12 Best News and Digital Media Stocks To Buy

Published on February 28, 2024 at 10:20 am by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 best news and digital media stocks to buy. If you want to skip our discussion on the digital media industry, head over to 5 Best News and Digital Media Stocks To Buy.

The World Press Trends Outlook Survey by WAN-IFRA indicates optimism among global news industry leaders for revenue growth in 2024, despite ongoing challenges such as declining referral traffic, Google discontinuing third-party cookies, and the impact of AI search engines. Approximately 55% of 175 surveyed news executives expressed optimism about their company’s prospects in the next 12 months, and 58% were optimistic about the next three years. This signals a shift towards cautious optimism compared to the previous year’s report. Despite layoffs and challenges in 2023, publishers anticipate a 2024 revenue growth of 18.5%. However, news media advertising was expected to decline by approximately 4.6% in 2023 and 3.1% in 2024. Global newspaper advertising spend has decreased, with print decline outpacing digital progress. Areas like platform partnerships and business services gained importance for publishers, while events, data, and memberships declined. Major upcoming elections and the 2024 Paris Olympics are predicted to boost revenues and audience engagement. Key areas for investment include reader revenue, product development, and diversifying revenue streams. Artificial intelligence is a top priority for investment, followed by data analytics, video, and audio/podcasts. While 34% of the surveyed news executives were very optimistic about generative AI opportunities, 67% feel their businesses are poorly prepared to capitalize on them at present.

Reuters Institute and the University of Oxford conducted a survey involving over 300 digital leaders from 50 countries, revealing that news organizations globally are navigating the challenges and opportunities presented by artificial intelligence. About 47% of editors, CEOs, and digital executives express confidence in the future of journalism, with concerns centered on rising costs, declining advertising revenue, and slowed subscription growth. Nearly two-thirds worry about a sharp decline in referral traffic from social media sites, particularly Facebook and Twitter. As a response, 77% of respondents plan to focus more on their direct channels, and 22% will cut costs, while 20% explore alternative third-party platforms. Publishers show increased interest in platforms like WhatsApp and Instagram, following Meta’s decision to open broadcast channels. Despite challenges, publishers plan to create more video content, newsletters, and podcasts while maintaining the number of news articles. However, 54% admit a focus on maximizing attention rather than respecting audience time. On the business side, 80% of publishers view subscription and membership as crucial revenue streams. Licensing deals with AI platforms are anticipated, but 35% believe most benefits will go to large publishers, with 48% expecting little money for any publisher.

An Ernst & Young (EY) report on key media and entertainment trends for 2024 highlighted that consumer dissatisfaction with paying for unused TV channels led to the rise of streaming services, allowing households to customize their content and reduce costs. Media companies now face the challenge of balancing traditional linear broadcast and cable networks with streaming platforms to drive subscription and advertising revenue. Media companies are integrating artificial intelligence into different aspects of their operations, focusing on productivity and incremental growth. However, executives remain cautious about spending, risk, and quality control associated with implementing GenAI. Challenges include job security concerns in creative industries, intellectual property protection, and the need for trust, accuracy, privacy, and fairness in GenAI implementation.

Moreover, EY mentioned that despite a 20%+ year-over-year growth in feature films at the box office, results are still 19% below pre-COVID-19 levels. Studios are prioritizing the first-run window over day-and-date releases, leveraging successful films to drive streaming sign-ups. There is a renewed emphasis on fresh storytelling and excellence in 2024, moving away from overreliance on long-running franchises. Consumer enthusiasm for concerts, sporting events, and theme parks indicates a desire for in-person entertainment. However, the rising cost of living poses challenges to consumer spending on media and entertainment. While inflation rates decrease, industry leaders recognize the discretionary nature of entertainment spending. In 2024, media and entertainment companies aim to showcase value through creative packages, commercial partnerships, exclusive features, and dynamic pricing.

Some of the best entertainment stocks to buy for benefiting from the industry momentum include The Walt Disney Company (NYSE:DIS), Netflix, Inc. (NASDAQ:NFLX), and The New York Times Company (NYSE:NYT).

Our Methodology

We chose the top news and digital media stocks based on overall hedge fund sentiment toward each stock. These companies provide real-time news, journalism, print and digital content, streaming, broadcasting, internet, and cable services. We have assessed the hedge fund sentiment from Insider Monkey’s database of 933 elite hedge funds tracked as of the end of the fourth quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).

