Time Warner, News Corp. look to capture digital shift
The Next Issue Media app offers up to 32 magazines for one subscription fee.
It is clear that print sales are declining and that apart from a few successful newspapers such as The Wall Street Journal, the newspaper industry has seen a disappointing trend.
In light of this digital shift, Next Issue Media has released an app for Google's (GOOG) Android devices with which users will be able to subscribe to up to 32 titles for a single subscription fee. This is a joint venture between several media giants and should help recoup the decline in print magazine sales.
We estimate that the magazines business is quite significant for Time Warner, contributing close to 20% to its estimated value. On the other hand, magazines constitute about 7% of News Corp. Nevertheless, this shift is applicable to all print media companies and therefore very important for News Corp as well, which owes about 13% of its value to newspaper business. Thus, total print media accounts for 20% of News Corp's value, similar to that of Time Warner.
Surprisingly, the app has come out on Android first instead of iOS. Perhaps the reason is that iOS already has a newsstand app, although it is not specific to particular titles as this one. The business model is similar to that of Netflix -- all-you-can-eat for a particular subscription price. This model has been successful for Netflix, and we'll have to see how well it does for this new magazine app.
Our price estimate for Time Warner stands at $40.20, implying a discount of little less than 10% to the market price.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.