In March last year, at the height of the global Covid-19 panic, company share prices across the world plummeted.
In the US and UK media sectors, news publishers including News Corp, the New York Times, Reach and Gannett were among the worst hit (as documented by Press Gazette at the time).
Just over 18 months on, and Press Gazette analysis today shows how Britain and America’s largest listed consumer publishers have staged a full comeback on the stock market – and are now worth more than they were at the end of 2019.
Our research focused on the market capitalisations (or total values) of the New York Times Company, News Corp and Gannett in the US, and DMGT, Future and Reach in the UK.
The combined value of these six companies was about $19.4bn (£14bn) at the end of 2019, according to our calculations. Three months later, as Covid-19 became a global crisis, they were worth $14.3bn collectively, down 26%.
Today, they have bounced back to claim a combined value of $34.6bn, up $15.2bn (or 78%) from the end of 2019.
Pandemic has ‘reinforcing effect’ on media company values
The Covid-19 crisis is not over. But this research suggests that, after a tough period for the advertising market and print sales, the world’s investors have renewed trust in the news business.
Douglas McCabe, the chief executive of media research firm Enders Analysis, believes that the pandemic has had a “reinforcing effect” on publishers.
“One of the effects of the pandemic is that it’s accelerated structural change that’s been going on for some time,” he told Press Gazette.
“The transition from physical retail to online retail, the transition of offline media to online media... all of those structural changes were rapidly accelerated. In actual fact, about five years of change – from the perspective of business planning – was probably in effect executed overnight due to the pandemic.
“I think that had an upside effect. I think it gave some people confidence in the fundamentals of media businesses in a way that they were still worried about them at the end of 2019 and early 2020. Which is to say that the transition was expected to take a long time, and it was to be very expensive.
“But suddenly we’re in this world where businesses have had to transition so much more quickly to strong online propositions. Indeed, that’s exactly what’s happened. And businesses have, as a result, moved into much stronger online-first organisational structures... That is a much stronger investment thesis for not all investors, but most investors.
“And so the result of that is they get interested in content fundamentals. That’s why online newspapers – or newspapers with big online presences – and some magazine portfolios like Future for example, but also others, look like better propositions now than they perhaps were two years ago.”
McCabe also suggested that media companies benefited from increased digital news traffic and resultant online advertising increases.
He said: “There was a virtuous circle effect: as traffic increased, that particular traffic was also more likely to be spending money online and therefore was particularly appealing to advertisers.”
McCabe added: “All three of these things have had a reinforcing effect on content media generally, and probably news media in particular. Because the importance of trusted, quality news just grew in a lot of people’s minds over the last 18 months.”
Zooming into publisher fortunes
Looking at the US companies specifically, Gannett – which publishes hundreds of newspapers in America including USA Today and owns local press group Newsquest in the UK – suffered the most dramatic fall in spring 2020.
Its market cap dropped from $800m at the beginning of 2020 to less than $100m in April that year. Today, it is worth around $840m, having fallen from above $900m in September.
News Corp’s market cap fell from above $8bn at the end of 2019 to around $5bn in the early months of the pandemic. The company, which owns major news brands in the US, UK and Australia, is now worth around $14bn.
Of the six publishers we looked at, the New York Times was least badly hit by coronavirus in the spring of 2020. Already possessing a strong digital subscription business, the Times was less dependent on advertising and single-copy newspaper sales than many of its peers.
The NYT started 2020 with a market cap of around $5bn, and – despite a brief dip in March and April last year – has grown steadily since. It is now valued by the stock market at more than $9bn.
In the UK, Reach – which publishes hundreds of local newspapers as well as the Mirror, Express and Star national titles – saw its market cap fall from £400m at the start to 2020 to less than £200m in the summer. But the news giant has since recovered and is now valued by the market at more than £1bn.
Like the New York Times in America, DMGT – publisher of the Mail titles, the i and Metro – did not suffer as badly as some of its peers.
Its market cap dropped from £1.7bn at the end of 2019 to around £1.4bn in the early months of the year. But the company – which may soon be taken private by majority shareholder Lord Rothermere – is now valued by the market at more than £2bn.
British magazine publisher Future is the stand-out performer in our analysis. It started 2020 with a value of £1.4bn, fell to below £1bn, and is now worth nearly £4.5bn. Its share price has been buoyed by a series of acquisitions and growing profits.
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