The New York Times Company (NYT), The Washington Post Company (WPO): This Media Company Is Too Risky, Buy These Alternatives Instead

Gannett Inc.

Gannett is the largest newspaper publisher in the U.S., with about 100 daily newspapers (including USA Today, the highest selling newspaper in the country) as well as 500 non-daily publications. Although the company has taken measures to emphasize its broadcasting segment, in my opinion the company is still far too dependent on print advertising revenues, which I foresee declining for the next several years at least. However, at just 10.3 times forward earnings, and with a nice dividend payout of 3.7%, Gannett may be worth taking a chance on for adventurous investors.

News Corp

News Corp is one of the largest media and entertainment conglomerates in the world. While the company does publish some very well-respected newspapers (the Wall Street Journal and New York Post), the majority of News Corp’s revenues come from their Fox film studio and broadcasting network as well as their HarperCollins book publishing business.

Sometime during 2013, the company hopes to complete the separation of its publishing and media and entertainment businesses into two separate publicly traded companies. I see this as a major positive catalyst for investors, assuming it happens as planned. Although News Corp trades at a relatively high valuation of 17.3 times forward earnings, analysts are expecting News Corp’s earnings to rise at a 16% annual rate going forward, making this a nice growth play.

The Bottom Line

To reiterate my point: I love The New York Times Company (NYSE:NYT) as a company. However, until they can show that revenues are indeed stabilizing and that the new direction of their business is sustainable over the long term, I am hesitant to endorse the company as an investment. As an alternative, I prefer either The Washington Post Company (NYSE:WPO) or News Corp because of their exposure to alternative businesses, and the fact that their revenues are on an uptrend.

The article This Media Company Is Too Risky, Buy These Alternatives Instead originally appeared on Fool.com and is written by Matthew Frankel.

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