(News)Paper Wealth

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smartcat
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Topic: (News)Paper Wealth
Posted: 18/Apr/2008 at 5:15pm

Newspaper companies seem to be having a ball. Look at the profit margins of some of these companies.

FY10 Earnings estimates from Motilal Oswal -

Deccan Chronicle

Net Revenues: Rs. 1,100 crores

Net Profits: Rs. 440 crores

EPS: Rs. 17.8

P/E(x): 9

RoE: 24%

RoCE: 32%

HT Media:

Net Revenues: Rs. 1,666 crores

Net Profits: Rs. 182 crores

EPS: Rs. 7.8

P/E(x): 21

RoE: 15%

RoCE: 15%

Jagran Prakashan:

Net Revenues: Rs. 1,166 crores

Net Profits: Rs. 180 crores

EPS: Rs. 6

P/E(x): 15

RoE: 25%

RoCE: 34%

Some of the largest global companies in the newspaper field are -

Washington Post - $6.6 billion marketcap

Gannett - $6.3 billion

NY Times - $2.8 billion

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basant
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Posted: 18/Apr/2008 at 5:33pm

This 15 liner is more important then a 150 page report. Excellent comparision. The only problem is newspapers are not scalable and is dependent on a region or a city unlike something else which can be taken to different parts of the country.

Over a period of time such companies turn into cash cows rather then schreecing growth stocks.

'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

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nitin_jagtap
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Posted: 18/Apr/2008 at 6:11pm

Now which one of these will be the next washington post ...I am not thinking Buffet ..btw I wish Times of India was listed.

Newsprint price hike forces newspapers to hike ad rates
17 Apr, 2008, 0031 hrs IST, TNN

NEW DELHI : Faced with rapidly escalating newsprint (NP) prices, Indian newspaper publishers have announced significant hikes in advertising rates, doubling them in some cases, to protect margins and tide over the crisis, even as measures are on to ask the government to remove the 5% import duty on NP and to increase government advertising rates by 50%, in addition to seeking a 30% hike in normal ad rates through the industry body; Indian Newspaper Society (INS).

Edited by nitin_jagtap - 18/Apr/2008 at 6:33pm

Warm REgards
Nitin Jagtap

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shivkumar
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Posted: 18/Apr/2008 at 6:37pm

Originally posted by basant

This 15 liner is more important then a 150 page report. Excellent comparision. The only problem is newspapers are not scalable and is dependent on a region or a city unlike something else which can be taken to different parts of the country.

Over a period of time such companies turn into cash cows rather then schreecing growth stocks.

And then there is ToI which is a newspaper and PE firm rolled into one....

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Vamsee
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Posted: 18/Apr/2008 at 8:09pm

One thing need to be kept in mind.
WB himself mentioned that news papers are not bullet proof franchises any more. The reason is that Internet + multiple TV news channels have reduced the USP of news papers.
I have never purchased Washington post, but I can always read it online. Same for many indian news papers as well.
Theoretically we can say that ad revenues online would compensate for the loss of revenues in print media, but still I have not seen any news paper site which is as popular as say...rediff. So they have not been able to transfer their advantages from print to the net.
So these things need to be kept in mind before valuing news paper stocks.
Indian news paper companies were very late in recognizing the strength of Internet.

May you live in interesting times
-- Ancient Chinese Curse

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MuKeShHaRlAlKa
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Posted: 23/Apr/2008 at 6:55pm

Newspaper publishers r more of a commoditized biz. They hv to bear newsprint costs which accounts for nearly 50% of the total raw material costs. Recently newsprint prices have gone up more than 80% to $850 per tonne & is pegged to touch $1000 soon. So if advertising rates don't go up in the same manner the margins will be hit. Internet & Electronic media are eating up their businesses. Also there are many newspaper publishers. So there is intense competition.
I think it would be better to buy newsprint cos which serve to majority of the publishers.

In Cricket & Stock Markets, everyone seems to be an expert but only a few really are.

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shivkumar
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Posted: 23/Apr/2008 at 10:39pm

Originally posted by MuKeShHaRlAlKa

Also there are many newspaper publishers. So there is intense competition.

I presume you buy your newspaper from the roadside vendor who pushes a copy in front of your nose without any affinity towards any particular publication.

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MuKeShHaRlAlKa
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Posted: 06/May/2008 at 6:06pm

the following link puts forward the story :
link
the article is little towards the bottom

In Cricket & Stock Markets, everyone seems to be an expert but only a few really are.

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