U.S. journalism benefiting from ‘game-changing’ investments: study

April 8, 2014 Leave a comment

U.S. journalism benefiting from ‘game-changing’ investments: study

12:13am EDT

By Jennifer Saba

(Reuters) – A new wave of funding by technology-savvy investors into U.S. media companies is driving momentum in journalism, even as news organizations continue to face challenges, according to a report issued on Wednesday.

The level of media investing activity is forging the underpinnings of “game-changing” developments for the industry, according to the Pew Research Center’s State of the News Media 2014 report, which cited funding from entrepreneurs like Amazon’s (AMZN.O: Quote, Profile,Research, Stock Buzz) Jeff Bezos and eBay (EBAY.O:Quote, Profile, Research, Stock Buzz) founder Pierre Omidyar.

“There is an unmistakable sense of new energy that emerged over this last year,” said Amy Mitchell, director of journalism research at Pew and an author of the report. “What we are seeing are individuals with ties to technology companies and an innate understanding for technology move into reporting.”

Bezos, the founder of online retail giant Amazon, stunned the media sector last August with his deal to acquire the Washington Post for $250 million from its long-time owners, the Graham family. Bezos has said told employees of the newspaper that they will have to “invent” and “experiment” as the Internet revolutionizes the news business.

In October, Omidyar said he would build an independent media organization covering news from sports to politics for mainstream readers.

Venture capital firms invested at least $300 million into new media digital startups in 2013, which have added thousands of reporting jobs over the past year, the Pew report estimates.

The report said that its first-ever tally found that in 2013 about 5,000 full-time jobs were added at nearly 500 digital news outlets ranging from BuzzFeed to Gawker to smaller local outfits.

“Even as the challenges of the past several years continue and new ones emerge, the activities of this year have created a new sense of optimism — or perhaps hope — for the future of American journalism,” the authors of the study wrote.

Several new media startups including Vox Media and Mashable, which are investing in reporting, have received millions of dollars in venture funding the past year.

Still, the study cautioned the new investments and jobs represent only a sliver of the overall media industry, which is hemorrhaging revenue and slashing headcount.

The report estimates that the news industry in the United States generated roughly $60 billion in annual revenue with advertising accounting for almost 70 percent. Investment from venture capital and philanthropy amount to only 1 percent of the total.

In comparison, Google alone generated about $59 billion in revenue last year.

Overall, the newspaper industry, which accounts for the largest portion of reporting, lost more than 16,000 jobs from 2002 until 2012. The industry now counts about 38,000 editorial jobs.

The State of the News Media takes a wide survey of the media landscape including cable and broadcast television. This year marks the 11th edition of the report.

The authors also noted the feeding frenzy for local broadcast TV stations that resulted in several big acquisition deals for Gannett (GCI.N: Quote, Profile, Research, Stock Buzz), Sinclair (SBGI.O: Quote, Profile,Research, Stock Buzz), and Tribune Co (TRBAA.PK: Quote, Profile, Research, Stock Buzz).

Transactions were up more than 200 percent with value of $8 billion worth of deals up 367 percent.

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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