Newspaper reinvestment strategies

This study examines effects of reinvestment levels within newspaper divisions and diversified divisions on short and long-run financial performance at publicly-held U.S. newspaper firms from 1996 to 2005. The literature suggests that reinvestment leads to improvement in market performance. However, these studies looked primarily at short-term operational expenses. This study found that above average reinvestment levels in capital expenses in both newspaper and diversified divisions is negatively related to short-run financial strength. Some evidence suggests that heavy reinvestment in newspaper divisions leads to long-run financial strength. Firms that reinvested more in diversified segments were more diversified during the decade. The same firms that reinvested heavily in newspaper divisions also reinvested heavily in diversification.