Best News and Digital Media Stocks To Buy

12. Thomson Reuters Corporation (NYSE:TRI)

Number of Hedge Fund Holders: 17

Thomson Reuters Corporation (NYSE:TRI) is a global provider of business information services, operating in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in five segments – Legal Professionals, Corporates, Tax & Accounting Professionals, Reuters News, and Global Print. On February 8, Thomson Reuters Corporation (NYSE:TRI) declared a $0.54 per share quarterly dividend, a 10.2% increase from its prior dividend of $0.49. The dividend is payable on March 8, to shareholders on record as of February 21.

According to Insider Monkey’s fourth quarter database, 17 hedge funds were long Thomson Reuters Corporation (NYSE:TRI), compared to 16 funds in the prior quarter.

Like The Walt Disney Company (NYSE:DIS), Netflix, Inc. (NASDAQ:NFLX), and The New York Times Company (NYSE:NYT), Thomson Reuters Corporation (NYSE:TRI) is one of the best entertainment stocks to buy.

ClearBridge International Growth EAFE Strategy stated the following regarding Thomson Reuters Corporation (NYSE:TRI) in its fourth quarter 2023 investor letter:

“Another welcome change has been the recognition of generative artificial intelligence (AI) opportunities for companies outside the U.S. While our IT holdings trailed their mega cap U.S. counterparts for most of the year, semiconductor equipment makers ASML and Tokyo Electron, which we consider enablers of AI, as well as enterprise software maker SAP and IT consultant Accenture, which we see as facilitators of AI adoption in new product lines and/or enhanced business models, rose strongly in the quarter. Additional outperformers included RELX, a publisher of law and related business trade information, and Thomson Reuters Corporation (NYSE:TRI), a business services conglomerate with leading positions across media and other industry verticals, which own large, proprietary data sets and stand to become key beneficiaries of the processing power of the large language models that drive generative AI. These companies are rolling out new, AI-enhanced products at higher prices which should positively impact earnings in the near term.”

11. Gannett Co., Inc. (NYSE:GCI)

Number of Hedge Fund Holders: 20

Gannett Co., Inc. (NYSE:GCI) is a media and marketing solutions company in the United States, operating through three segments – Domestic Gannett Media, Newsquest, and Digital Marketing Solutions. The company provides print offerings through home delivery and single-copy sales, as well as digital-only subscriptions and advertising services. On February 22, Gannett Co., Inc. (NYSE:GCI) reported a Q4 GAAP EPS of -$0.16 and a revenue of $669.4 million, missing Wall Street estimates by $0.18 and $3.63 million, respectively. It is one of the best entertainment stocks to buy.

According to Insider Monkey’s fourth quarter database, 20 hedge funds were bullish on Gannett Co., Inc. (NYSE:GCI), compared to 18 funds in the preceding quarter.

Miller Value Deep Value Select Strategy stated the following regarding Gannett Co., Inc. (NYSE:GCI) in its fourth quarter 2023 investor letter:

“Nabors (NBR) and Gannett Co., Inc. (NYSE:GCI) were the two largest detractors during the quarter. Gannett shares also pulled back during the quarter. Management’s transformation plan remains on track in my view. Their digital offerings and new content partnerships are growing nicely, as they approach 50% of revenue, which may lead to an eventual inflection to positive company revenue growth. The company has an opportunity to monetize their 180M+ monthly unique visitors, developing new subscription revenue and cash flow streams over time. The New York Times, which has a smaller audience reach than Gannett, undertook a similar successful transformation 10 years ago that lead to accelerating revenue growth and free cash flow generation. As their transformation progressed over that period, The New York Times valuation expanded, price-to-sales multiple increased from less than .5x to 3.2x and Enterprise Value to EBITDA from near 7x to 21x.

Gannett’s share price today presents a similar long-term opportunity as it implies no value from a successful transformation. Gannett’s valuation multiples are near all-time lows, price to sales multiple of .13x and an EV/EBITDA near 5x. Ongoing operational progress and debt reduction has the potential to accelerate free cash flow generation and unlock significant equity value overtime. In addition, Gannett’s anti-trust lawsuit against Google is underappreciated in my view as it has the potential to further accelerate the transformation. Winning the case could result in a reward in excess of $1B (anti-trust suits awards can be triple damages). Gannett remains one of our larger holdings, with significant embedded long-term appreciation potential with business value significantly above current share prices.”

