OCR Text |
Show NEWSPAPERS EMBRACING NEW TECHNOLOGY The more efficient large publishers of newspapers are fast adapting to the advanced ad-vanced telecommunications age. They are diversifying their businesses into radio and television broadcasting, cable TV, and supplying information from their own data bases via computer terminals. In addition, these well-capitalized well-capitalized and publicly-owned chains have acquired computers to lay out pages, photocomposition equipment, and laser-produced printing plates. It is in the area of information retrieval, however, (the supplying of all kinds of data from company-owned software) where demand is expected to accelerate over the next several years. This sophisticated two-way, interactive, interac-tive, call-up television service and the transmission of information via a home personal computer system are two dynamic sectors holding great potential for increasing the revenues of the newspaper publishers. The Research Department of Bab-son's Bab-son's Reports expects the expansion of the communications base by newspapers to result in a number of mergers and acquisitions of smaller newspaper publishers who do not have the resources to compete with the entry into the electronic and video media. Despite the deepening business recession, reces-sion, the stocks of the leading newspaper publishers, down from their highs, now appear to be especially attractive at-tractive for purchase. ADVERTISING AND REVENUES RISING Newspapers are enjoying increasing advertising revenues stemming from both rate hikes and expanded linage. Some 29 percent of the total expenditures expen-ditures for advertising in the United States is received by newspaper. Publishers operating the only newspaper in a local area are able to raise their advertising rates almost at will. Large chains are continually on the lookout for profitable small-town papers to add to their bases because of this. Total newspaper advertising revenues are expected to rise to $24 billion by 1985, up considerably from the $17.5 billion recorded in 1980. Likewise, a marked advance is forecast for the growth in net revenues for the industry from a little over an estimated $19 billion last year to $27-$28 billion by 1985. This is a commendable annual average growth rate to 10 percent. per-cent. OTHER EFFORTS TO PROMOTE GROWTH Besides acquiring other papers and entering new allied communication fields, the big publishers of daily and Sunday editions have revamped their papers or are in the process of doing it. In many instances, both the appearance ap-pearance and content have been improved im-proved through the use of more feature-oriented feature-oriented articles and color photographs. New attractive special sections have been added andor enlarged to whet reader interest and loyalty. Longer range, some large U.S. newspaper publishers are increasing their investments in-vestments in international publishing operations. In summary, today's modern city newspaper is a far cry from the provincial provin-cial limited, one-product business of a decade ago. Publishers have embraced fully the communications explosion and are prepared to compete aggressively in the many widening submarkets. RECOMMENDATIONS The Research Department of Bab-son's Bab-son's Reports is currently advising the purchase of the stock of two large newspaper publishers for investment. These are Dow Jones & Company, known for its Wall Street Journal and Barron's, and Knight-Ridder, one of the largest newspaper chains in the country coun-try and publisher of the nenowned Journal Jour-nal of Commerce. Purchase the Dow Jones conservative-grade common stock for its promising growth potential near 46 (NYSE), buy limit 52, PE 20, yield 2.8 percent ; and the conservative-grade conservative-grade common of Knight-Ridder near 29 (NYSE), buy limit 34, PE 9, yield 3.2 percent, also for growth |