The
New York Times Company
(
NYT
) traditionally competes with large companies like News Corp (
NWS
), Yahoo (
YHOO
), Google (
GOOG
), Microsoft (
MSFT
) and AOL (AOL) in the online advertising market, but also has
started to face competition from smaller players that include
news aggregator and blog sites like
The
Huffington Post
.
The Huffington Post, which started its business in 2005, has
grown to 26 million unique monthly visitors, compared to an
estimated 30 million average monthly unique visitors for NYT online
in 2010. This indicates that a much newer player like Huffington
Post could soon overtake NYT in terms of unique visitors, which
means that increasing competition could threaten NYT online
business growth.
We estimate that NYT's online advertising business constitutes
around 20% of the
$8.46 Trefis price estimate for NYT stock
, which is about 14% less than the current market price.
Huffington Post Worth More Than NY Times Online?
The Huffington Post is benefiting from the increasing use of
social media where online readers can share news, post comments and
contribute to blogs. This is personalizing the way people consume
news and so aggregator sites like Huffington Post are growing
traffic rapidly. The Huffington Post aggregates about 300 stories
from other publications and publishes a similar number of original
stories and original blog posts. According to MediaMorph as quoted
by Bloomberg, The Huffington Post is worth between $300 to $450
million. This valuation is driven by impressive growth as the
company plans for its sales to grow from $30 million in 2010 to
$100 million by 2012, a whopping 82% compounded growth rate over 2
years.
We estimate that the New York Times is worth around $1.2 billion
overall after accounting for its net debt. Its online advertising
business from the New York Times and International Herald Tribute
online segments total about $380 million by our estimates. If we
rely on the $300 to $450 provided by Bloomberg, then Huffington
Post could be worth more than NYT's online business as a standalone
business today. Assuming its growth continues to impress, it will
likely outpace NYT online going forward.
To stymie this competition, NYT online has started to tap in to
the new growth formulas of targeting mobile internet and social
media to drive traffic and enrich the reader's experience, but we
believe the company still has needs to find innovative ways to
position and share its premium content so that visitors will visit
NYT online. We wrote recently that mobile internet and social media
could help drive NYT's online business, and stock, higher - but
this will not be easy given the rapid ascent of newer sites like
Huffington Post. (See New York Times Online Can Add +25% to NYT
Value)
We currently expect NYT's average monthly unique visitors to
increase from around 30 million in 2010 to around 42 million by
2013. However, there could be upside of around 5% if it can grow
this traffic to 50 million uniques by the end of 2013.
To see the impact of unique visitors to NY Times online, drag
the trend line in the modifiable chart above.
You can see the complete $8.46 Trefis Price
estimate for NYT here
.