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The bull market in news is over. Now what?

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·12 min read
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WASHINGTON, DC - FEBRUARY 29:   U.S. President Donald Trump takes questions as Vice President Mike Pence looks on during a news conference at the James Brady Press Briefing Room at the White House February 29, 2020 in Washington, DC. Department of Health in Washington State has reported the first death in the U.S. related to the coronavirus.  (Photo by Alex Wong/Getty Images)
WASHINGTON, DC - FEBRUARY 29: U.S. President Donald Trump takes questions as Vice President Mike Pence looks on during a news conference at the James Brady Press Briefing Room at the White House February 29, 2020 in Washington, DC. Department of Health in Washington State has reported the first death in the U.S. related to the coronavirus. (Photo by Alex Wong/Getty Images)

It was a bit of a moment for me.

The scene is early February 2017 and I’m chatting with Rupert Murdoch and Peter Thiel at a reception for chess grandmaster cum anti-Putinist, Garry Kasparov, at New York City’s hoary University Club.

Murdoch, garbled mouthed, asks me how things are. I assume he means my business life and so I tell him that Yahoo Finance is humming right along. Murdoch blinks and says nothing. Then Thiel pipes up. “Well,” he says in the sort of earnest way he has, “we are in a bull market for news.”

And a lightbulb went off in my head. Thiel was right, (leaving aside that Thiel is the man who shut down Gawker, and nevermind the polarization and carnage Murdoch has inflicted on our media and society), we were in a bull market for news. And it turned out the bull had room to run too, gathering steam over subsequent years and culminating in last year’s news frenzy. But just like any mania the salad days for the news business couldn’t last forever. And in fact didn’t.

It’s pretty obvious what happened, right? Trump is gone, (for now at least), not only from the White House but off Twitter and Facebook where every one of his posts merited coverage. There was also COVID-19, huge news unto itself, but the pandemic also meant that tens of millions were cooped up with nothing to do all day but stare at CNN or Fox. George Floyd’s murder, the ensuing protests and racial and social justice stories were huge. And finally there was the election, impeachment and the insurrection. The last time all that happened in the same year, (or ever), was never.

So yes the bull market in news is over, finito, kaput. Not forever of course but for now. Cable TV news ratings were mixed in Q1, but down significantly in March as the election faded into the rearview mirror. And growth slowed at the New York Times too, (more on that in a bit.) Meanwhile media columnists are running out of things to write about, except oh-so-predictable Twitter dust-ups (like the recent one at the AP), or the weekly internecine contretemps at the New York Times, which fewer and fewer people give a flying fruit bat about.

“The downturn should’ve been widely expected,” says Ed Moya, senior market analyst with OANDA. “The media is missing Trump who was the greatest show on every network. He was captivating, whether you loved him or hated him. He provided a steady stream of interesting news developments that are impacting the country or the economy.”

And now?

“Biden and his team are doing everything they can to make Biden as boring as possible,” says New York Times media columnist Ben Smith. “Last year there really was life and death stuff going on like COVID and would our country survive. That’s gone now. Who the hell wants to stay inside and read news now anyway?” (Note that Smith said this to me while we were chatting on a bench in Central Park on a lovely afternoon this week.)

Wall Street understands all this. You need to look no further than the New York Times’ stock chart. Two years ago, I wrote about the paper’s remarkable rise from a near death experience in 2009, when the company’s stock touched $3 and change. By the time I wrote that piece in February 2019, the stock was up almost 10X to the low $30s, having climbed 10 points in just two months that year. The run continued with (NYT) spiking to $58 this January, as the stock handily outperformed the S&P 500 over the past five years. That’s over now. Today the stock trades at $43, down 17% year-to-date, while the market is up 12%.

“In February and March, our audiences declined from their historic highs last year and we saw fewer net subscription additions in the latter part of the quarter,” Times CEO Meredith Kopit Levien said on the earnings call earlier this month. “There is no doubt that the news cycles of the last five years, capped by last year's tumultuous presidential election, racial reckoning, and the COVID-19 pandemic, created unprecedented demand for Times journalism. And therefore, accelerated subscription growth.”

