The ‘print publishing industry’ is a phrase used by some in the field to refer to the old newspaper game. And it’s a game undergoing some dynamic shifts and adjustments — due mostly to falling subscriptions and advertisements — the financial numbers depicting this follows in tonight’s post.
This adjustment/survival mode being entertained by the major print news giants such as New York Times and News Corp has opened up new inroads for innovative companies to deliver more frequent and customized news (and news feeds) to more demanding and sophisticated customers.
And just who are these innovative ‘white knight’ companies who will charge in and take up the banner of global news delivery? Social media sites, that’s who — Facebook and LinkedIn, to be specific. Others are sure to follow.
Facebook is developing a service called ‘Reader’ that will reveal news content to its users and LinkedIn just bought ‘Pulse’, a mobile application that enables users to create custom news feeds. The service is similar to Facebook’s Reader.
Imagine being able to immediately tap into news feeds that old print newspapers used to get the stories they published the next day or later? All kinds of interesting things are brewing and possible in the future of news and news delivery 🙂
Facebook Inc (FB), LinkedIn Corp (LNKD): Two Companies That Will Grow In a Declining Publishing Industry
The invention of the printing press by Johannes Gutenberg in 1440 revolutionized the world, reducing the price of printed goods and enabling the materials to be mass-distributed. Now, technology is doing the same. Established publishing companies are facing challenging times, while social media firms like Facebook Inc (NASDAQ:FB) andLinkedIn Corp (NYSE:LNKD) are poised to capitalize within a new market.
A dying model
Newspapers generate their revenue primarily from subscriptions and advertisements. And with both decreasing in recent years, the industry is under major reconstruction. For example, according to The Wall Street Journal, The Newspaper Association of America estimated that U.S. print advertising fell 55% in the past five years. Further, Magna Global expects print ad revenues to drop 6.8% in 2014, and Zenith Optimedia anticipates print ad spending to drop 8% in coming years.
Entrenched players are adjusting to stay alive
The New York Times Company (NYSE:NYT) publishes national and regional newspapers and “owns eight network-affiliated television stations, two New York radio stations and more than 40 web sites.” However, to diversify its portfolio and focus its strategy, it plans to sell The Boston Globe and related assets.
The transition comes as New York Times wants to expand its international reach. With current assets just under $1 billion as of the first quarter, and liabilities exceeding $2 billion, the cash generated from the potential sale will help the publisher to remain competitive by paying down debt, moving into new markets, and holding a cash reserve for future use.
On Friday, conglomerate News Corp (NASDAQ:NWS) will officially spin off its publishing and newspaper assets. It wants its two major business units to function independently and to encourage growth, especially with its entertainment division. This segment will be named 21st Century Fox, and will continue to operate major news and television studios, along with major broadcasting networks.
News Corp’s publishing spin-off is valued at $9.1 billion, about one-seventh the value of 21st Century Fox. However, by market cap, it is still the largest print media firm in America.