NYT Ready to Throw in the Towel on Local Newspapers
As Google (NASDAQ:GOOG) and Facebook continue to provide stiff competition in the online advertising space, New York Times (NYSE:NYT) is considering to let go of its Regional Media group. [1] The division stands out as a relatively weaker link for the company, especially since these local newspapers have seen the maximum drop in advertising revenue compared to NYT’s other news offerings.
After Paywall, Regional Media Seems Less of a Strategic Fit
The decision to introduce digital subscriptions for NYTimes.com made it clear that the company had increasingly shifted its focus toward online advertising and subscriptions compared to physical circulation. In this regard, the Regional Media Group has consistently been the weakest performing division for the company’s News Media Group, posting close to 10% declines in online advertising revenues for all quarters in 2011. [2]
Scaling down its local news operations could also free up NYT’s resources to focus on the ailing About Group, which itself has seen steep declines in online advertising revenues for 2011. It’s not a big surprise that this move coincided with the stepping down of Janet Robinson as CEO, [3] and we expect NYT to increasingly reduce reliance on circulation as a revenue stream in the future as well.
We currently have a price estimate of $7.50 for NYT’s stock, which is roughly in line with the current market price.
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