The newspaper publishing industry continues to defy the experts as many of the largest newspapers in the country are seeing significant growth in revenue, while failing newspapers are being bought and made profitable again. But perhaps the most perplexing fact about the newspaper publishing industry is that it is attracting investors such as Warren Buffett and Amazon.com CEO Jeff Bezos. Why are all types of investors so interested in putting money into newspaper stocks? The reasons that investors are buying into newspapers may be surprising, but the results are speaking for themselves.
Newspapers Are Shedding Weight
According to Zacks.com, newspapers have started to get with the times and are shedding business divisions and operations that have nothing to do with reporting the news. While the editorial staffs of many major newspapers are hiring a significant number of people, the accounting departments of major newspapers are getting outsourced and eliminated.
Investors feel comfortable with businesses that focus on their core competency and that is one reason why newspapers are becoming popular with investors. Now that newspapers have identified the need to get more efficient, investors are seeing returns that are making newspapers worth looking into.
Newspapers Are Proving To Be Resilient
In 2009, Poynter.org published an article that showed how many of the major newspaper stocks had tripled in value during the first three months of the year. This is significant because 2009 was the first year after the Great Recession and not many stocks were showing gains during that period.
Newspaper stocks, throughout their history, have proven to be extremely resilient. That was true 40 years ago and it is still true today. Investors have a soft spot for newspapers and when the publishing industry shows that it can still generate a profit, then it is relatively easy to find investors to help bring in the capital that newspapers need to survive.
Newspapers Are Attracting Big Names
As we mentioned at the start of this discussion, names such as Warren Buffett and Jeff Bezos are buying up newspapers and big names always attract a crowd. But what makes this particular run on buying newspapers interesting is the amount of money being spent and the number of newspapers being bought.
Warren Buffett is a man who gives investing advice to some of the top financial minds in the world. Buffett spend $344 million to buy 28 daily newspapers that covered markets all over the United States and claims that, in the process, he added $350 million in revenue to his portfolio. When Warren Buffett makes a profit claim, there will be a long line of investors listening.
It is difficult for people outside the publishing industry to understand why so many investors are putting hundreds of millions of dollars into the newspaper industry. It is also hard for these people to understand how newspaper stocks can experience three-fold growth in a time when the rest of the world is recovering from the Great Recession. But to the investors, the lure of buying into newspapers is strong and, as long as newspapers continue to show positive results, the investors will keep on buying.