Over the past two years, several media companies that have both print and broadcast properties have separated their newspapers and other print products into separate publishing companies to isolate this struggling industry from their most popular broadcast stations. more profitable. And this strategy has largely paid off.
Gannett Co. Inc., Tribune Company and EW Scripps Co., which together own more than 100 newspapers and more than 70 television stations, all decided in 2014 or 2015 to split their printing properties into separate companies. A spillover analysis shows that original company broadcast components (which also retained many digital properties) significantly outperformed their publishing counterparts in terms of operating profit margins.
In 2014, before the split of its publishing properties, Gannett had an operating profit margin of 39%. As a result of the 2015 spin-off, Gannett’s broadcast arm Tegna had a similar operating profit margin of 37% – nearly three times that of its publishing brother (13%), which retained the name “Gannett Company”. (Operating profit, often referred to as “operating profit before depreciation and amortization,” is the portion of every dollar in sales that accumulates as profit, before paying taxes and investors, and to the exclusion of figures which do not relate to typical company operations.)
The spreads were even larger for Tribune, which posted an operating profit margin of 35% in 2013, before its split. After the spin-off, in 2014, their broadcasting company (Tribune Media Company) had a similar margin of 31%, more than four times that of its publishing sister, Tribune Publishing (recently renamed trunk).
The story of EW Scripps Co. is a bit more complex, in part because the successor to the broadcast merger-related costs were four times those of the editorial successor. In 2014, the company owned 14 dailies and 21 TV channels and had an operating profit margin of 13%. The following year, it merged with Journal Communications, which owned the Milwaukee Journal Sentinel and 14 television stations, and spun the resulting 15 dailies under the Journal Media Group name. In 2015, Journal Media Group had a lower profit margin (7%) than EW Scripps Co. before the spin-off, but higher than that of its post-spin-off broadcast successor (4%). (In 2016, Journal Media Group was acquired by Gannett.)
Comparisons between companies are never exact, and in this case the three spin-offs were structured such that each of the new printing companies had a significantly different mix of debt and equity. Yet these results reflect broader trends in the newspaper and audiovisual information industries. As detailed in the 2016 State of the News Media report, as newspaper advertising revenues decline, circulation revenues increase – some of which is linked to increased retransmission fees as well as regular advertising revenue at the television.
This drop in income has had some impact on journalistic resources. In particular, the newspaper editorial staff has steadily declined. Between 2007 and 2014, full-time daily newsroom staff, according to estimates from the American Society of News Editors, fell from 52,600 to 32,900, a drop of 37%.
TV news, on the other hand, have multiplied. Staff at local TV news stations grew from 24,500 to 27,600 between 2007 and 2014, a 13% increase, according to the Radio Television Digital News Association.
Note: This post originally included information comparing the stock prices of the companies involved, which has been removed.