The 21st century has presented a perfect storm of misery to the Times and the rest of the newspaper industry. It has suffered the shock of seeing its time-honored business model — relying on print advertising — becoming all but irrelevant during news consumers’ migration to the Internet. Increasingly, people go online to get news in real time — and more cheaply than before. Advertising revenue crumbled when the economy slumped and the industry as a whole has yet to figure out fully how to monetize the Internet and capitalize on the boom in mobile devices.
Young readers — the 18-to-34-year-old demographic that advertisers have always coveted — prefer to get their news from feeds on smartphones, tablets, Facebook Inc (NASDAQ:FB), and Twitter, not to mention such alternate information sources as Comedy Central’s Jon Stewart and Stephen Colbert. As a result, once-powerful newspaper companies have had to enlist new strategies to remain relevant to shareholders.
The Times has been making strategic moves that enable it to concentrate on its newspaper and digital properties. In 2012, the Times finished the sale of the Regional Media Group, divested its remaining share in the Fenway Sports Group, and sold its About Group as well as its stake in Indeed.com. The Times plans to sell its New England Media Group, which encompasses the Boston Globe and related assets.
Bloomberg reported on June 27 that the Times was probably going to have to settle for a price for the Boston Globe that’s approximately one-tenth of what it paid in 1993. Bids are expected to be in the range of $100 million, and Bloomberg noted that potential buyers included former Globe president Rick Daniels and former Time CEO Jack Griffin, in a partnership with cousins Steven and Ben Taylor, whose family once owned the Globe. The Times paid $1.1 billion 20 years ago.
Wall Street frets that the Times Co. won’t be able to capitalize on any momentum it can muster. For example, earlier this month, Barclays Capital analysts downgraded shares of the Times to equal weight, citing concerns that the stock — which at the time of the pronouncement had surged about 47% to date in 2013 — might have peaked.
In addition, Zacks Equity Research reaffirmed its long-term neutral rating on the Times on July 9. “Tough economic conditions along with softness in advertising demand have been weighing upon the company’s performance. Consequently, [the Times is] trying every means to shield itself from the impact of an unstable market and has been contemplating new revenue-generating avenues.”
The Times has focused on diverse revenue sources, such as a circulation-pricing model and a pay-and-read style to make it less vulnerable to economic downturns. It’s also trying to increase its profile on the multiplatform media ecosystem, which encompasses mobile and social networks.