NY Times Sheds Boston Globe at a Loss
In order to focus more on its core businesses, The New York Times Company (NYT) entered into a deal to sell its New England Media Group, including The Boston Globe and its allied properties to an acquisition company spearheaded by John W. Henry, who owns Fenway Sports Group. Additionally, the company will offload its 49% stake in Metro Boston.
This $70 million cash transaction, expected to conclude within 30 to 60 days, would result in a massive loss for The New York Times Company, which had paid a mammoth amount of $1.1 billion to acquire The Boston Globe newspaper in 1993.
The New England Media Group, which consists of The Boston Globe, BostonGlobe.com, Boston.com, Telegram.com, Worcester Telegram & Gazette and GlobeDirect, generated total revenue of $179.7 million in the first half of 2013, down approximately 7.1% year over year.
The divestitures come as part of the company’s ongoing strategy to completely offload assets in order to re-focus on its core newspaper group, The New York Times Media, and pay more attention to its online activities.
The New York Times Company on Sep 24, 2012 completed the sale of About Group, which it acquired in 2005, to InterActiveCorp (IACI) for a consideration of $300 million. In October, the company sold its stake in Indeed.com, a job portal, for approximately $167 million. Another example of asset divestiture by the company is the sale of Regional Media Group in Dec 2011.
The Washington Post Company (WPO) is another media company that divested its daily and Sunday newspaper, The Herald, to Black Press Ltd. and its subsidiary Sound Publishing.
The current economic situation does not seem conducive for publishing companies, which are bearing the brunt of waning advertising demand. Consequently, the companies are contemplating on introducing a new line of digital products and services, and targeting global customers to counter the headwinds.
The New York Times Company has been adding diverse revenue streams, which include a pay-and-read model for NYTimes.com to make it less susceptible to the economic conditions. Another diversified media conglomerate, Gannett Company Inc. (GCI), has also moved toward a subscription-based model for news content.
The New York Times Company remains committed to streamline its cost structure, strengthen its balance sheet, and rebalance its portfolio. 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 its portfolio. Currently, the company carries a Zacks Rank #3 (Hold).
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