10. EchoStar Corporation (NASDAQ:SATS)

Number of Hedge Fund Holders: 24

EchoStar Corporation (NASDAQ:SATS) is a global provider of networking technologies and services. The company operates through two segments – Hughes and EchoStar Satellite Services (ESS). The Hughes segment offers broadband network technologies, managed services, equipment, and satellite services to government and enterprise customers. It also provides gateway and terminal equipment for other satellite systems. The ESS segment offers satellite services on a full-time and occasional-use basis to various customers, including U.S. government service providers, internet service providers, news organizations, content providers, and private enterprises. It is one of the best entertainment stocks to consider.

On January 2, EchoStar Corporation (NASDAQ:SATS) completed its merger with DISH Network. The merger, finalized on December 31, involves the conversion of each share of DISH Network Class A and Class C common stock into 0.350877 shares of EchoStar Class A Common Stock. Similarly, each share of DISH Network Class B Common Stock will be converted into 0.350877 shares of EchoStar Class B Common Stock.

According to Insider Monkey’s fourth quarter database, EchoStar Corporation (NASDAQ:SATS) was found in 24 hedge fund portfolios, compared to 25 in the prior quarter. Alan Fournier’s Pennant Capital Management is the leading stakeholder of the company, with 2.15 million shares worth $35.6 million.

Steel City Capital made the following comment about EchoStar Corporation (NASDAQ:SATS) in its Q3 2022 investor letter:

“Virtually all of the Partnership’s year-to-date decline emanates from our long book. In aggregate, our short positions have partially offset this performance. Outsized declines have come from EchoStar Corporation (NASDAQ:SATS) and Anterix (ATEX). With SATS, I think we “bought well” in the sense that our position was established at an average price of $23.40 vs. the most recent price of $17.40. There certainly remains the risk we’ve invested in a “value-trap” / “melting-ice cube,” but I’ll try to explain why I think that outlook isn’t completely accurate.

I tend to think of SATS as an iceberg whose peak – the portion visible above water – reflects only a small part of its totality. The visible portion is the company’s legacy satellite broadband business that, at the current time, is shedding customers at an unhealthy clip. The main culprit is most likely Elon Musk’s Starlink, which currently offers more attractive speeds (100 Mbps) and lower latency. Maybe I’m being pollyannish about the situation, but I believe when SATS brings its Jupiter 3 satellite online next year, and is capable of delivering the same speeds as Starlink, churn will not only slow, but subscriber counts should begin to rebound. SATS will never be competitive with respect to latency, but that doesn’t keep me up at night. That’s not to discount the draw of low latency, which is important for use cases such as video conferencing and gaming, but when your target customer base is scraping by with max speeds of just 25 Mbps, the prospect of 100 Mbps should be highly attractive. Moreover, as I’ve discussed in prior communications, the financial case for Starlink is unproven and it remains to be seen whether or not Musk can ever make the unit economics work…” (Click here to read the full text)

9. Nasdaq, Inc. (NASDAQ:NDAQ)

Number of Hedge Fund Holders: 30

Nasdaq, Inc. (NASDAQ:NDAQ) is a global technology company serving capital markets and various industries. It operates in three segments: Capital Access Platforms, Financial Technology, and Market Services. The Capital Access Platforms segment sells market data, develops Nasdaq-branded indices, and offers investor relations intelligence, governance, and ESG solutions. The company also publishes financial news on its website. It is one of the best news and digital media stocks to watch.

On January 31, Nasdaq, Inc. (NASDAQ:NDAQ) declared a $0.22 per share quarterly dividend, in line with previous. The dividend is distributable on March 28, to shareholders on record as of March 14.

According to Insider Monkey’s fourth quarter database, 30 hedge funds were bullish on Nasdaq, Inc. (NASDAQ:NDAQ), compared to 37 funds in the prior quarter. Thomas Steyer’s Farallon Capital is the largest stakeholder of the company.

TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Nasdaq, Inc. (NASDAQ:NDAQ) in its Q3 2023 investor letter:

“In Financials, we prefer well-placed insurance companies and niche businesses while tending to avoid banks which face credit deterioration and rising deposit costs. Partially countering these positives was Nasdaq, Inc. (NASDAQ:NDAQ), which is engaged in trading, clearing, exchange technology, regulatory, securities listing, and company services. Its shares pulled back by -2% despite reporting an upside to consensus projections, driven by stronger trends in their solutions business.”

