The New York Times Company has been slimming down rapidly in the last year, shedding non-core assets and amassing a cash hoard to take it through a trying time of low ad sales.
Now, the Times is putting its last remaining outside asset on the block. In a release issued on Wednesday afternoon, the company announced it is selling the Boston Globe and its sister paper, the Worcester Telegram & Gazette.
“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 Times CEO Mark Thompson. Politico has an internal memo to Times staff which says “this was not an easy decision.”
As reported by Boston.com, the Times acquired the Globe for $1.1 billion in 1993 and tried unsuccessfully to sell it in 2009.
In recent years, the Globe has incurred the same struggles as other metropolitan newspapers; its ad revenue is falling fast and its digital prospects are limited by its regional coverage. As we reported this morning, the paper has only 28,000 digital only subscribers after putting in a digital paywall almost a year and a half ago.
In light of all this, the sale isn’t surprising. The Times’ brand power has allowed it to tap into national and international markets where it competes with the Wall Street Journal and the Financial Times. Selling the Globe will permit the Times to focus on its global strategy and also to amass more cash to weather a current rough patch in which circulation revenue is not coming in fast enough to offset declining ad sales.
As Bloomberg reports, the terms of any sale are likely to hinge on the Globe’s large pension liabilities.
In coming months, New York Times watchers will scrutinize what the Grey Lady does with its cash hoard which is likely to top $1 billion after the Globe sale. On its last earnings call, Thompson said it will use the cash for debt reduction and investment rather than reissuing the dividends which are an important source of income for the family members who control the company.