The Application Of Real Options Method For Investment In The Newspaper Industry

An important topic is newspaper investment in Chinese media industry. From the historical data we can see newspaper industry developing rapidly with domestic economic growth and owning tremendous space. But there are great risks in investing newspaper because the current investment environment and press media have many uncertain prospects. Therefore the enterprises have more difficulty of making the correct investment decisions. By understanding the characteristics of newspaper media business model and analyzing its external environment and internal environmental risk factors, and linked to the development status, the investment environment and financial maturity of different media industries between countries, this paper attempt applying the real options method in the newspaper industry for investment value and strategies. The real options is a useful complement to the traditional methods of investment analysis, that help managers cope with the investment decision-making problem by uncertainty with more flexibility, which is also the significance in the application of the real options in newspaper industry investment.In the current time there are not domestic researches and cases for applying the real options method in newspaper industry. And there are also the problems in the application of traditional investing methods and the investor. With this problem this paper compares the difference between the real options method and traditional investment method. The lack of traditional method lies in the consideration from passive view and assuming that investment is reversible, business environment is stable. And how to identify risk-adjusted discount rate is also a problem. Traditional method take that the more future uncertain, the lower the value of assets. The real options methods overcome the deficiencies in these areas, and provide useful attempt for flexibility to measure the impact of investment value to make a better investment decision. From the related literature about the real options method, in the current the field of theoretical research scope is relatively fragmented. Different investment areas and industries using which kind of pricing models, there are not a complete core theory that applies to all areas and sectors in the valuation models. But this does not affect research in the specific area of investment and industry.In the newspaper industry the application of the real options idea itself has more practical significance than real options pricing formula, and therefore the focus in this paper is the comparative systematic research on the identification and...