NYTimes Company to Sell 16 Regional Newspapers for $143M
The New York Times Company (NYSE:NYT) will sell 16 regional newspapers from across the U.S. Southeast and California to Halifax Media Holdings for $143 million in cash in an effort to cut costs and focus on its most important newspapers and their websites.
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Weak local retail and national advertising have weighed on regional newspapers, forcing many to shut down after decades, in some cases more than a century, of reporting in a community.
With free access to many top news websites, and relatively cheap online subscription fees for still more than allow subscribers to read the news on a variety of platforms, newspapers that don’t make the grade get left behind.
Subscribers to The New York Times online can read articles on their computers, smartphones, or even tablets. NYTimes.com offers different subscription plans that come with smartphone and tablet apps. With up-to-date news so easily accessible on one’s iPad (NASDAQ:AAPL) or Android phone (NASDAQ:GOOG), few readers remain for traditional print newspapers.
The newspapers still in the game are those that have evolved, like The New York Times, meeting the digital needs of their readers.
The Washington Post Company (NYSE:WPO) offers free membership, allowing readers unlimited access to WashingtonPost.com articles and blogs, as well as breaking news updates sent via e-mail or text.
Readers can follow USA Today (NYSE:GCI) on Twitter, a platform that many news media use to entice readers with bite-sized pieces of information that link back to the story on their websites.
With competition mounting for sites from CNN.com (NYSE:TWX) and MSNBC.com (NASDAQ:CMCSA) to specialty blogs and search engines, only the newspapers that can successfully cater to digital markets have any chance for survival — and given the already low readership for regional papers, and their significantly lower budgets, few are able to successfully make the transition.
The Times Company’s regional assets have become a burden. The group of 16 newspapers, which includes the Sarasota Herald-Tribune in Florida, The Press Democrat in California, and the Herald-Journal in South Carolina, has a weekday circulation of about 430,000.
The Times Company expects to record an after-tax gain on the sale of its regional assets, which is scheduled to close in the first quarter of 2012. It estimates that net after-tax proceeds from the sale will be about $150 million.
“I think that it’s toward the low end of what we expected. I was expecting $150-$200 million,” said Evercore Partners analyst Douglas Arthur.
“What it implies is that margins on regional newspapers were not as high as we thought, but the underlying profitability of the main New York Times is higher,” Arthur added.
Last week, the Times Company announced it would sell its regional newspapers only days after Chief Executive Janet Robinson announced her sudden retirement.
The group’s revenue, more than a tenth of Times Company’s overall sales, fell about 7 percent to $190 million in the first nine months of this year.
“These newspapers have been a drag on overall results due to heavier reliance on local advertising, which lags national advertising growth,” said Morningstar’s Joscelyn Mackay.
“Without these papers, the firm will be able to focus on its flagship The New York Times and monetize its digital content.”
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