December 19, 2011
by Jeff Bercovici
Uneasy as the leadership of The New York Times Co. may be about their current financial situation, they remain confident their flagship newspaper has a bright future. The same can’t be said for the 16 small and medium-sized papers the company publishes in California and the southeastern U.S. The prospects for those papers have been dimming, to the point that the Times Co. has decided to cut them loose.
The company’s in “advanced discussions” to sell the Regional Media Group to Halifax Media Holdings LLC, owner of the Daytona Beach News Journal and other papers across the region. Media blogger Jim Romenesko broke news of the impending sale after noticing that Halifax had, apparently prematurely, added the papers’ names to its corporate website. No word yet on what the price might be, but media appraiser Kevin Kamen tells me the group “does not appear to be worth more than $65 million in total valuation.”
Why sell? For starters, the Regional Media Group’s fortunes have been trending downward. Its revenues were down 6.7% through the first nine months of 2011, versus a 0.4% dip for the New York Times itself and a 5.5% decline for the Boston Globe, which isn’t part of the sale.
Even more to the point, Times executives have made building up digital circulation revenues the central pillar of their strategy. But generating those revenues — ie. getting readers to pay to read news stories on computers, phones and tablets — is a daunting task for papers that lack the brand recognition of a paper like the Times. When Janet Robinson, the Times Co.’s soon-to-retire CEO, came to FORBES’s offices in September, she acknowledged as much. “It’s harder for regional papers,” she told us. “They are at the beginning stages of monetizing their digital future.”
Ironically, the very success of the Times’s digital edition is contributing to the declines of regional papers like the ones it owns. Digital delivery means readers outside the New York area no longer face a choice between paying more for the Times or settling for a second-rate local paper like, say, the Gainesville Sun. According to a Times spokesperson, 81% of the digital subscribers the Times has signed up since putting up its paywall last March live outside the New York market. For the print edition, only 62% of the subscribers live outside the market.