UK Consumer Publishers’ Market Caps Are Sliding

Market valuations of UK companies held up from Q4 2010 to this year’s Q1 – but those in the consumer publishing sector have seen value wiped off, according to accountant Grant Thornton’s Media Watch index…

  • Publishing sector is down seven percent from Q4 2010.
  • That’s down three percent from last year.
  • Yell is down 54 percent.
  • Johnston Press and Trinity Mirror (LSE: TNI) lost 33 percent.
  • But broadcasting sector is up eight percent from Q4 (up 30 percent from last year).
  • And the media agency sector is up six percent frmo Q4 (up 25 percent from last year).

Grant Thornton’s media and entertainment head Mark Henshaw: “The publishing sector overall is currently struggling to reach high valuations. However, there are some quite clear and differing patterns emerging behind the figures in this segment.

“The B2B market, i.e. companies, such as Pearson (NYSE: PSO) and Informa whose main activities are conferences events and educational material, have actually held up well. However, B2C companies, such as Trinity Mirror, Daily Mail (LSE: DMGT) and Yell, have all seen their stocks marked down heavily in the last quarter and over the last 12 months. This shows that the market confidence in the structure of the consumer market is still shaky.

“It is also interesting to note the bounce-back in values of some small media caps across different categories. We have seen some dramatic share price jumps within this group with, for example, Dot Digital now sitting comfortably at a prive-to-earnings ratio of 80 times its profits. Mobile Stream has also seen its share price move up in the last quarter by 65%. This is likely to be a result of the company repositioning itself as an apps provider rather than the mobile phone content provider it used to be known as, and the buzz created around its much anticipated ‘appitalism’ website.

“It would appear that for some investors there is potential value in media small caps as business models start to mature. The listed media space remains an interesting one for the investor community.”