NEW YORK, NY - DECEMBER 24: A general view of One Times Square, located at 42nd Street and Broadway on December 24, 2019, in New York City. Also known as 1475 Broadway, the New York Times Building, the New York Times Tower, or simply as the Times Tower, One Times Square is a 25-story, 363-foot-high skyscraper, designed by Cyrus L. W. Eidlitz. (Photo by Paul Rovere/Getty Images)
NEW YORK, NY - DECEMBER 24: A general view of One Times Square, located at 42nd Street and Broadway on December 24, 2019, in New York City. Also known as 1475 Broadway, the New York Times Building, the New York Times Tower, or simply as the Times Tower, One Times Square is a 25-story, 363-foot-high skyscraper, designed by Cyrus L. W. Eidlitz. (Photo by Paul Rovere/Getty Images)

And now the deceleration.

To be clear, the Times is doing just fine. Digital subscriptions are still growing. The paper added 301,00 subs in Q1, but that was the lowest number since Q3 2019. And at some point another crazy news cycle will pop up. (The 2028 AOC versus Sarah Huckabee Sanders presidential race is sure to be for the ages.)

As of now though there are two realities at the Times. First, as it leaned into subscription revenue it accentuated opinion and deemphasized comprehensive coverage of global news, sports and business, which has resulted in the paper being less non-partisan through simple addition and subtraction (if not intent), so much so that it cannot be called the paper of record anymore. I remember hearing a few years ago some reporters at the paper complaining about the prime space opinion occupied on the home page. Now opinion writers garner even more room. (“And they all have the same opinion,” a Timesman snickers.)

Second, the paper is highlighting non-hard news. “They created a reader strategy on all things around health, family, arts, culture etc. to build out other franchises,” says Ken Doctor, longtime media analyst for the Nieman Journalism Lab and CEO of Lookout Local, a local news company. “They’ve been the most successful doing that.” Cooking and games (crossword puzzles and such) have been standouts. Kopit Levien noted that the Times has “nearly 900,000 games subscriptions and slightly more than 800,000 cooking subscriptions.” (That combined 1.7 million amounts to nearly 22% of the Times’s total 7.8 million subscribers.)

“Taken individually, NYT games and NYT cooking are among the largest journalism-backed subscription services in America,” says Kopit Levien, “and our plans for expanding our subscription portfolio through Wirecutter and Audm [an audio app the Times bought last year that turns longform journalism into audio content] reflect our deeply held belief that The Times will play an even bigger role in the lives of tens of millions of people.” Hard news at the Times is hardly an afterthought, but it does now have competition coming from both the bosses and from what the audience is seeking.

The news did seem to take a back seat during the two recent telco decouplings that went down this month. Let me explain. First on Monday May 3, my soon-to-be ex-parent company Verizon (VZ) announced it was selling Verizon Media Group, which includes Yahoo Finance, Tech Crunch, what’s left of AOL and other properties to private equity firm Apollo. The talk in the deal is all of e-commerce, sports betting and crypto platforms. In the press release, news was mentioned just briefly in the seventh paragraph in relation to Gen Z and Tik Tok. The news is there, but not in the headline.

Ditto at the bigger AT&T (T) deal. On Monday, May 17, exactly two weeks later, AT&T announced “a definitive agreement to combine WarnerMedia’s premium entertainment, sports and news assets with Discovery's leading nonfiction and international entertainment and sports businesses to create a premier, standalone global entertainment company.” News is listed third here, (as part of a global entertainment company) and to be fair that’s where it may have been regardless of the news cycle. Note too though in the AT&T press release, CNN (which is the news piece of this company) is mentioned just once in a laundry list of assets tucked between D.C. Comics and Cartoon Network. True, Discovery CEO David Zaslav (who will lead the new company), reportedly helped launch CNBC and MSNBC, and is besties with CNN chief Jeff Zucker. And there is talk of Zaslav and Zucker bromancing at the new company but with Zucker perhaps taking on a bigger role. Here again, news is not the main event.

By the way, the reviews are in from analysts on the telecoms’ foray into media, and they are scathing. “The telcos ran their media properties into the ground,” says Jessica Reif Ehrlich, senior media and entertainment analyst, BofA Merrill Lynch Global Research. “This is not their wheelhouse. Give AT&T credit for getting out now. It says absolutely nothing about the outlook for media, so much as the telco’s capabilities.”

