The New York Times Company (NYT), Gannett Co., Inc. (GCI): This Newspaper Company Can Still Make You Money

How are others doing

With print publishing slowly on the verge of being pushed to antiquity, Gannett Co., Inc. (NYSE:GCI) is another media and advertising conglomerate slowly diluting its exposure to print media. The company has acquired television-station operator Belo, a deal which is said to conclude by the end of this year.

Gannett Co., Inc. (NYSE:GCI) posted its 2Q 2013 results recently, and both earnings and revenue failed to beat consensus estimates. It reported total revenue of $1.3 billion, which was a shade below the year-ago quarter by 0.3% and fell short of consensus estimates by roughly $30 million. On the earnings side, including one-time items, it notched a figure of $0.48 per share, missing the year-ago mark of $0.51.

Like the majority of the publishing business, Gannett Co., Inc. (NYSE:GCI) was also hit by volatility and a drop in advertising revenue, but managed to partly offset it through the subscription-based content access model that it has adopted.

Reed Elsevier NV (ADR) (NYSE:ENL) is primarily exposed to publishing, but the company apparently has a stronger footing that the Times or Gannett. It caters to very niche markets like science, medical and technology publishing units. I think that advertisers relevant to these areas will still continue to commit money to advertisements with the company because of the readers that keep returning.

In the medical segment, it’s a virtual monopoly through “Grey’s Anatomy.” In the legal segment, it does have a competitor in the form of Thomson Reuters, and together they hold 80% of the legal-market segment. Based on the only analyst that covers this company, it is projected that the company will increase earnings 67.5% this year and 9.5% next year.

Conclusion

The New York Times Company (NYSE:NYT) is following a good strategy of divesting its non-core businesses and improving its digital presence. Its digital growth has been strong enough to offset the decline in its traditional publishing business, and at a trailing P/E of 9x, it is the cheapest stock on offer when compared to peers such as Gannett Co., Inc. (NYSE:GCI) (13x) or The Washington Post (45x). Investors looking to benefit from the digital revolution at traditional newspapers should take a look at The New York Times Company (NYSE:NYT).

The article This Newspaper Company Can Still Make You Money originally appeared on Fool.com and is written by ANUP SINGH.

ANUP SINGH has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. ANUP 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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