Digital Option Idea: Gannett Co Sued Google!

As you've probably noticed, the largest publicly traded newspaper publisher in America, Gannett Co Inc (GCI), filed a federal lawsuit against Google last summer, here is a short summary of the lawsuit:

"Gannett, the largest publisher in the United States, filed a federal lawsuit against Google in the U.S. District Court for the Southern District of New York. The lawsuit alleges that Google's digital advertising practices violate U.S. antitrust and consumer-protection laws. Gannett accuses Google of monopolizing advertising technology markets and engaging in deceptive commercial practices, which have adversely impacted digital advertising revenue for publishers like Gannett. Specifically, Google controls significant portions of the market for "publisher ad servers" and "ad exchanges," thereby exerting control over selling, buying, and matching ad space. Gannett seeks to restore competition in the digital advertising marketplace to encourage investment in newsrooms and news content. This action comes amid similar lawsuits from state attorneys general, the U.S. Department of Justice, and the European Union regarding Google's ad-tech monopolization."

In a nutshell, Gannett jumped on the bandwagon of the U.S. Department of Justice and the EU and now wants a piece of the pie too! In the lawsuit, Gannett is demanding damages of around USD 1000 million. To put this into perspective: Gannett's current market cap is USD 360 million! 

Currently, neither a victory nor a loss before the District Court is priced into the Gannett share price, as it is still too far in the future or not yet tangible! This could possibly be an opportunity: One could position himself with long dated options or digital options (if they exist for a company of this size) and play a timing arbitrage! 

Unfortunately, we can only buy options through our interactive broker account until October 2024, which is clearly too short!

P.S. Maybe a quick thought on newspaper stocks in general: If you look at the cost structure of newspaper companies, employees (journalists) make up a sizable portion of all total costs! AI should make journalists much more productive in the next 1-2 years as it helps them with researching, writing, and checking! Which in turn means that fewer employees will be needed to publish a newspaper! Even a 20% increase in productivity (from AI) would massively reduce the costs of newspaper companies! Gannett, for example, spent USD 400 million on compensation and benefits last year. A 20% AI cost saving would increase profits by USD 60-80 million! And such a profit increase/cost saving is currently maybe not reflected in the prices of newspaper shares!