Publishing/Writing: Insights, News, Intrigue


Social Media Sites to Become “Personalized Newspapers” – Elsewhere, Market Caps for Current, Fading News Sources

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 ūüôā

From the Insider Monkey by The Motley Fool:

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 ‚Äúowns¬†eight network-affiliated television stations, two New York radio stations and more than 40 web sites.‚ÄĚ 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.

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Is News Corp. Really Throwing its Publishing Ops Under the Bus ?

Throwing Print Publishing Under The Bus ?

Ole Rupert is actually being forced by financial forces to break off News Corp.’s print publishing arm¬†from the rest of his media empire — But,¬†could this bring about¬†an unintended¬†method to their madness at the end of the day (also forced)¬†?

The decreasing¬†financial numbers being earned by News Corp.’s publishing arm all point to the eventual failure of this entity if¬†left to operate on its own without¬†any type of other financial¬†shoring up¬†as was provided by News Corp.’s other digital and entertainment¬†arms.¬†
This forced separation, however, could just be the igniter of the needed ingenuity that could revive print just out of the adrenalin of survival.
Lets get inside some numbers and forecasts provided by Diane Mermigas in the Business Insider:

Splitting News Corp. Means Shoring up – or Shipping Out – Print Ops

News Corp.’s decision to throw its publishing operations under the bus in a division of assets is a shortsighted effort to pacify shareholders disgruntled with a year-long phone-hacking scandal in Britain and declining stock price that could blunt the newspapers’ digital survival.

Is it realistic to expect a pure-play publishing company to do more experimenting with digital business models than it does now? News Corp. Chairman Rupert Murdoch promises the standalone entity will have “a robust net cash position” for potential acquisitions. But where will the investment funds come from?¬†

News Corp. chairman Rupert Murdoch, who has been loath to spin-off his beloved newspaper operations, says the stand-alone entity will have “a robust net cash position” for potential acquisitions.¬†

Nomura Securities analyst Michael Nathanson estimates the publishing business will have $362 million in profit in fiscal 2012 and a value of about $2.6 billion, or 7% of News Corp.’s current market cap. By comparison, News Corporation’s entertainment business will earn $3.1 billion¬†in fiscal 2012 and could be the highest-growth portfolio in media, valued at about $52.5 billion–nearly the same as the existing company.¬†

Barclay’s Anthony DeClemente¬†expects as much as $2 billion of News Corp.’s estimated $11 billion in cash will go with publishing to mitigate $1.5 billion in debt and an estimated $330 million in phone hacking-related legal expenses. Even with double-digit declines in ebitda, BTIG analyst Richard Greenfield expects publishing free cash flow to remain positive in fiscal 2015.¬†

Still, those numbers speak more to getting by than getting on. 

The publishing company will not likely seek another $5 billion deal like its purchase of  Dow Jones in 2007, which was heavily written down and whose estimated value has deteriorated. But it will need to continuously invest in innovative digital applications and business models to better monetize its unique data and information. 

The WSJ, as it is expected to be rebranded, is aggressively making variations of its content available to users through their device of choice to avoid the huge reader exodus spurred by The Times of London‘s hard pay wall tactics.¬†

Wall Street Journal readers can “subscribe” for a few dollars a month to specific news channels through premium sources, such as Water Cooler, the Political Report and the Technology Digest in a unique revenue-sharing arrangement between Dow Jones, aggregator Pulse and Apple, which demands about one-third of money generated from apps on its devices.

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