Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Monday, July 31, 2006

Time For The NYT To Sell The Boston Globe

The New York Times Company has a stock price sitting at multiyear low as its advertising lineage and circulation continue to drop. Revenue at its newspaper online businesses grew 25% last quarter, slower that the online units of most other newspaper companies. The company’s debt was recently downgraded by S&P because of the cost of its new headquarters, deteriorating margins, and the closing of one of the company’s large printing facilities.

In addition to the other bad news, the company’s CFO retired, a little early it would seem, and the company’s flagship property was forced to cut the width of its newspaper to save costs.

Although none of the properties owned by the company is having a spectacular year, the real drag on the company’s financial progress is what the company quaintly describes as the New England Media Group, known to the rest of the world as The Boston Globe. The NYT bought The Globe’s parent in 1993.

In the second quarter of 2006, advertising revenue at the New England Media Group fell 10% to $109 million. Circulation revenue fell 7% to $40 million. Both figures accelerated downward from the numbers in the first quarter.

Based on the most recent numbers, the New England Media Group will have annual revenue of about $1.2 billion this year. Based on the multiples that successful publicly traded newspaper companies get today, the operations could be worth as much as $1.7 billion. The New York Times showed total debt of $1.4 billion at the end of Q2. Times management has said that they won’t sell the unit, but, who knows, if their jobs depend on it.

Imagine the Times, debt free, with its New York flagship, regional newspapers (which are good little money makers) and broadcasting unit, in a position to drive forward on the Internet and make a go of it. Certainly a better picture than a stock trading at $22, down from over $40 in the Fall of 2004.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

Powered by Blogger