Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

News Corp (NWSA), Gannett Co., Inc. (GCI): Do Media Companies Get Better by Ditching Print?

News Corp (NASDAQ:NWSA) recently spun off its video assets as

Twenty-First Century Fox Inc (NASDAQ:FOXA). That continues the trend of companies divesting their struggling print businesses to focus more heavily on growing assets. Is it the right move?
Gannett Co., Inc. (NYSE:GCI)

A dying business

Newspapers, magazines, and books are all in decline because of digital media. News Corp (NASDAQ:NWSA)’s move to free its cable, television, and movie assets from its print businesses was, thus, well received. Investors pushed the new company’s shares up a meager 2%, but that left the company with a valuation in excess of media industry leader The Walt Disney Company (NYSE:DIS), according to Reuters’ analysis.

Sum of the parts

The pure play Twenty-First Century Fox Inc (NASDAQ:FOXA) has notable assets, so it probably deserves a rich valuation. For example, it owns Fox News and regional sports networks that would be hard to replicate and succeed side by side with sports giant ESPN. Its movie and television library is also quite large at a time when such content is increasingly in demand online. And it owns cable and pay television assets.

Since the break only just occurred, there’s no clean numbers to use as a comparison tool. However, it’s hard to believe that the company is worth more than The Walt Disney Company (NYSE:DIS). Investors should probably watch the shares for a pullback after the euphoria of the break wears off.

News Corp (NASDAQ:NWSA), meanwhile, is left with a large and challenged newspaper division. That includes the iconic Wall Street Journal and its loyal business customer base. In fact, the Journal is one of the few papers that’s been able to charge for content and get away with it. It also has a number of valuable assets in foreign markets with a digital angle to them, like online real estate ads.

With investors focusing on Twenty-First Century’s solid video position, investors might be interested in News Corp (NASDAQ:NWSA). Shares traded lower after the break and could continue to do so as investors view it as just a print company. However, based on the assets it owns, being tagged as a print company isn’t exactly appropriate.

It’s how you do it

The Walt Disney Company (NYSE:DIS), notably, provides an interesting comparison to consider. The company’s strength is clearly its video content. That led it to sell its Hyperion book business. However, it kept control of its kids books. In effect it only jettisoned its adult books. While this transaction probably got overlooked by many investors, it shows that the right printed media has value in the new world.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.