A recent news story got me thinking about print media stocks making a comeback.
Axios recently reported on Punchbowl News’ revamped website. The move by the congressional news startup is meant to generate more revenue by making its content more available to those who aren’t D.C. insiders.
D.C.-based media companies have seen their valuations rise in recent years. In fact, Axios sold for $525 million in August 2022.
If you look closely, there’s something to cheer about if you work for a media company. All is not doom and gloom.
With regards to the print media, there are several publicly traded companies I could have chosen, but they wouldn’t be suitable investments. Here are three that are.
The New York Times (NYT)
The New York Times (NYSE:NYT) is having an excellent year in the market, up nearly 24%, more than double the S&P 500.
I subscribe to the Times. While I joined to help me write better about the markets, a lot of the non-business stuff is very interesting and informative. That said, I’m not picking up the paper’s print version, but I would if I were in New York, if only for nostalgia’s sake.
I also subscribed to The Athletic before the NYT acquired it last year for $550 million. Sadly, as part of the acquisition, the Times closed its sports section, moving sports cover over to The Athletic. While that stings, it’s a financial decision that makes total sense. The duplication was unnecessary.
The company reported Q2 2023 results in August. They were reasonably good, with revenues 6.3% higher to $590.9 million, with an adjusted operating profit of $92.2 million, 21% higher year-over-year.
Its total subscribers were 9.88 million at the end of the second quarter, up from 9.17 million a year ago, with digital-only accounting for 93%. Its average revenue per user (ARPU) was $9.15 during Q2 2023, 11 cents higher than Q1 2023 and 32 cents more than a year ago.
The bundled subscription is working for the Times. Down from its all-time high of around $55, it’s got room to move higher.
News Corporation (NWSA)
News Corporation (NASDAQ:NWSA) is another media company whose products I subscribe to. I currently have subscriptions for both Barron’s and MarketWatch. I refuse to subscribe to the Wall Street Journal because of its shameless editorials in support of former President Donald Trump. But that’s okay; I’ve also got Bloomberg to keep me informed.
And, yes, I realize News Corp owns both Barron’s and MarketWatch, but they don’t veer off the business path too often.
In September, Rupert Murdoch announced he was stepping down as leader of both News Corp and Fox (NASDAQ:FOXA), leaving the CEO chores to his son Lachlan, who’s a much younger 52. That makes sense.
Once Murdoch Sr. dies, the real fireworks will start as the kids inherit their father’s voting shares. Rupert holds 40% of News’ and 43% of Fox’s voting shares. They will control both businesses.
News Corp’s business isn’t nearly as strong as the Times.
In fiscal 2023, its sales fell 5% to $9.88 billion, with a 15% decline in segment earnings before interest, taxes, depreciation and amortization (EBITDA), to $1.42 billion.
However, its Dow Jones unit, which operates the Wall Street Journal, etc., had an excellent year, growing 7% in revenue and 14% in EBITDA. Across the board, Dow Jones’ subscriptions were significantly higher in the fourth quarter. It finished the year with 5.24 million total subscribers, up from 4.90 million a year earlier.
Business is good.
Nexstar Media Group (NXST)
I picked Nexstar Media Group (NASDAQ:NXST) primarily because of its focus on local news. However, it’s technically not a print media company using digital means to reach 106 million estimated consumers.
Nexstar’s digital operations are spread across 125 websites and 239 mobile apps. Comscore ranks Nexstar’s digital assets as a top 10 U.S. digital news and information property. It does that aided by its 200 owned or partner local broadcast stations in 116 U.S. markets, reaching 68% of households.
Now, it could be ready to land a massive fish by acquiring ABC from Walt Disney (NYSE:DIS). The two companies are currently in early talks about a possible sale. However, given complications, such as ESPN’s relationship with ABC and the fact that Nexstar’s TV stations are primarily Fox, NBC or CBS affiliates, things need to be worked out before any actual numbers are discussed.
Estimates put the sale of ABC and its eight TV stations at $4 billion, or about 7x EBITDA. Nexstar currently has a market cap of just $4.7 billion. So, any deal would be difficult to swing for the Texas-based media business.
Nonetheless, its focus on local media will continue to resonate with Americans. That’s good news for every kind of media, including print.
On the date of publication, Will Ashworth did not hold (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 InvestorPlace.com Publishing Guidelines.