As a part of its ongoing strategy to completely offload assets
that bear no direct relation with the core operations,
The New York Times Company
) recently divested its remaining stake (210 Class B units) in the
Fenway Sports Group, the owner of the Boston Red Sox and the
Liverpool Football Club, for $63 million.
As a part of the transaction, the company would register a
pre-tax gain of approximately $38 million during the second quarter
of 2012. Moreover, the names of the buyers were not disclosed.
Initially, The New York Times Company, used to hold a 17.75%
stake (or 750 Class B units) in Fenway Sports Group, which it had
acquired in 2002 for $75 million. But the 2008 economic downturn
and sinking print advertising demand compelled management to look
for strategic options to get rid of the non-core assets, and infuse
the proceeds to augment its struggling publishing business.
Since, then The New York Times Company has been trying to
offload its stake in Fenway Sports Group. In April 2010, the
company sold 50 of its 750 units to the major shareholder in
Fenway, John Henry, a commodities hedge-fund billionaire, which
lowered its stake to 16.6%. In July last year, the company divested
55.7% (or 390 Class B units) of its stake for $117 million.
Further, in February 2012, it had shed 100 of 310 units
remaining for an aggregate amount of $30 million, which shrunk its
ownership to 4.97%, and the current transaction successfully
culminates the divestment of the remaining 210 Fenway Sports
In total, The New York Times Company has generated approximately
$225 million in proceeds from the complete divestiture of Fenway
Sports Group, which is three times the price it had to pay to
acquire the same.
Another example of shedding the assets by the company is the
sale of Regional Media Group, - consisting of 16 regional
newspapers, print publications and associated ventures - to Halifax
Media Holdings LLC, the proprietor of The Daytona-Beach News
Journal in Florida, for approximately $143 million.
Waning print advertising revenue, in an uncertain economy,
compelled The New York Times Company to take this tough decision of
divesting Regional Media Group, part of The New York Times Media
Group. This would allow the company to re-focus on its core
newspapers and pay more attention to its online activities. The
decision to offload the division is also considered part of the
cost containment efforts undertaken to stay afloat in this
The Regional Media Group has long been grappling with shrinking
advertising revenue. The recent global economic uncertainty has
worsened matters. This comes in the wake of a longer-term secular
decline as more readers choose free online news, thereby making the
print-advertising model increasingly irrelevant.
To curb shrinking print advertising revenue and improve market
shares battered by the recent economic headwinds, the company
launched a pay-and-read model on March 28, 2011, with the intent to
augment its digital revenue.
Another media conglomerate,
) has also moved towards an online subscription-based model for
general news content. News International, a subsidiary of News
Corporation, began charging readers for online content for
The Times of London
Sunday Times of London
effective June 2010.
Holds Zacks #3 Rank
The New York Times Company remains committed to streamline its
cost structure, strengthen its balance sheet and rebalance its
portfolio. However, we remain apprehensive about risks that the
company faces due to its high dependence on advertising
Currently, we have a long-term Neutral recommendation on The New
York Times Company. Moreover, the company holds Zacks #3 Rank that
translates into short-term Hold rating.
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