2010-12-14 06:06:00
Netflix In, New York Times Out of the S+P 500
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The world is changing each and every day, and the recently announced changes to the S+P 500 are clear evidence of that.
Netflix, which was seen by many as possessing a laughable business plan when it started its subscription service back in 1999, is going to add another feather to its cap when it is officially included in the S+P 500 next Friday.
Netflix, which is a big reason why Blockbuster was recently forced to declare bankruptcy, currently sits with a market cap of $9.6 billion. The company has seen its shares soar over the past 52 weeks from the mid $50s to its current price of $183.80.
If Netflix is going in to the S+P 500, then who is coming out?
That would be the New York Times, which has fallen on hard times over the past decade and currently sits with a share price of $9.35. This is well off of its all-time high of over $50 per share, which it hit back in June of 2002.
The New York Times has fallen on hard times largely due to:
1) The rise of Google and its various advertising platforms
2) The rise of online media outlets and blogs
Google (and other online advertising companies) has given companies the means to conduct ultra-targeted and cost effective advertising campaigns online. The growth in online ad spends has come at the expense of other forms of media, including newspapers.
Also, many people are now choosing to get their news online rather than through traditional forms of media. The rise of sites such as Politico.com (just to name one) and social networking platforms such as Twitter and Facebook have contributed to the decay in newspaper subscription numbers. The average age of a typical newspaper subscriber has jumped alarmingly over the past number of years, mainly due to the fact that younger generations are simply choosing to forego newspaper subscriptions and instead relying on more "immediate" forms of media.
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So Netflix, which was laughed out of the offices of Blockbuster in 2000, now possesses a market cap of nearly $10 billion, while the New York Times, which used to be a blue chip holding, has seen its market capitalization whittled away to just $1.36 billion.
One company turned an entire industry on its ear in just over 10 years, while the other company is slowly sinking into oblivion.
The world changes quickly - if I told you 10 years ago that Netflix would be added to the S&P 500 in 2010 and the New York Times would be taken out, I doubt that you would have believed me.
Filed under: General Market News
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