Newspapers' struggles are well known in this era of Internet advertising. However, television stations, once powerful outlets for advertising revenue, also face pressure from increasing alternatives, including cable companies, satellite TV, and now the Internet. Juicy profits, once a given, are still attainable, but only with an increasingly diligent management.
New York Times
The stations that formed the Times' broadcast group were profitable enough to earn a reasonable valuation of 13.4 times estimated 2006 cash flow of $43 million. The company's SEC disclosures hint that gross of all corporate expenses and non-cash charges, cash flows for 2006 will be closer to $52 million. So it's a win-win situation for both parties: The stations are profitable, but operating margins have room for improvement.
As for the Times, management has traded in the diversification of cash flows so that it can increase its focus on monetizing its content in a digital world. It's an interesting contrast to Washington Post's path. Not only does Washington Post run six stations, but it also has diversification with its Cable One cable company and its Kaplan educational division. However, I believe that along with Dow Jones'
However as a Foolish investor, I think this is one case where the road less traveled might not make for a good investment thesis.
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