The Australian Media: Big Losses, Big Potential Gain.
The trend of consumers shifting away from print media to online is unstoppable.
Take these two headlines that caught our eye last week:
‘”Newsweek” to end print edition in December’ — USA Today
‘Guardian “seriously discussing” end to print edition’ — Telegraph
Former leading US news magazine Newsweek has decided to stop issuing a print edition in December. And it’s arguable whether the 80-year old institution will survive the change.
Newsweek’s circulation has more than halved over the past 10 years. It has dropped from four million to just 1.5 million today.
In the UK, one of the leading national daily newspapers, The Guardian, looks set to move to an online-only business model too.
This isn’t surprising. The Guardian’s daily circulation has halved over the past 10 years. The Guardian’s parent company made a multi-million pound loss last year. If you know anything about the UK newspaper industry, you’ll know there are 11 national daily newspapers…so there’s a lot of competition.
And back in our broking days, only the old timers bothered fingering through the rag. Most of the brokers used online news services to keep up to date with the latest events. And that’s the thing, even the best and most efficient newspaper business can only ever report yesterday’s news.
That puts it at a big disadvantage to online news services, most of which are free…including the free news sites run by the daily newspapers. Talk about cannibalising their own business.
But it’s not just the print media in trouble. TV media is in trouble too.
The Nine network was within minutes of going bust last week before financial backers hatched a deal. It was close to going bust because the company is a loss-making business.
The same goes for Ten Network Holdings [ASX: TEN]. Last week the company reported a $12.9 million loss, causing the stock price to drop following falls earlier in the month.
Bottom line: across the board, the media landscape is changing fast. And so far the traditional firms haven’t been able to move quick enough to avoid trouble.
But at some point the industry will realign. It will see new players emerge while older companies disappear or make big changes. We think we have just the right stock in the Australian Small-Cap Investigator portfolio to capitalise on this trend.
There’s no telling when the change will happen, but we’re prepared to bet as the National Broadband Network rolls out this game-changing event draws closer and closer.
Editor, Money Morning
This article is contributed by Money Morning. Click Here to Subscribe to their free newsletter.