Gannett Co., Inc. (GCI): What Do Newspaper Companies Need To Do To Survive?

Alternative: The New York Times Company (NYSE:NYT)

The New York Times Company (NYSE:NYT) publishes one of the most well-known newspapers in the world, and also operates the website NYTimes.com. The company charges for content on its website in addition to collecting ad revenues. Speaking of ad revenues, about 24% of the company’s ad revenues are now from digital media, up from just 12% in 2006. The New York Times Company (NYSE:NYT) has an average circulation of almost 1.7 million people for weekdays, of which 640,000 are paid digital subscribers.

Although the company has been somewhat successful in monetizing its online content, the company is still experiencing declining revenues and earnings. In fact, the last time the company posted an annual revenue increase was in 2005. While I believe that low expectations have been priced into the stock, I still don’t think that New York Times has done what it needs to successfully adapt their business model to the current environment, like Gannett seems to be more successful at doing.

Final thoughts

As far as this sector goes, although I like Gannett Co., Inc. (NYSE:GCI), I still advise readers to tread cautiously. However, for those with a relatively high amount of risk tolerance, there could be great gains to be had if Gannett is successful in the transition of its core revenue stream to broadcasting.

The article What Do Newspaper Companies Need To Do To Survive? originally appeared on Fool.com and is written by Matthew Frankel.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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