Newspapers are undervalued by Wall Street, according to Jim Chisolm, principal of IMedia. He made the comments to an audience at NAA’s 2009 MediaXChange.
Chisolm pointed out that share prices for Gannet have fallen by 90% , with the market valuation so low the company is “worth less than one of their printing plants.”
“Its not real. This is not a measure of economic value. Our businesses are worth more than this,” he said.
While he attributed most of the blame for low share valuations ultimately to economic conditions created by the banking community, he also had suggestions for publishers from a study IMedia recently completed for the NAA on future business models. He summarised several of his theories:
* Analysts underestimate progress the newspaper industry has made in digital publishing. “The key is whether newspapers can grow digital faster than losses in print advertising in real terms.”
* Larger papers will do worse than smaller ones because the sense of community is being lost. (Quote of the day: “How do you buy a small local newspaper? You buy a big one and wait five years.”)
*Internet savvy markets have experienced the greatest loss of market share. However, newspapers are regaining online display and classified market share because of heavy traffic. They need to “catch up” in search.
* U.S. papers have the lowest cover prices in the world when compared with GNP and should raise rates to keep up with inflation. “It a sign of confidence in ourselves,” he said, also concluding that raising prices 1% could ad 12% to newspaper valuation without damaging the brand.
* In every downturn newspapers have decreased sales people and permanently lost customers as a result. “I don’t know a newspaper on earth that has enough sales people,” he said, pointing out that market share in terms of numbers of customers has decreased by 50% over the last few years.
* Mobile will rapidly beat current forecasts of delivering 15 to 20% of all digital by 2017. ”We believe these forecasts are pessimistic and mobile is going to surpass fixed internet” in that period of time.
*Newspapers will begin offering subscriptions on mobile, saying “you can have it in print, or we’ll give you a thingie and you can have it on that.”
*The French newspaper Les Echos already publishes ten different digital editions, including Kindles, e-books and phones.
* NYTimes grew mobile page views from 500,000 in February 2007 to 50 million last December.
* Mobile search with targeted locational marketing will be a giant advertising market.
* Google and Yahoo are investing in locational search. “ They are after your money, they are the devil, and you should avoid partnering with them,” he said, a warning to newspapers now partnering with Yahoo on locational search and with Google on reselling AdWords.
* New business models will include side businesses and multiple revenue streams. He pointed out the London Telegraph, which acquired a database of 3 million of the richest people; converted 300,000 to paid and now derives 11% of revenues from exploiting the database.
* Le Monde in France produces 20 products year based on the Le Monde brand “When you go into a retail store you see a Le Monde product.”
*Austria you can buy your home electricity through the newspaper company, and save more money on electricity than the cost of the newspaper
Chisolm reserved his most vicious criticism for the banks creating the economic crisis and unrealistically low share evaluations. “Bankers are bastards, ” he said. “If there are any bankers in the room you need to remember that you’re the problem, not us.”
Posted by Alisa Cromer |
03/13/09 | No Comments »
