The New York Times Company
) recently declared a cash deal to sell-off About Group, which it
acquired in 2005, to
) for a consideration of $300 million. The transaction is expected
to be completed in the coming several weeks. The media conglomerate
plans to put in the cash proceeds for general corporate
The About Group segment comprises the websites About.com,
ConsumerSearch.com and Caloriecount.com, along with other related
Management believes that About Group's search engine provided
light to the company's diversified media portfolio. However, in an
effort to offset the declining revenue and shrinking market share,
management decided to sell About Group, which is facing declining
revenue since the last two quarters.
About Group segment's revenue dropped 8.7% in the second quarter
to $25.4 million due to fall witnessed in both cost-per-click and
display advertising. During the first-quarter, the revenue declined
23.1%. Adjusted operating profit plunged 30.4% to $10.2 million in
the second quarter, reflecting a decline in advertising
Moreover, declining print advertising revenue, in an uncertain
economy, compelled The New York Times Company to divest About
Group, which would allow the company to re-focus on its core
newspapers and concentrate on its online activities.
In order to survive in the tight advertising market, The New
York Times Company aims to streamline its cost structure,
strengthen its balance sheet and restructure its portfolio.
Moreover, the company is offloading assets that bear no direct
relation with the core operations.
As a part of its ongoing strategy, the media giant divested its
remaining stake (210 Class B units) in the Fenway Sports Group in
May 2012. The company also completed the sale of Regional Media
Group, which has been struggling with shrinking advertising
The New York Times Company, which faces stiff competition from
), carries a Zacks #2 Rank that translates into short-term Buy
rating for the next 1-3 months. We maintain our long-term
'Outperform' recommendation on the stock.
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