The New York Times doesn't need a white knight

The publisher's digital strategy is paying off, and shares are up about 40% this year.

By Jonathan Berr Aug 8, 2013 4:39PM
The New York Times headquarters building, Manhattan, New York, America
© Sipa Press/Rex FeaturesNew York Times (NYT) Chairman Arthur Sulzberger has said it before, and in the wake of the Washington Post's (WPO) sale to Amazon.com (AMZN) founder Jeff Bezos he said it again: The company his family has controlled since 1896 is not for sale.

Of course, anything is for sale for the right price, including the Times, but the company doesn't need a white knight to come to its rescue -- whether it be New York Mayor Michael Bloomberg, who owns the media company that bears his name, or anybody else. Financially, the Times is doing OK. Not great, mind you, but good enough that the Sulzbergers probably don't feel an urgent need to sell.

The company had about $918 million in cash and marketable securities at the end of June, exceeding total debt by approximately $224 million. Shares of the publisher have surged more than 40% this year, closing Thursday at $12.03, as many investors have found the sector too cheap to ignore. 

Warren Buffett is a fan of the sector as well, buying the 63-newspaper Media General chain last year in addition to standalone entities, such as The Omaha World-Herald. The Oracle of Omaha, though, probably wouldn't buy the Times, since he prefers dailies in smaller towns where competition for readers is less intense than in big cities.

The Times, to its credit, recognized early that it couldn't keep giving away all its content for free and instituted a paywall in 2011 that has worked better than many people, myself included, expected. In the latest quarter, paid digital subscriptions hit 738,000, an increase of nearly 40% from a year earlier. That helped boost circulation revenue by 5%, but it wasn't enough to offset a 6% decline in advertising sales. Even so, the Times reported a profit of $20.1 million in the latest quarter.

The Post, one the other hand, didn't launch its paywall until this year. Dragging its feet cost the company financially as well. During the most recent quarter, the company's newspaper publishing business reported a loss of $14.8 million. Shares of the Post are up more than 70% this year, but that reflects investors' enthusiasm for the company's other businesses, including its television stations and the for-profit Kaplan education operation.

These are hardly the days of wine and roses for The New York Times, but unless the economy takes an unexpected nosedive, it should muddle on just fine.

--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.


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