And this: “AT&T and Verizon [were] clueless about these companies," says Ken Doctor. “They do not understand product consumption. They’re pipes companies. Pipes carry news, but have to operate differently. Media takes different skills, leadership, judgment and a long term perspective. They didn't belong in the news business and it doesn’t surprise me they’re getting out. They bought high and got out low.”

Double ouch.

And so two more attempts at combining content and distribution have bombed. A quick personal note here. Much of my career has been wrapped around this windmill tilting. Two decades ago I was working at TimeWarner when AOL bought that company, creating the biggest media enterprise on earth. To say things didn’t work would be a vast understatement and the AOL/TimeWarner deal was soon branded the worst deal of all time. Bankers at Morgan Stanley and elsewhere, who reaped huge fees putting the deal together, double-dipped as they disassembled the colossus. AOL was spun off in 2009 and then bought by Verizon in 2015. Two years later Verizon bought Yahoo, reuniting me with team AOL. I then watched the other big telephone company AT&T successfully battled the Trump Justice Department to buy TimeWarner which employed my former colleagues at CNN and HBO. Would I be surprised if I ended up working with those folks again? No I would not.

So what’s next for the news business?

Some new stuff is still happening but given the environment, not much. Peter Thiel and neocon fav J.D. Vance have invested in Rumble, a conservative video alt-YouTube site, signaling perhaps that politicized fragmentation in media is far from over. Buzzfeed, Vice and Forbes may or may not be still doing SPACs depending on which banker you talk to or how the market is doing.

Local news may be stirring, thanks also to subscriptions. “To really be a subscriber-based business, you have to have stories of value your readers can’t get anywhere else for free,” says George Stanley, editor of The Milwaukee Journal Sentinel, regional editor for Gannett and president of the News Leaders Association. “Trump has nothing to do with our long term business model and strategy and nobody’s talking about it, at least in our membership. Politicians come and go, things come in and out of the news. In our market the Green Bay Packers going to the Super Bowl is a much bigger deal than anything Trump did.

“We’ve grown our digital subscribers in the past five years from 13,000 to over 50,000,” says Stanley. “I think the folks who thought subscriptions would only work for the big three [see below] at the national level were proved wrong. It can work at local and regional level. I think [that means] providing news of value to your community that people can’t get from anybody else. The Washington Post, New York Times, Wall Street Journal are never going to cover the Milwaukee city council and Wisconsin state government. They’re never going to cover schools and other stuff happening that we’ve covered, let alone sports teams and prep teams.”

Reif Ehrlich sees the value in what Stanley et al. are doing. “There's a reason why journalism is not user-generated content,” she says. “Truth and fact-finding is worth something to a lot of people. It’s my view people will pay for quality that’s vetted, versus something that’s made up.”

Still it will likely be tough sledding for the news business over the near term.

“Media is one of the least sexy trades out there right now,” says Ed Moya. “There’s too many influencing factors that can impact the stocks. Unless you have an amazing dividend, Wall Street will look elsewhere. The problem is that you’re at a moment where the second half of the year you’re going to have base effects of tremendous dropoff in readership, viewership [compared to the previous year] and that is something that’s going to be very difficult on your balance sheet.”

(Which is why 2019 has become the new 2020. In other words, sure, if you compare a media property’s numbers this year to the boffo year of 2020, business is soft, but on a more normalized basis, aka, 2019, they’re up.)

That the air has been taken out of the media business’s tires isn’t lost on Kopit Levien of the Times. “The change in the news cycle, the opening up of activities that people could do following a year of quarantine combined with better weather, combined with the prevalence of vaccines, that all sort of happened at once,” she says. “It came a little faster than we were expecting, probably because of the compounding effects of all of those things at once. We have seen periods where the tide has gone out a little bit on one particular storyline or few storylines and it always comes back. But, it's hard not to regard this as a moment in time.”

It is indeed a bit of a moment. And a bookend to Peter Thiel’s remark at the University Club four years ago.

This article was featured in a Saturday edition of the Morning Brief on May 29, 2021. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer

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