Debate Politics Forums - View Single Post - Ny Times Hits 10-year Low On Downgrade

donsutherland1 · 07-11-08, 11:33 PM

The printed newspaper sector is going through a secular decline due to the rise of electronic technology (including the Internet), changing lifestyles and habits with respect to seeking news, increased emphasis on customized news that fits one's interests, etc. Indeed, there is an inherent clash between the information/news content a reasonably informed public needs and the news one desires based on one's interests. The Internet with its specialty sites, blogs, etc., has tilted the balance toward the latter. However, significant political, international, and economic events have been "pushing back" in the other direction. Just as is the case with the business cycle where conditions alternate between booms and recessions, there likely will be a periodic shift in demand for the news one needs and the news one seeks based on interests. The Internet coupled with the journalistic caliber of leading newspapers might ultimately help them cater to both types of customer demand. For now, the situation is still fluid.

There is also much greater competition than in the past, as the Internet has eliminated competitive barriers and is now being harnessed by a huge and rapidly growing population of competitors, including newspapers, TV/radio stations, blogs, etc. The Internet has some large sites. It is also very dynamic and highly fragmented.

Clearly, The New York Times has experienced some transitional difficulties with the magnitude of industry change that has occurred and is ongoing. It is presently having some difficulty in transforming its assets into the value added necessary to generate new streams of cashflow in this environment. That's why the newspaper's stock was described as "expensive" relative to its peers. Its price-earnings ratio was out of line with industry norms given the nature and prospects of its current operations.

Nevertheless, whatever one thinks of its editorial page, the fact remains that the newspaper still possesses some enormous strengths:

1) Its name carries weight worldwide.
2) Its journalists are widely viewed as credible.
3) Its journalists possess access to key industry and government sources.
4) Its content is substantive, and much more so than the "lighter" fare one finds on many blogs and TV stations.

Worldwide, The New York Times, Times of London, The Globe and Mail, The Washington Post, etc., are viewed as authoritative journalistic sources precisely because of some of the above attributes I cited. However, in the industry as it presently exists, journalistic authority is necessary but not sufficient to achieve the competitive success required to command high price-earnings multiples and high stock prices. Expected persistent growth prospects that are above the industry norm are necessary to build and sustain a higher price-earnings multiple.

The current business models employed by most newspapers do not yet provide such prospects for the newspaper industry. But opportunities are present and the world's leading newspapers, of which The New York Times is one, have some pretty significant strengths. For the longer-term, one should not write them off.

07-11-08, 11:33 PM	#9 (permalink)
donsutherland1 Moderator Mod team member Join Date: Oct 2007 Last Online: Today 07:47 AM Location: New York Posts: 2,213 Thanks: 694 Thanked 1,313 Times in 759 Posts Lean: Centrist Gender: Awards:	Re: Ny Times Hits 10-year Low On Downgrade The printed newspaper sector is going through a secular decline due to the rise of electronic technology (including the Internet), changing lifestyles and habits with respect to seeking news, increased emphasis on customized news that fits one's interests, etc. Indeed, there is an inherent clash between the information/news content a reasonably informed public needs and the news one desires based on one's interests. The Internet with its specialty sites, blogs, etc., has tilted the balance toward the latter. However, significant political, international, and economic events have been "pushing back" in the other direction. Just as is the case with the business cycle where conditions alternate between booms and recessions, there likely will be a periodic shift in demand for the news one needs and the news one seeks based on interests. The Internet coupled with the journalistic caliber of leading newspapers might ultimately help them cater to both types of customer demand. For now, the situation is still fluid. There is also much greater competition than in the past, as the Internet has eliminated competitive barriers and is now being harnessed by a huge and rapidly growing population of competitors, including newspapers, TV/radio stations, blogs, etc. The Internet has some large sites. It is also very dynamic and highly fragmented. Clearly, The New York Times has experienced some transitional difficulties with the magnitude of industry change that has occurred and is ongoing. It is presently having some difficulty in transforming its assets into the value added necessary to generate new streams of cashflow in this environment. That's why the newspaper's stock was described as "expensive" relative to its peers. Its price-earnings ratio was out of line with industry norms given the nature and prospects of its current operations. Nevertheless, whatever one thinks of its editorial page, the fact remains that the newspaper still possesses some enormous strengths: 1) Its name carries weight worldwide. 2) Its journalists are widely viewed as credible. 3) Its journalists possess access to key industry and government sources. 4) Its content is substantive, and much more so than the "lighter" fare one finds on many blogs and TV stations. Worldwide, The New York Times, Times of London, The Globe and Mail, The Washington Post, etc., are viewed as authoritative journalistic sources precisely because of some of the above attributes I cited. However, in the industry as it presently exists, journalistic authority is necessary but not sufficient to achieve the competitive success required to command high price-earnings multiples and high stock prices. Expected persistent growth prospects that are above the industry norm are necessary to build and sustain a higher price-earnings multiple. The current business models employed by most newspapers do not yet provide such prospects for the newspaper industry. But opportunities are present and the world's leading newspapers, of which The New York Times is one, have some pretty significant strengths. For the longer-term, one should not write them off.