Google and Facebook’s share prices have recovered to pre-coronavirus crisis levels, suggesting fears over their advertising revenues are receding.
But news publishers that compete with the tech giants for ad money are still struggling, with local media companies appearing particularly vulnerable, analysis by Press Gazette has found (see chart below).
Multiple factors play a role in share price movements, but the contrasting fortunes of the tech firms and the ad-reliant news businesses will stoke fears that the Duopoly could increase their dominance of the advertising market.
Facebook’s share price hit an all-time high last week after it launched a new feature, Shops, allowing businesses to sell through its website or app. The company expects Shops – which will also be available through Facebook-owned Instagram – to pull in more ad revenues from businesses.
Alphabet, the owner of Google and Youtube, has seen its share price rise to early-January levels. The firm is still down from mid-February – when it hit an all-time high – but its recovery means the company’s value has returned to pre-coronavirus crisis levels.
In contrast, American firm Gannett – which publishes hundreds of local newspapers across the US and owns Newsquest in Britain – and Reach in the UK – which owns more than 100 regional newspapers and nationals including the Mirror and Express titles – have seen little sign of recovery on the stock market.
Gannett’s market capitalisation, calculated using public US data by Ycharts, has fallen to around £157m – around a fifth of its value at the end of 2019. In the same period, Reach’s market value has nearly halved from £408m to £222m.
As the chart below shows, major news publishers that have large subscription businesses – and are therefore less reliant on the advertising market – have fared better.
News Corp – which owns subscription-heavy newspapers like the Times and Wall Street Journal, as well as several information firms under its Dow Jones brand – and DMGT suffered less dramatic falls on the market and are beginning to recover.
And the New York Times Company, which recently reported record subscriber growth, has grown its value since the end of last year.
The chart below, which is logarithmic to show relative changes, shows how Google and Facebook market capitalisations (converted into £) have recovered to late 2019 levels, in sharp contrast to Gannett and Reach.