Online media stocks outperform traditional media
Some of the biggest traditional media companies on the Australian stock market are now outranked by a handful of successful online media players as legacy print companies struggle to adapt to shrinking advertising markets.
Fairfax Media Ltd shares plumbed a new historic low of 42 cents last week amid a broad selldown on media stocks.
The share price drop places Fairfax's market value at less than $1 billion.
Fairfax has been punished since unveiling a writedown-driven $2.7 billion full-year loss in August and predicting no improvement in ad markets in the coming year.
Meanwhile, APN News & Media Ltd shares had 27 per cent of their value slashed to 28.5 cents last Friday as chief financial officer Peter Myers resigned "to pursue other interests".
Earlier in August APN posted a $319.4 million loss for the six months to June 30.
Fairfax's slide also coincided with the publication of a list of more than 100 senior journalists and photographers leaving the organisation under its redundancy program.
Fat Prophets analyst Greg Fraser said Fairfax was caught in a general downgrade in sentiment towards media stocks.
"What we're looking at here is a massive shift in value from those traditional print and television businesses into the online sector," he said.
"Even if there's a sniff of more bad news, like Peter Myers leaving APN."
Mr Fraser said the market capitalisation of three successful ASX-listed online businesses: Seek, REA Group-owned Realestate.com.au and Carsales.com was about $6.2 billion.
By comparison, the combined market capitalisation of Seven West Media, Fairfax Media, Southern Cross Media, Ten Network and APN was about $3.5 billion.
Another analyst, who asked not to be named, said the key issue for media stocks is the deteriorating growth outlook as advertising markets remain flat and traditional revenue streams are lost to online businesses.
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