In its ongoing restructuring process, the New York Times Company announced Feb. 20 it will sell The Boston Globe and other assets belonging to the New England Media Group. According to analysts, the transaction could fetch $200 million.
“Our plan to sell the New England Media Group demonstrates our commitment to concentrate our strategic focus and investment on The New York Times brand and its journalism,” said Mark Thompson, president and CEO of The New York Times Company.
Thompson said the move is in the best interest of shareholders.
New England Media companies include the Boston Globe, The Worcester Telegram & Gazette, Boston.com.
The New York Times acquired the Boston Globe for $1.1 billion in 1993, but recently circulation has been declining. According to the New York Times, circulation at the Globe decreased from 438,621 in 2002 to 230,351 by September 2012. The New York Times hired investment bank Evercore partners to find a buyer for the assets.
The proposed sale continues a series of divestments in a bid to focus on core New York Times activities. IAC/InterActiveCorp bought About.com for $300 million in September. The remainder of the Fenway Sports Group, owner of the Boston Red Sox, was sold for $63 million in May 2012. In addition, the company sold 16 regional newspapers for a $143 million in 2012.
Citigroup estimates that the New England Media Group might only fetch around $200 million. “The segment generated $395 million in revenue in 2012. Assuming a 17 percent margin [and] applying a 3 times multiple—on the high end of comparable large metro newspaper sales—implies that the paper is worth ~$200 million.”
The analysts think that the transaction is a positive overall, but hurts cash flow, which makes it harder to pay a dividend. The New York Times has not paid an annual dividend since 2008. Shares in the New York Times Group jumped 28 percent to $9.19 in late New York trading Feb. 20 but pulled back to $9.03 in after hours trading.