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NY Times Confirms Divestiture - Analyst Blog

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The New York Times Company ( NYT ) now confirmed that it is selling its Regional Media Group segment - 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 $143 million in cash.

The deal, which is expected to conclude within a few weeks, will result in after-tax proceeds of approximately $150 million. The New York Times Company hinted that the after-tax gain on the sale will be recorded in the first quarter of 2012, and will be utilized for general business purposes.

Waning print advertising revenue, in an economy in turmoil, 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, which include The New York Times, The Boston Globe and The International Herald Tribune, and pay more attention to its online activities. The decision to offload the division is also considered as a part of the cost containment efforts undertaken to stay afloat in this turbulent environment.

The papers put on the block include Sarasota Herald-Tribune, The Press Democrat, The Gainesville Sun, The Gadsden Times, Times-News, Petaluma Argus-Courier, Star-Banner, The Tuscaloosa News, The Courier, North Bay Business Journal, News Chief, The Ledger, Star-News, Herald-Journal, Daily Comet and The Dispatch. The Regional Media Group has an average weekday circulation of approximately 433,251 and Sunday circulation of about 481,232.

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.

The Group witnessed secular declines of 9.7%, 9.2% and 9.7% in advertising revenue during the first, second and third quarters of fiscal 2011, respectively. Circulation revenue also fell 4.7%, 1.7% and 1.5% during the respective quarters. Revenue for the Group tumbled 7.4%, 6.2% and 6.5% in the first, second and third quarters of fiscal 2011, respectively.

The ongoing slouch in the advertising market continues to weigh upon The New York Times Company. Total advertising revenue slid by 8.8% to $261.8 million in the third quarter of 2011, as against a fall of 4% in the second quarter. The diversified media conglomerate had warned against a further deepening of the slump in advertising revenue, thereby raising alarms about a rough economy, and its susceptibility to such conditions.

Despite hiccups in the economy, what still promises a guaranteed revenue generation avenue is The New York Times Company's pricing system for NYTimes.com, which was launched on March 28, 2011.

Another media conglomerate, News Corporation ( NWSA ) has already taken a similar leap forward. It is promoting an online subscription-based model for offering general news content to readers. News International, a subsidiary of News Corporation, began charging readers for online content for The Times of London and Sunday Times of London, effective June 2010.

The New York Times Company remains committed to streamlining its cost structure, strengthening its balance sheet and rebalancing its portfolio. Currently, we have a long-term 'Neutral' rating on The New York Times Company. However, the stock holds a Zacks #2 Rank that translates into a short-term 'Buy' recommendation.

NEWS CORP INC-A ( NWSA ): Free Stock Analysis Report

NY TIMES A ( NYT ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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