The story gets batted around so often these days, you think it would make for the ultimate ironic headline at your favorite newsstand: “Newspapers are dead! Newspapers are dead!”
Or are they?
“No, newsprint is not dead and newspapers are not dead,” says Craig Barberich, global head of media solutions at Zuora, a subscription management company. “But they do have a pricing challenge.”
So before stopping the presses, invite your favorite editor to meet the digital elephant in the room. “Our newspaper and publishing clients are beginning to think and talk about themselves as ‘modern media companies,'” Barberich says.
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Venture a bit further afield and similar challenges confront cable television companies, even as consumers “cut the cord” on their subscriptions in favor of more affordable streaming services.
And so, the headline as it might read goes more like this: “Old media companies must modify or die.”
Tribune, others take steps. Such was the apparent motivation behind a drama that unfolded just days ago. Tribune Publishing Co. (ticker: TPUB) — which traces its print roots to 1847 and controls the Los Angeles Times and Baltimore Sun — changed its name. And its stock exchange.
Now dubbed “tronc” (for Tribune Online Content), the company has signaled its intention to join the high-tech set by leaping from the New York Stock Exchange to the NASDAQ on June 20.
What’s more, the phrase “online content” in the moniker highlights the very web- and mobile-centric approach Barberich describes.
The paradigm no longer pits, for example, the Washington Post versus the Washington Times. “They’re now competing with Netflix, Spotify, Facebook and Twitter, and they’ve also come to the realization that everyone is competing for attention on mobile devices,” he says.
“This is part of a plan for a digital transformation,” says Todd Antonelli, managing director of the Berkeley Research Group in Chicago. “With a fresh relevant digital approach and strategy, tronc can become a content curation and monetization company focused on creating and distributing premium, verified content across all channels.”
In the very short term, there seems to be guarded optimism surrounding the media pivot. Since the June 2 announcement, TPUB stock is up almost 16 percent to about $13 a share. In the longer term, though, the company will want to study the Post’s struggles with digital innovation.
After the paper unveiled WaPo Labs with much fanfare, WaPo Labs in turn created the Washington Post Social Reader, which depended on news feed algorithms from Facebook (FB). But after initial heavy promotion in 2011, Facebook essentially abandoned it and the reader’s traffic took a nosedive.
After Jeff Bezos, the founder and CEO of Amazon.com (AMZN), bought the Post for $250 million in 2013, WaPo Labs changed its name to Trove. And in 2015, Trove was shut down for good, folded into a company called SocialCode.
SocialCode is a Post-launched social media marketing company and if it’s meant to be different, then a Post photo from 2013 left no doubt. It showed, among other things, a half-empty Jim Beam bourbon bottle and a rubber horse head, props used to roll out “new innovations.” (Attention interested digerati: The Post will sell you a 16×20 mounted canvas print for $129.95.)
Unlike WaPo Labs, SocialCode has gained traction. It now has offices in San Francisco (naturally), along with Chicago, Los Angeles, New York and Detroit — and retains the advisory board presence of Don Graham, a member of the family that owned the Post for much of its storied history.
Beyond newspaper firms. For investors looking outside the newsprint landscape, other media giants are contending with their own problems. “It’s difficult to find a traditional media stock that is growing revenues and earnings at a steady pace,” says D.J. Shaughnessy, senior vice president and portfolio manager at F.L.Putnam Investment Management Co. and based in Portland, Maine.
This breaks down to the age-old problem of supply and demand as spied in the internet’s funhouse mirror. “Consumers want more content, packaged in easily digestible and downloadable formats, delivered on demand,” Shaughnessy says. “At the same time, they have become more selective about what they are willing to pay for that content.”
This summarizes the dilemma facing cable companies, and those producing bountiful cable content. Last August, shares of Walt Disney Co. (DIS) fell 15 percent. And a one-week tumble battered Viacom (VIA, VIAB) — the home of cable channels MTV, Comedy Central, BET and Nickelodeon — by more than 17 percent.
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Since mid-June last year, VIAB is off by 38 percent (trading at $41 per share) and while DIS has fared better, Mickey Mouse still lacks pep in his step (off 11 percent, trading at $98).
Cable TV bills can soar into the hundreds of dollars per month; a streaming subscription to Netflix (NFLX) maxes out at $11.99 — and that’s if you pick the option that allows you to stream on four different screens.
Yet even Netflix has its woes as shareholders fret about a stagnating subscriber base and potential customer revolt over announced price hikes. After a rock star showing in 2015 — its stock shooting up 143 percent — NFLX is off this year by 18 percent, trading just shy of $94 per share.
Innovation will impact the marketplace. All of this could signal that the battle for screen supremacy is not so much decided in favor of Netflix and Amazon, but remains very much in the air as their cable competitors chase down the next wave of tech transformation.
“Cable companies may be losing video subscribers but they are making up for it with profitable internet service and connectivity,” Barberich says. “In the cable industry I think we’ll see further diversification of offerings into the connected home and connected cars — and all of these will be very profitable.”
With all that expected change, what is media anymore? Is it social media, for example? If so then Facebook — which depends on advertising, just like any newspaper or cable channel — has carved a self-styled niche.
“Facebook has shown explosive growth in mobile advertising, with spending increasing 73.6 percent year-to-year in 2015,” Shaughnessy says. “Digital and mobile platforms will continue to dominate advertising spending and pressure traditional print and network ad spending.”
To that end, he produces a chart from the Newspaper Association of America that measures newsprint advertising going all the way back to 1965. The statistics are enough to give Clark Kent a dose of deadline kryptonite. After peaking in 2000 — just before the invasion of the dot-coms — ad revenue now squats at $17.3 billion: a level not seen since 1982.
Meanwhile, the ratio of print-to-digital ad revenue for newspapers has morphed from 45:1 (2003) to less than 5:1 (2014), according to the Pew Research Center for Journalism & Media.
If it hasn’t already arrived, Barberich sees a day when “newspaper companies begin to think of themselves as mobile companies with a unique product called a newspaper or magazine.”
And so the media world turns on its head — even as the front page gives way to the splash page, and the fable of cable to the dream of stream.
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“I think we will see print used more frequently as a direct marketing tool,” Barberich says, “to drive mobile subscriptions and cross selling of products.”
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Media Businesses Aim to be Tech Firms originally appeared on usnews.com
