One of the most profitable trades over the past decade was among the most obvious: sell old-media stocks and buy new-media ones. Investors who switched from print media and TV stocks into online advertisers such as Seek, REA Group and Carsales.com profited.

As did those who invested early in out-of-home advertisers such as oOH! Media and APN Outdoor Group.

But every trade runs its course. Some so-called old-media stocks look better value after years of underperformance and some new-media ones (which aren’t that new anymore) look expensive after stellar gains. So is it time to dive into old media?

For the most part, no. Print media and TV advertising are as cyclically and structurally challenged as ever. TV stocks in particular are problematic.

The likes of Nine Entertainment Co. Holdings, Seven West Media and Ten Network Holdings look cheap on several measures. Nine’s median share-price target of $2, according to consensus broking forecasts, suggests it is materially undervalued at the current $1.01 but some analysts are overly optimistic on its prospects.

Seven West is slightly undervalued against the consensus 85-cent price target. Ten Network Holdings, gaining more operational and share-price momentum, is trading just a few cents below its $1.18 consensus price target. Ten is included in the Switzer takeover portfolio.

Clearly, more brokers see value in TV stocks. I don’t, at least at current prices.

The revenue shift from free-to-air TV to other mediums, such as digital, out-of-home (billboard) advertising and radio continues apace.

TV operators are copping it from all angles. Facebook Inc announced in April 2016 that its revenue jumped 57% to US$5.2 billion in the first quarter. The mobile-advertising powerhouse is snaring even more funds from traditional advertising.

Locally, Nine and Seven Media face a resurgent Ten Network and stronger programming competition. Nine and Seven continue to overpay for sporting rights, one of the few remaining content drawcards. Even huge sport events, such as the Olympics, have less free-to-air TV appeal when viewers can access content on their desktop computer or mobile device.

Then there’s subscription TV. If you’re like me, you watch ad-free sport on cable TV or download content and fast forward through the ad breaks. Ad-blocking technology that helps users bypass advertisements on different media is another threat.

Make no mistake: it will get a lot worse before it gets better in TV land, if it does. Seven West Media’s profit warning last week that its earnings could be down as much as 20% this financial year reinforces the tough outlook. The TV industry’s business model may be beyond repair.

Print media is not much better. The sector, in decline for years, continues to find new lows as advertisers use other mediums and consumers resist paying for content. Try to spot a twenty-something reading a print newspaper these days.

Print-media companies argue, with justification, that more people are reading content online and that channels, such as physical newspapers, are not the main issue. Maybe. But it’s hard to make big profits online as ad rates fall and content competition intensifies.

It will surprise few (and disappoint many) if Fairfax Media stops printing The Age and Sydney Morning Herald from Monday to Friday and publishes them only online. Or if it sells its regional newspaper business and continues it move away from print media through the proposed merger of Fairfax and APN’s New Zealand businesses, pending regulatory approval in that country.

Yet for all the challenges, Fairfax is among the more interesting media stocks at current prices. I must declare an association with the company, having written for its products for years, first as a staff member and now a freelance writer, and previously as managing editor of several of its business publications.

Six of eight broking firms that cover Fairfax have buy recommendations and two have a hold, show consensus estimates. A median share-price target of $1.05 suggests it is slightly undervalued. The stock’s rally from a 52-week low of 74 cents to 95 cents has taken it closer to fair value.

Chart 1: Fairfax Media

Source: Yahoo

Fairfax was sold off this week after reporting full-year earnings. Advertising revenues in its print-media businesses fell by 12-15%, its prized Domain business signalled a tougher start to the financial year and overall guidance was weaker than the market expected.

Still, the main thesis with an investment in Fairfax – unlocked value in its Domain online property advertising business – is intact. Fairfax’s joint-venture TV movie streaming service, Stan, is also on a healthy trajectory but years from cash-flow break even.

There are plenty of complications as Fairfax winds back its print exposure and market pressure builds for a spin-off of the Domain business.

Domain looks a classic de-demerger candidate: it could achieve a higher valuation as a standalone company, reward Fairfax shareholders who receive stock in the new entity, and existing Fairfax shareholders, should the company retain majority ownership in Domain, similar to News Corp and its controlling stake in REA Group.

My hesitation is that Domain and Fairfax’s print-media operations are more related than investors realise; the newspaper helps drive traffic to the property site. The best demergers usually involve unrelated assets that have no purpose being together in a conglomerate.

Still, there’s enough momentum in Fairfax’s new-media businesses to suggest it can do better than the market expects over the next two years and that it is undervalued, although not excessively so. Potential upside comes from reducing print media’s drag on the rest of the business, as cost cutting continues and more print-media markets are exited.

News Corporation also has better valuation appeal after falling from a 52-week high of $21.98 to $17.85. It, too, is reducing its reliance on structurally challenged news and information services and increasing its earnings exposure to digital real-estate advertising, cable TV and books.

Chart 2: News Corp

Source: Yahoo

News Corp has a strong balance sheet, good cash flow and a 61.6% stake in digital powerhouse REA Group. Morningstar’s fair value of $22 for News Corp suggests it is materially undervalued at the current $17.65. Macquarie’s 12-month price target is $21.08.

News’ fourth-quarter earnings update, released this week, was a quality result. Revenue rose 5% to $2.2 billion, amid good growth in digital real estate advertising and its book publishing operations. Digital advertising now accounts for 23% of News’ revenue, up from 19% last year.

News Corp, arguably, is the pick of large media stocks. Like Fairfax, it’s potentially worth more on a sum-of-the-parts perspective compared to the market’s current valuation.

Among other media stocks, APN News and Media is worth watching given its exposure to the better-performing out-of-home advertising and radio markets. After a good run this year, APN is due for a pullback. It should have a spot on portfolio watchlists for small-cap investors.

It’s hard to get excited about Prime Media or Southern Cross Media Group (another good performer this year) given their exposure to structurally challenged TV markets.

In online advertising, Seek, REA Group and Carsales are as attractive as ever given their dominant market positions and expanding global operations. But a Price Earnings (PE) ratio of 27 for Carsales, 31 for Seek and 40 for REA Group, is too rich in this market. Granted, these stocks always look expensive and deserve a premium rating given their position and prospects.

Buying the big internet-portal stocks during significant market corrections or pullbacks, when their valuations improve a little, has been an effective strategy over the years. Of the three, Seek looks the best value for long-term investors.

Among newer media stocks, I have written positively about oOH! Media and APN Outdoor Group for the Switzer Super Report over the past year.

Both have good long-term prospects as more out-of-home advertising signage is converted to digital and this segment grows its share of total advertising. Digital billboard advertising offers new opportunities for customers and higher profit margins for providers.

After big share-price gains this year, oOH and APN Outdoor’s valuation risks are rapidly rising. Each looks fully valued at current prices.

Tony Featherstone is a former managing editor of BRW and Shares magazines. The information in this article should not be considered personal advice. The article has been prepared without taking into account your objectives, financial situation or particular needs. Before acting on the information in this article you should consider the appropriateness of the information, with regard to your objectives, financial situation and needs. Do further research of your own or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article. All prices and analysis at August 10, 2016.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.