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APN News & Media Ltd shares jump more than 4.7%

APN News & Media Ltd (ASX: APN) has seen its shares rise 4.7% to 92 cents in mid-afternoon trading.

That’s despite no news from the newspaper, magazine publisher and radio station owner.

Last week, APN announced that it had completed the acquisition of Perth’s 96FM radio station from Fairfax Media Limited (ASX: FXJ). APN now holds a number of stations including Sydney’s The Edge 96.1FM, WSFM and Kiis 1065 (home of Kyle & Jackie O). The company paid around $78 million for the station.

APN also owns a wide selection of newspapers, magazines, digital media and even outdoor advertising across Australia, New Zealand and even Hong Kong.

Shares have been on a tear this week, soaring 17%, including today’s rise, and are up 114% in the past 12 months. That’s thanks in part to a turnaround strategy under way. As part of the strategy, APN has been rationalising its businesses, transforming others into integrated media businesses, through new digital channels, and slashing costs where it can.

The company’s biggest issue is falling advertising revenue for its newspapers. Since 2009, New Zealand newspaper revenues have dropped from NZ$623 million to NZ$494 million in 2013. Radio and television advertising continues to grow, as does online advertising.

The good news is that the company appears to be growing earnings, but plenty of work still needs to be done with cost cutting and stopping the advertising bleeding from physical newspapers. The other issue remains the company huge debt pile – more than $500 million worth. APN is also carrying around $724 million in intangible assets associated with goodwill, software, mastheads and radio licences. Mastheads and goodwill could be most at risk of being written down, particularly if they relate to newspapers.

Despite the recent improvements, APN remains one company I’m steering clear of for now.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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