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NY Times to Shed Regional Media - Analyst Blog

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The waning print advertising revenue in an economy, which is facing the brunt of the financial turmoil, compelled The New York Times Company ( NYT ) to take the tough decision of divesting its Regional Media Group division, part of The New York Times Media Group and focus on core newspapers, which include The New York Times , The Boston Globe and The International Herald Tribune , and its online activities.

The company hinted that it is in discussion to sell 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. 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.

Last week, the company informed the sudden departure of Chief Executive Officer, Janet Robinson.

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 meltdown has made matters even worse. 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 professed of 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 Zacks #2 Rank that translates into 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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