8. Nexstar Media Group, Inc. (NASDAQ:NXST)

Number of Hedge Fund Holders: 31

Nexstar Media Group, Inc. (NASDAQ:NXST) is a television broadcasting and digital media company in the United States. It focuses on acquiring, developing, and operating television stations, interactive community websites, and digital media services. Nexstar is one of the top entertainment stocks to monitor. On January 26, the company declared a quarterly dividend of $1.69 per share, a 25% increase from its prior dividend of $1.35. The dividend was paid on February 23.

According to Insider Monkey’s fourth quarter database, 31 hedge funds were long Nexstar Media Group, Inc. (NASDAQ:NXST), same as the prior quarter. Amy Minella’s Cardinal Capital is the largest stakeholder of the company, with 616,022 shares worth $96.5 million.

Here is what Richie Capital Group has to say about Nexstar Media Group, Inc. (NASDAQ:NXST) in its Q1 2022 investor letter:

“Nexstar Media Group (NXST up 24.8%) – The television broadcasting and digital media company surged during the quarter after presenting at an investor conference where management pointed to a strong 2022 for both political advertising and retransmission. They have exposure to more than 80% of markets with competitive mid-term political races. NXST is developing new ad categories such as sports betting and they are focused on expanding digital ad revenue and providing digital solutions to local advertisers. Auto advertising will return in the fall as auto dealerships re-enter the market to sell their replenished inventory.”

7. Fox Corporation (NASDAQ:FOX)

Number of Hedge Fund Holders: 38

Fox Corporation (NASDAQ:FOX) is a news, sports, and entertainment company in the United States. Its operations are divided into three segments – Cable Network Programming, Television, and Other, Corporate, and Eliminations. Fox Corporation (NASDAQ:FOX) is one of the best entertainment stocks to buy.

On February 7, Fox Corporation (NASDAQ:FOX) reported financial results for the quarter ended December 31, 2023. The company posted a non-GAAP EPS of $0.34 and a revenue of $4.23 billion, outperforming Wall Street estimates by $0.22 and $20 million, respectively.

According to Insider Monkey’s fourth quarter database, 38 hedge funds were bullish on Fox Corporation (NASDAQ:FOX), compared to 29 funds in the prior quarter. Donald Yacktman’s Yacktman Asset Management is the largest stakeholder of the company, with 8.6 million shares worth $237.7 million.

6. News Corporation (NASDAQ:NWSA)

Number of Hedge Fund Holders: 38

News Corporation (NASDAQ:NWSA) is a global media and information services company that creates and distributes content for consumers and businesses. News Corporation (NASDAQ:NWSA) operates in six segments, including Digital Real Estate Services, Subscription Video Services, Dow Jones, Book Publishing, News Media, and Other. On February 8, the company declared a $0.10 per share semi-annual dividend, in line with previous. The dividend is distributable on April 10, to shareholders on record as of February 13.

According to Insider Monkey’s fourth quarter database, 38 hedge funds were bullish on News Corporation (NASDAQ:NWSA), compared to 34 funds in the earlier quarter. Donald Yacktman’s Yacktman Asset Management is the largest stakeholder of the company, with 16.7 million shares worth $411 million.

In addition to The Walt Disney Company (NYSE:DIS), Netflix, Inc. (NASDAQ:NFLX), and The New York Times Company (NYSE:NYT), News Corporation (NASDAQ:NWSA) is one of the top entertainment stocks to monitor. It ranks 6th on our list.

Here is what L1 Capital specifically said about News Corporation (NASDAQ:NWS) in its Q2 2022 investor letter:

“News Corporation (NASDAQ:NWS) (Long -26%) shares fell over the quarter despite reporting third quarter results in line with consensus expectations. The decline was primarily driven by a softening in investor sentiment towards News Corp’s Digital Real Estate assets against a backdrop of rising interest rates in both Australia and the U.S., with REA Group shares down 17% during the quarter. While concerns over property market drivers are likely to continue in the near term, we see both REA Group and Move as being well positioned to structurally improve their businesses through this period. We continue to believe the News Corp assets are materially under-valued and remain supportive of ongoing initiatives to unlock value across the Group.”

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