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Why ASX media stocks are looking cheap at the moment

It’s no secret that the print media industry is struggling, both here in Australia and worldwide.

The meteoric rise of digital media content and the subsequent decline of newspapers and magazines has hurt profits and ushered in a period of change in the Aussie media industry.

In recent years, we’ve seen Ten Network enter voluntary administration and receivership in 2017 before making a recovery while the recent $4 billion Fairfax and Nine Entertainment Co Holdings Ltd (ASX: NEC) merger shows further consolidation could be on the cards.

So, is there any value in ASX media stocks at the moment or should you be looking elsewhere in 2020?

What’s happened to ASX media stocks this year?

For the big-name Aussie media companies, 2019 has been a mixed bag in terms of share price performance with some winners and some losers.

The Nine Entertainment share price has climbed 45.19% higher to more than double the S&P/ASX 200 Index (INDEXASX: XJO) performance since the start of the year.

However, the Seven West Media Ltd (ASX: SWM) share price has plummeted 27.78% in 2019 as the company continues to struggle to turn around its business model.

Shareholders would have been disappointed with Seven West’s full-year results in August, with the Aussie media group posting a 0.9% drop in net profit after tax to $207.3 million as revenue and EBITDA also fell lower.

Given the Seven West share price is down 73.38% in the last 5 years while the Nine Entertainment share price has edged marginally lower over the same period, I don’t think 2020 looks like a turnaround year just at the minute.

Is there any value in ASX media stocks?

While the recent share price declines mean there could be good value buys in the Aussie media space, I think it could be a better time to buy tactically in the mining sector.

While there have been declines in both the resources and media sectors, I think the problems in the media industry could be structural, whereas the short-term declines in mining can be put down to the US–China trade war in a large part.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nine Entertainment Co. Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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