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NEW
DELHI: Unless the newspaper industry finds ways to connect
with younger readers, newspaper valuations will continue to
be depressing, according to private equity firm Quadrangle
Capital Partners.
According
to Quadrangle Managing Principal Joshua Steiner, finding the
model, which is heavily dependent on the internet and other
electronic technologies, is crucial for publishers who want
to remain relevant to younger readers.
Newspaper
has been categorised as an out-of-favour industry by Wall
Street, with advertising revenues falling and readers turning
to the internet for news.
Without
a successful new business model that will sustain the strong
cash flow newspapers still produce, publishers can only rely
on cost cuts and consolidation to offset slower growth. “With
no end in sight to that trend, investors in the business will
steer clear until valuations fall further,” Steiner added.
However,
he admitted that newspapers will keep a strong franchise in
many markets for a long period of time.
"If
you're going to invest into a sector where there is big cyclical
risk, or where there is fundamental change associated with
the industry, you need to be compensated for it. And the way
you're normally compensated for it is through price,"
said Steiner.
Over
time, devices like the Kindle, which offers e-books for sale
and charges subscription fees for newspapers, magazines, and
blogs, could turn into an ad vehicle for publishers, a report
by Reuters said.
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