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Paper's Revenge

The phenomenal growth of Google and Facebook, as well as the hold these empires exert on our ability to pay attention, means that we are witnessing a real competitive assault on traditional media companies. In many cases, this assault turns into a catastrophe.

Many newspapers and weeklies have closed in recent years, changing the information landscape. In a single year, 2017 has shown how bad this sector is: founded in 1854, the Oldham Evening ChronicleNOTE - This link will open in a new tab. ceased its activities, resulting in the newspaper's ultimate closure and the loss of some fifty jobs. The digital pure-player GawkerNOTE - This link will open in a new tab. filed for bankruptcy protection because of a lawsuit. The Alaska Dispatch NewsNOTE - This link will open in a new tab. did the same, despite the skill and resources of its new owner. At the end of November, Cumulus MediaNOTE - This link will open in a new tab., which operates 446 radio stations in 90 markets with more than 3,500 employees, suffered the same fate.

Most surprising is that new digital media is also experiencing difficulties. Thus, it was recently learned that BuzzfeedNOTE - This link will open in a new tab., one of the market leaders on the Web, missed its revenue target by more than 20%, which has led the company to set aside its plan to go public. We see the same story at Vice Media, which is expected to announce results soon, and for Mashable, whose recent sale priceNOTE - This link will open in a new tab. of $50 million USD to Ziff Davis was well below its valuation of $250 million, calculated during its last round of investment in March 2016.

Paradoxically, it is the more traditional companies that seem to be paving the way. The New York Times share price has appreciated 50% in the past year, surpassing $20 per share in October, and has since been hovering between $17 and $19. Digital revenueNOTE - This link will open in a new tab. growth and an increase in subscriptions put the New York giant in a good position. During the same period, Rupert Murdoch's News Corporation has increased in value by 40% to $16.54 USD per share.

Many people refer to Donald Trump's controversial presidency to explain this phenomenon: increased news media popularity for some, and an upsurge in infotainment platforms for others.

However this does not explain it all. After years of exploration and experimentation, is it possible that traditional platforms have finally unlocked the mystery of the digital world and found ways to turn this threat into a source of lasting value? Or, can one imagine that after the frenzy of tablets and onscreen-everything, consumers are returning to the safe values of traditional journalism?

The media industry is fascinating in many ways. Despite the tumult that places its historical players in competition with each other, it seems that traditional media is still in the race. And since many of them are listed on stock exchanges, they can be attractive investment opportunities. It is also in this way that the paper's revenge is taking place.

The author

Francis Gosselin

Francis Gosselin

President, FG8 Conseils