Projo’s Parent Company’s Stock is Downgraded by Citi
Monday, September 05, 2016
Citi analyst Jason Bazinet has downgraded the Providence Journal’s parent company, New Media Investment Group’s stock to “Sell” and lowered its price target to $13 from $17 per share.
This substantial downgrade comes almost simultaneously to more buyouts and a reorganization for GateHouse newspapers.
The Providence Journal has announced yet another buyout, further reducing their newsroom by an estimated 70% over the past decade. Similarly, the circulation is plummeting — in 2012 weekday circulation was reported at 78,000 and in 2016 dropped to a reported 58,000 — a 25% drop in just three full years.
"The analyst said New Media bulls see $1B of M &A by year end, further synergies, organic revenues stabilizing in Q4 2017, and a robust, sustainable dividend. However, Bazinet believes the bear case is more likely with no additional M&A, top-line trends that fall short of stable revenues by Q4 2017, and growing investor anxiety about the sustainability of the dividend," writes The Street.
Dan Kennedy, Northeastern University Professor and author of the media website Media Nation writes, "GateHouse Media New England, which owns more than 100 daily and weekly newspapers in Greater Boston and its environs, is shedding about 40 positions through buyouts and layoffs, according to Don Seiffert of the Boston Business Journal."
The newspaper group has seen a number of transactions - buying and selling numerous media assets during the past year. According to second quarter financials, the company reported that overall revenues were up, but "same store revenue for the quarter year-over-year decrease 3.2 percent.
Related Slideshow: Why the Last 60 Days May Have Been the Worst Ever for Newspapers
Pew's Forecast is Dismal
"Though the industry has been struggling for some time, 2015 was perhaps the worst year for newspapers since the Great Recession and its immediate aftermath. Daily circulation fell by 7%, the most since 2010, while advertising revenue at publicly traded newspaper companies fell by 8%, the most since 2009. At the same time, newsroom staffing fell by 10% in 2014, the last year for which data were available. Coming amid a wave of consolidation, this accelerating decline suggests the industry may be past its point of no return," said Michael Barthel, research associate, Pew Research. June 16, 2016
Collapse of Print
Mary Meeker's annual digital study finds that time with print has now declined to just 4 percent of consumer's time -- less than 10 percent of the time consumers spend with digital. Her report "2016 Internet Trend Report," was released June 1, 2016.
"In a large metro market, Macy’s ROP – or run of press, the ads running with the newspaper pages – would generate $1 million to $1.5 million in ad revenue a year. Now, with that number cut 40-60%, depending on the market, a publisher would see a drop of as much as $900,000. Figure that’s the equivalent of at least 10 newsroom jobs. In fact, at some companies, these cutbacks will mean a fairly commensurate cut in newsroom jobs, unless digital ad growth can offset the print losses," reports Ken Doctor in Politico on June 9, 2016.
In The Newspaper Industry
1993 to 2007: -79,000
2007 to 2016: -168,200
Other Print Cuts
68% of job loss occurred since 2007
In The Magazine Industry
1993 to 2007: -300
2007 to 2016: -48,400
99% of job loss occurred since 2007
In The Book Industry
1993 to 2007: 700
2007 to 2016: -20,700
100% of job loss occurred since 2007
Loss of Readership
Newspaper readers are declining for all age groups -- especially the young. They aren't starting to read papers, accroding to the Center for Media Research, July 4, 2016.
More Digital Staff Now
"Few industries have been affected by the digital or information age as much as newspapers and other traditional publishing industries (books, magazines, etc.). In June 1990, there were nearly 458,000 people employed in the newspaper publishing industry; by March 2016, that figure had fallen to about 183,000, a decline of almost 60 percent. Over the same period, employment in Internet publishing and broadcasting rose from about 30,000 to nearly 198,000." according to a U.S. Department of Labor report issued in June.
Even Brexit Hits Hard
"Economic uncertainty arising from the June 23 referendum will impact advertising across all media sectors, including TV and the Internet, Enders Analysis, a leading London research firm, said in a report emailed to clients on Friday. But print is likely to be the worst hit, adding to the woes of a sector that is already facing serious financial challenges…Enders is projecting that print advertising income on Fleet Street will decline by between 20 and 25 percent in 2016 and 2017," writes Alex Spence from Politico.
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