What Did Wall Street Know About Where Journalism Was Going?

By Jack Limpert

My wife and I have some of our retirement money invested in T. Rowe Price mutual funds, one of which is the Media & Telecommunications Fund. Being an old wire service-newspaper-magazine guy, I always like to see the fund’s annual report to get Wall Street’s take on the future of the media.

According to the 2013 annual report, the fund owns stock in 35 companies they classify as media: British Sky Broadcasting, Charter Communications, Comcast, Eutelsat, Sky Deutschland, Time Warner Cable, Las Vegas Sands, Wynn Macau, 58.Com, Amazon.com, Angie’s List, eBay, priceline.com, zulily, Autohome, Baidu, Criteo, Facebook, Google, LinkedIn, Naver, Sina, Tencent Holdings, Twitter, Yandex, Central European Media Enterprises, Discovery Communications, Hertz Global, Liberty Global, Liberty Interactive, Netflix, Twenty-First Century, Viacom, Disney.

The New York Times Company? The Washington Post Company? Gannett? The fund shows no love for print journalism.

The Media and Telecommunications Fund started in late 1993, so I thought that maybe in the early days, before broadband, portability, and Google, the fund would have bought stock in companies that did good journalism.

The fund’s top 10 holdings in January 1994: Telmex, King World Productions, Pacific Telesis, Playboy Enterprises, Northern Telecom, Enquirer/Star Group, Capital Cities/ABC, Bell South, SPI Holding, Time Warner.

Playboy Enterprises? Lots of sex, not much journalism. Enquirer/Star Group? Lots of scandal, not much journalism. Time Warner had the Time Inc. magazines and did well until its merger with AOL in 2000, and Time Warner now is spinning off the magazines—goodbye print, we’re not going to miss you.

The fund in 1994 also owned small amounts of stock in E.W. Scripps, Knight-Ridder, and Reuters. Good old Knight-Ridder—once a great newspaper company, now history except for its foundation.

How about the Media and Telecommunications Fund in 2003, just when the digital revolution was really beginning to have a real impact on print? The top 25 holdings in 2003: Viacom, Verizon, Vodafone, Liberty Mutual, Cisco Systems, Partner Communications, KT Cororation, USA Interactive, SK Telecom, Telmex, Comcast, First Data, AOL Time Warner, Disney, Echostar, Scripps, Spanish Broadcasting, American Movil, Omnicon, Meredith, Telecom Italia, WPP Group, CNET Networks, Univision, Certegy.

The fund manager then seemed as slow as everyone else in not recognizing what broadband would do to AOL. Nice to see a little love for Meredith, which still puts out lots of magazines aimed at women and also has big interests in television and marketing. But the 2003 fund still didn’t see any potential in the New York Times, Washington Post, or the Tribune Company, which owned the Chicago Tribune, LA Times, Baltimore Sun, Newsday, and the Hartford Courant.

If editors, reporters, and writers had MBAs, would we have looked at where Wall Street was investing 10 years ago and realized that getting digitally savvy was the future. Probably so, but if you loved doing good journalism, it was hard to know where the good jobs were going to be.

I knew some out-of-work journalists back in the late 80s and early 90s who went to work at AOL, sort of out of desperation, and made tons of money, especially if they cashed out when AOL merged with Time Warner. I know some good people who more recently got jobs at Google and LivingSocial—presumably the Google people are richer and happier.

One of the guys I worked with at the Washingtonian in the late 1990s quit to go with a new Internet company; he told me that at one point he was worth $5 million on paper but couldn’t sell the stock before the digital crash of 2000. Some of the early Washington Post reporters and editors became rich if they were able to buy stock or were given stock when the Post Company went public in 1971. I knew one Postie who bought Post Company stock when it was $19 a share and sold it at $38, happy to double his money. The stock then went to $1,000.

As for the T. Rowe Price Media and Telecommunications Fund, back in 1994 they wanted to own stock in Playboy and the National Enquirer, and in 2003 they still liked Time Warner AOL, but they’ve done okay. The fund was up 41 percent last year, and over the past 10 years it has averaged a 17 percent annual return.

The fund’s two largest holdings are Amazon and Google. Amazon went public in 1997 at $18 a share; the stock is now at $360 and the company is valued at $165 billion. Google went public in 2004 at $85 a share and the stock now is at $1,200. The company is valued at $400 billion.

New York Times Company stock went from $24 a share in 1994 to $46 a share in 2003 to $16 a share today; the company is valued at under $3 billion. The Washington Post Company, now without the Washington Post, is called Graham Holdings. Post Company stock was $261 a share in 1994, $795 a share in 2003, and $660 a share in November 2013 when it sold its flagship newspaper to Jeff Bezos and Amazon for $250 million.

A  bright spot in all this? Warren Buffett, the nation’s smartest investor, has recently bought newspapers in cities like Richmond and Tulsa. His embrace of print seems a little tentative—no big city papers—but maybe it suggests that not all the good reporting and editing jobs will be killed off by Google and the other tech companies.


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