subscribe to print, while the other nine million read digital. The New York Times is clearly profitable from its subscriptions alone. This fact makes the company less reliant on advertising revenue, which can be cyclical and prone to ups-and-downs.

In Q1 of this year, NYT reported its ad revenue fell 8.6% to $106 million, dragged lower by declines in advertising among technology and finance companies. However, the Times added 190,000 net new digital subscribers in the quarter, helping to offset the drop in ad spending. Increasingly, The New York Times is becoming a multi-media company, adding podcasts, video documentaries, and even animation to its news coverage.

In 2022, the company bought the popular online sports news site The Athletic for $550 million. They are beginning to offer it to readers in bundled subscriptions. The Times recently reported that The Athletic had 3.3 million subscribers in Q1, more than double the number it had a year earlier. NYT stock has risen 42% in the last 12 months, including a 20% gain so far this year. Over five years, the stock is up 51%.

News Corp. (NWSA)

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News Corp. (NASDAQ:NWSA) is a diverse media company. It boasts the Fox News television network, Dow Jones Newswire, The Wall Street Journal, and HarperCollins book publisher. The company also owns The New York Post and Fox Sports TV network, as well as dozens of influential United Kingdom and Australian newspapers. As with the other media outlets on this list, News Corp. has managed to build a successful media company that spans the globe.

The business-focused Wall Street Journal also has built a successful paid-subscription model, and Fox News maintains a devoted viewership. The company’s recent earnings have been challenged by lower advertising revenue, which has weighed on the stock, amid fears of a global economic downturn. However, despite the near-term issues, NWSA stock has managed to perform well. It rose 25% in the last 12 months, including a 7% year to date gain. Since the pandemic struck three years ago, News Corp.’s stock has increased 130%.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.