New York Times Eyes First Acquisition in Three Years to Bolster Growth

New York Times Co. (NYT), publisher of the namesake newspaper, may make its first acquisition in more than three years.

Times Co. is interested in deals for technology or information companies to bolster digital growth, according to Chief Executive Officer Janet Robinson. The company has been paying down debt and reducing costs, giving it the financial flexibility to strike deals, she said.

“We are in a position to invest organically or inorganically,” Robinson said in an interview at Bloomberg headquarters in New York. Any acquisitions will “depend on really what comes through the pipeline, what becomes available and what fits. If it’s something that has some bearing to really rounding out our portfolio then we will do that.”

She declined to name any businesses the company may buy.

Times Co., based in New York, has been struggling with a slide in traditional print revenue that has led to annual sales declines every year since 2006. The company introduced an online paid subscription model at the New York Times in March, helping bolster advertising and lift digital subscriptions to 324,000 at the end of September.

Times Co. wants to build on that momentum at the New York publication and its other newspapers, including the Boston Globe, which started an online paid subscription in October.

“It’s working from a revenue perspective,” said Robinson, who was joined in the interview by Chairman Arthur Sulzberger Jr.

Last Acquisition

Times Co.’s last acquisition was the purchase of a Florida newspaper in March 2008, according to Bloomberg data. The company has made investments in technology startups including LibreDigital Inc. and Ongo Inc. since then.

In 2005, Times Co. paid about $410 million in cash for About.com, a platform for content on topics such as home repair and movie previews. For the nine months ending in September, the About Group had $84.7 million in revenue, a 16 percent decline from the same period a year earlier. About’s operating profit was down 23 percent during the period to $35.4 million.

The About.com acquisition was instructive, helping Times Co. understand how to manage acquisitions and learn about issues such as optimizing stories for search engines, Robinson said.

“We learned the lesson that if you’re going to buy a company like that, you don’t try to make it into the New York Times or the Boston Globe,” she said. “This is a very different animal. Let it sing on its own.”

Huffington Post, Facebook

As digital subscribers increase, the company continues to work to reverse the slide in overall revenue. Total advertising revenue was down 8.8 percent in the third quarter, with print dropping 10 percent and digital falling 4.5 percent. Revenue during the quarter fell 3.1 percent to $537.2 million.

Times Co. can contend with competition from online news sources such as AOL Inc. (AOL)’s Huffington Post and emerging competitors for advertising revenue such as Facebook Inc., said Sulzberger.

“We’re always going to have competitors,” he said. “As long as we keep a direct relationship with a quality audience and find the new tools to do that in this digital world, we’re going to be able to offer that quality audience to advertisers.”

The company’s stock has suffered from the newspaper industry’s challenges, along with the economy, he said.

“We’re in a very challenged sector,” he said. “We can’t pretend we aren’t.”

Times Co. rose 3.9 percent to $7.73 at the close in New York and has declined 21 percent this year.

‘Challenged Sector’

The company does have an opportunity to make money off of its investments in online subscription technology, said Robinson. It’s developed two different models at the New York Times and Boston Globe, the former metered so readers get a certain number of stories free and the latter a paid gateway for virtually all stories.

“There’s been a Conga line of people coming in for advice,” Robinson said.

Times Co. could generate revenue from the experiments, perhaps through licensing its technology or consulting on other newspaper companies’ projects, she said.

“We’re into developing new revenue streams,” she said with a smile.

To contact the reporter on this story: Brett Pulley in New York at bpulley@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom in New York at pelstrom@bloomberg.net.

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