- Get dividend stock recommendations from our dividend portfolio
- Learn how to build positions at the DRIP Investing page
- See how dividends can fit into your passive income strategy
A Chance for an Up Bet
Posted on | March 18, 2013 | Comments Off
If you have at long last yielded to one of Cantor’s UK spread betting offers, here’s a tip you could use. The newspaper industry is in turmoil due to the rise of internet use accompanied by the proliferation of mobile devices. If a newspaper publisher is to thrive, it must be a leader in niche markets and diversify its holdings.
The McClatchy Company is the third-largest newspaper publisher in the United States, publishing 30 daily local newspapers in the fastest-growing markets in the country. It was established in 1857 by James McClatchy, who fled the Irish potato famine, tried his hand at gold mining and then founded the newspaper, The Bee, in Sacramento, where the company is now headquartered. The Bee began a tradition of liberalism that included environmentalism and abolitionism, which McClatchy’s son, Charles Kenny, continued, and which remains in effect to this day. “Liberal” is an emotive word in the United States, and such people prefer the term, “progressive.”
McClatchy has minority stakes in a diverse selection of internet companies, including HomeFinder.com, Apartments.com, Cars.com, and Careerbuilder.com, the largest online employment website in the country. It has a policy of no redundancies. Its journalism has won 13 Pulitzer Prizes. While publicly-traded, most stock is held by the McClatchy family, which makes it more attractive.
In 2006, McClatchy purchased Knight Ridder for $4.5bn, which briefly made it the second-largest US newspaper publisher. Knight Ridder dated back to 1892 and won 84 Pulitzer Prizes. Chuck Richard, an analyst for the Outsell Inc research company, said that it was a case of a dolphin swallowing a small whale. McClatchy sold off a dozen of Knight Ridder’s titles, as its long-standing strategy is to own newspapers in growing markets where there is no direct daily print competition and it also needed to offset the cost of the purchase.
In February, 2012, cost cutting by McClatchy offset slumping advertising revenue, a common problem for publishers since 2006. Later in the year, the company’s third quarter results showed that advertising revenue had fallen by 5.4 percent from the year before and circulation revenue was down by two percent. Digital advertising revenue, however, rose 2.7 percent, and now represents 22.9 percent of all advertising revenue. Print and digital advertising revenue had, meanwhile, fallen at the New York Times. McClatchy made $5.1 million of profit, while the Grey Lady managed only $2.28 million. McClatchy’s president and CEO, Pat Talamantes, said the company was “making progress in an uncertain economy,” and that he was particularly pleased that digital advertising revenue was growing.
This year, five McClatchy newspapers went the way of The Times and Sunday Times in the United Kingdom and introduced subscription packages, which Talamantes said would have “a more significant impact” by the end of 2012. The share price of McClatchy has been rising for a month or two. When US markets tanked as a whole, McClatchy’s share price was firm.
McClatchy is fundamentally solid and has a diverse platform of products, both traditional and digital. It has a strong foothold in niche communities and a number of lucrative websites. Its share price rose 58 percent between August and October, 2012 and was at a 52-week high in November of that year. If you choose your moment well, it would be a good up bet.