An AI Stock in the Media Industry Called tronc
In our recent article about artificially intelligent (AI) robot writers, we talked about how media content is starting to be automatically generated using scripted methods that let you produce lots of content very easily. Here at Nanalyze, we love to write about technology in a way that is relevant to investors, straight forward, and doesn’t pander to anyone. We typically don’t cite authors on our articles because we believe the message is more important than the messenger (don’t shoot the messenger and all that). We also believe that someday in our lifetimes, the occupation of being a “writer” is going the way of the dodo because artificial intelligence (AI) will do a better job than human authors. At that point, you could either make up fake names for your authors or what will most likely happen is we’ll have different AI sages that are watched over by a human editor but that publish under a single brand name.
Sure, you can say that “we’ll all still prefer the human touch” and that “we need diversity in our messages” but smart people know that with today’s deluge of information there is a need for honed, focused content piped straight to your head. What if Elon Musk’s only job was finding content that matched every interest you had and he hand wrote every piece of information you needed to know? That sort of tailored content generation is what AI will enable. We recently came across a very interesting company called tronc (yes, we used a lower case t) that is making some bold statements about how they plan to use AI to disrupt the media industry.
The story actually starts in summer of this year when a media company called Tribune Publishing (NASDAQ:TRNC) renamed themselves as “tronc” with a lower case “t”. Social media commentators had a field day with this rebrand and proceed to take the piss out of it to no ends. Here’s a great article from The Verge that just lists out a bunch of “funny” tweets. That article is some quality journalism, isn’t it? Just slap a few hundred words out there and then copy and paste a bunch of tweets in there and call yourself a “Silicon Valley editor at The Verge”. Nice one.
So anyways, this media company that has been around since 1847 decided to rebrand itself and work to “accelerate the transformation from a legacy news company to a technology and content company, including gaining access to over 100 machine vision and artificial intelligence technology patents for news media applications“. The sort of elusive rhetoric that accompanied their rebranding led many people to question if tronc wasn’t just blowing smoke. The most interesting thing about tronc is that they are actually a massive media company with many notable brands that attract up to 60 million readers a month as seen below:
Those brands are actually generating a tremendous amount of revenue for TRNC, a company that has a market cap of just $479 million:
So this media company that generates $1.67 billion last year has now decided to begin using the powers of AI to produce up to 2,000 videos a day. We’re immediately confused here as to how Ai can help produce so much video content. Sure, we’ve seen AI used to edit video content and in some cases generate its own content (if you can stomach watching it for more than 30 seconds) but how can AI actually create video content? Here’s the closest thing we could find that explains what TRNC might be getting up to:
At this point, we would typically start to lose interest and conclude that perhaps they are really just using these buzzwords to attract the attention of investors except for the fact that a very notable entrepreneur is behind their rebranding efforts. Regular readers will be all too familiar with Dr. Patrick Soon-Shiong who is the wealthiest American in the healthcare industry with a personal net worth of over $12 billion. Dr. Soon-Shiong is the man behind the family of “Nant” companies, with the most recent IPO being that of NantHealth. The man is by all counts a very successful entrepreneur who is not afraid to dabble in areas outside of healthcare.
A look at the most recent 10-Q filed by TRNC shows that NantWorks licensed this portfolio of patents to TRNC with an $80 million cut of revenues derived from the AI technology and a 6% royalty thereafter. We also see that Nant Capital made an investment in TRNC of $70.5 million which represented the acquisition of 4.7 million shares at $15 a share. Dr. Soon-Shiong has also been acquiring shares of TRNC on his own personal account and has amassed a position of 439,306 shares over time.
TRNC was upgraded to “buy” this last week and since then shares have jumped +22%. As investors, we consider short-term price movements to be mostly irrelevant and given that TRNC is volatile, to begin with, the question is do we start accumulating a position in hopes that the leadership and technical savvy of Dr. Soon-Shiong will make this company a leader in media through the use of AI? The first question we need to answer is just how AI is going to help produce 2,000 videos a day. Do any of our lovely readers have some insight into how TRNC might accomplish this to become the first media AI stock? Drop us a note in the comments section and let’s discuss!
Pure-play disruptive tech stocks are not only hard to find, but investing in them is risky business. That's why we created “The Nanalyze Disruptive Tech Portfolio Report,” which lists 20 disruptive tech stocks we love so much we’ve invested in them ourselves. Find out which tech stocks we love, like, and avoid in this special report, now available for all Nanalyze Premium annual subscribers.