These are curious days for the news business.
President-elect Donald Trump this week took to his Twitter account to call CNN’s Jeff Zeleny a “bad reporter,” alleging the network should have found evidence that he had suffered from voter fraud.
Trump has spent the weeks since the election attacking “the media,” charging that he certainly was a victim of “serious bias – big problem.” Others, however, contend the former reality-TV star received a big boost from hours and hours of free media that benefited both the candidate and the media industry.
While Trump’s jabs at The New York Times (NYT) have tempered since he met with top editors on Nov. 22, the newspaper company’s stock price has been on a torrid rebound, more than 14% since the Nov. 8 election, helping to pare its 2016 decline to 4.6%.
Shares of other newspaper and TV-station groups have similarly soared since Trump defeated Hillary Clinton in an outcome that surprised most forecasters.
Gannett (GCI) , the country’s largest newspaper publisher and owner of USA Today, has gained 12% since the election, while Lee Enterprises (LEE) , a chain of mostly small city publications that’s based in Davenport, Iowa, has surged nearly 33%. Tronc (TRNC) , owner of the Los Angeles Times and Chicago Tribune, among other newspapers, has added nearly 14%.
Despite the generally glum picture for print advertising sales, newspaper stocks appear to be benefiting from predictions of deregulation under a Trump presidency and the prospect that a stronger economy could bolster advertising sales enough to moderate the broad-based multiyear decline in print advertising. The benchmark S&P 500 has added roughly 2.5% since the election.
“The stock market is telling us that there’s an increased confidence in the U.S. economy,” said Michael Kupinski, St. Louis-based research director at Noble Financial Capital Markets. “There’s a lot of speculation that deregulation, the prospect of lower taxes, of having an FCC that is more de-regulatory, could benefit newspaper and TV stocks.”
Specifically, Kupinski said, investors are betting that the the Federal Communications Commission will make it easier for TV stations and newspapers in the same market to own each other. Likewise, that TV station groups led by Sinclair Broadcast Group (SBGI) will be successful in their push for the FCC to lift a cap on national coverage above its current 39% of U.S. households.
Sinclair shares are up more than 24% since Election Day.
Newspaper publishers, meanwhile, are faced with two countervailing forces. On one hand, advertising sales from print publications continue to fall, extending a more than 10-year decline. On the other hand, interest in the news business is better than ever. According to ComScore, visitors to many of the country’s top news sites have surged over the past two years.
Unique visitors to The New York Times have jumped 26% over the past two years; USA Today visitors are up 6%, NBC News Digital has gained 16%, and CBS News has climbed 21%.
“While the newspaper business model has been in secular decline for years, the news business itself is in many ways in robust health,” Barclays media analyst Kannan Venkateshwar wrote in Nov. 23 investor note. “With President-elect Mr. Trump continuing to focus on The New York Times in his Twitter comment, this interest level could sustain for some time.”
The question for publishers is how to translate increased attention to the news with a better picture for advertising sales.
Kupinski pointed out that while overall retail print ad sales at U.S. newspapers stumbled a chilling 19.9% in 2015, the decline has tapered somewhat this year, down between 8% and 12%. That’s progress of a sort.
As for digital ad sales, The New York Times expects it will reach a gain of 6% for 2016, helping to pare an overall drop of 8% for the year. But digital ad sales at the company jumped 21% in the third quarter, and Venkateshwar in a note on the publisher said that “recently we have seen acceleration both at the industry level and the company level.”
Circulation sales also are bolstering the outlook for the Times along with Jeff Bezos’ Washington Post and The Boston Globe. At $15 per month, a subscription to NYTimes.com costs the same as Time Warner‘s (TWX) HBO Now, the preeminent entertainment network. Digital subscriber growth at the Times is forecast to reach 30% in 2016, more than offsetting print’s secular decline.
Newspaper stocks, Kupinski argued, will be particularly sensitive to economic indicators and regulation policy. Lee and McClatchy (MNI) , he added, also have benefited from reducing debt loads that had hampered their abilities to invest in the digital sides of their businesses. (McClatchy shares have seesawed since the election, adding $1 on Friday to turn positive with a 6.5% gain.)
“The economy growing at a faster clip is very important to a newspaper industry trying to get more growth from digital,” Kupinski said. “If print advertising declines would moderate and digital continues to grow in the high single digits [as a percentage], you could see the industry reach an inflection point where total revenue growth for newspapers actually rises.”
For newspaper publishers that would be something to cheer about — even if Donald Trump calls them biased.