Earnings Season

News organisations bounce back from the effects of Covid-19


According to Press Gazette analysis of 16 publicly-listed news companies, all have now recovered from the worst effects of the pandemic which impacted them between March and May this year. Nine months later, several are now in fact more valuable than they were before the Covid-19 crisis began.

The takeaways:
  • All 16 companies – including News Corp, the New York Times, Gannett, Thomson Reuters and DMGT – have made a positive recovery from the worst point of the pandemic at the end of March, with their market values up 40% on average.
  • Seven of the companies are now valued higher than they were at the end of 2019.
  • Investors are confident of a full recovery for many of these companies, thanks to budget cuts improving profitability for some, but also improved performance and business strategies.

A welcome recovery: Research earlier in the year found the same 16 companies had lost around $20 billion in value between February and mid-April.

  • This was attributed to the collapse of the advertising market and economic uncertainty, as well as uncertainties around furlough and job retention schemes.
  • Although the ad market hasn’t recovered, many of these businesses have benefited from subscription booms
The highlights:
  • The New York Times’ market cap was $5.3 billion at the end of 2019. The strength of its subscription business saved it from a sharp tumble in the spring, meaning it ended March at $5.1 billion. The publisher is currently valued at $6.9 billion, up 34% since the start of the crisis.
  • News Corp’s stock market value dropped from $8.5 billion to $5.3 billion between December 2019 and March 2020, but has since doubled in size to overtake its 2019 value at $10.7 billion. 
  • Reach PLC, Thomson Reuters, S&P Global, Tech Target and Global Data have all also increased their market value from December 2019. 

Slower recovery for some: The other nine companies included in Press Gazette’s analysis – including ITV, Fannett, DMGT and Fox Corporation – have all now recovered from the drop they collectively saw in the spring. But none of them have yet managed to reach the same level they were at in December 2019.

What’s fuelling the bounceback?

For many of these publishers, the cycle of Covid-19 news and the US presidential election has seen audience attention and demand for trustworthy content rocket. 

  • With many brands having held off advertising spend for most of the year, there is an expectation of a pre-Christmas ad boom. Publishers, armed with these newly engaged audiences, are in a position to benefit.
  • Those with subscription strategies have benefited this year, with surges reported both at the start of the crisis and over the summer.
  • On a 12-month rolling basis, subscription revenues performed well across the whole industry, growing by 27% to reach £112.3 million ($149 million).
  • Organisations dealing in financial news and data products are among those which have made a strong recovery, as demand for this type of news has increased.

Yes but: Strong performance doesn’t tell the whole story. Many of these news publishers also took the opportunity to ‘rightsize’ and make cost cuts during the pandemic. 

  • “What you’ve ended up with is companies who are, if the ad revenues come back, are going to be starting at structurally lower cost bases. Which means more profits,” explained media analyst Mark Whittaker.
  • In the mid-to-long-term, there will also be opportunities for these publishers to make savings with office space reductions, as well as reduced travel and entertainment costs.

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