We maintain our long-term Neutral recommendation on
The New York Times Company
). Tough economic conditions along with softness in advertising
demand have been weighing upon the company's performance.
Consequently, the company is trying every means to shield itself
from the impact of an unstable market and has been contemplating
new revenue generating avenues. Currently, The New York Times
Company carries a Zacks Rank #4 (Sell) status.
Why the Reiteration?
Advertising, which remains a significant source of revenue, is
largely dependent upon the global financial health. We observe
that The New York Times Company's total advertising revenue slid
2% in the third quarter of 2013, which however, portrayed the
lowest quarterly decline in 3 years. Print advertising dipped
1.6% during the quarter. Other publishing companies such as
Journal Communications, Inc.
The E.W. Scripps Company
Gannett Co. Inc.
) are also encountering similar headwinds.
Advertisers are shying away from making any upfront
commitments in an economy that is showing an uneven recovery.
The New York Times Company has been adding diverse revenue
streams, which include a circulation pricing model and a
pay-and-read model to make it less vulnerable to the economic
conditions. The company is also adapting to the changing face of
the multiplatform media universe, which currently includes
mobile, social media networks and reader application products in
Despite hiccups in the economy, what still guarantees revenue
generation is The New York Times Company's pricing system for
NYTimes.com, which was launched on Mar 28, 2011. The company also
recently announced that mobile app users will now be able to
access a maximum of three articles per day from over 25 sections,
blogs and slideshows, before being asked to subscribe.
The publishing industry has long been grappling with sinking
advertising revenue. 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 advertising revenue and seek new revenue avenues,
the publishing companies contemplated charging readers for online
In an effort to offset the declining revenue and shrinking
market share, publishers are scrambling to slash costs. The New
York Times Company has been realigning its cost structure and
streamlining its operations to increase efficiencies, and in turn
the operating performance. The company is also offloading assets
that bear no direct relation to its core operations.
The New York Times Company completed the sale of Regional
Media Group in Jan 2012 to re-focus on its core newspapers and
pay more attention to its online activities. The company divested
its remaining stake (210 Class B units) in the Fenway Sports
Group in May 2012.
The company, in Sep 2012, completed the sale of About Group
and sold its stake in Indeed.com in Oct 2012. Most recently on
Oct 24, 2013, it completed the sale of New England Media Group,
The Boston Globe
and its allied properties to an acquisition company spearheaded
by John W. Henry, who owns Fenway Sports Group, for about $70
million in cash.
GANNETT INC (GCI): Free Stock Analysis Report
JOURNAL COMM-A (JRN): Free Stock Analysis
NY TIMES A (NYT): Free Stock Analysis Report
EW SCRIPPS CO (SSP): Free Stock Analysis
To read this article on Zacks.com click here.