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| How Can The New York Times Be Worth So Little? |
| 2008-07-26 |
| On Wednesday, New York Times Co. (NYT) reported disappointing second-quarter earnings, and on Thursday the stock continued in its steep descent. At the end of trading it stood at 12.48, or virtually half the price it commanded one year ago. This part of the story is unsurprising, given how the Street is slamming any newspaper stock. What's startling is something else: If you back out much of the rest of the company's portfolio, you arrive at a surprisingly teeny valuation for the vaunted New York Times itself, despite all the respect the brand commands. At its current $12.48 stock price—down 46.3% from a year ago—Times Co. has a $1.79 billion market cap. To put this in perspective, CBS recently acquired tech publisher CNET, a much weaker media brand, for $1.8 billion. Add in the company's $1.1 billion of debt, subtract $42 million for its cash on hand, and the company's total enterprise value—a valuation measure that totals up those items in such a fashion—is just $2.85 billion. In a research note published on July 9, Lehman Brothers (LEH) analyst Craig Huber estimated the Boston Globe and the 14 regional newspapers the company owns could be sold for $575 million after taxes. Huber valued the 17% stake in the Boston Red Sox, after taxes, at $152 million and the Times's portion of its new headquarters building in midtown Manhattan at $750 million after taxes. The company paid $410 million three years ago for Web property About.com; according to an estimate by tech blog Silicon Alley Insider, that could be sold for approximately $600 million today. That sounds low to us, since About has consistently reported increasing revenues. Let's conservatively kick that up to $700 million and assume a 20% tax bite on the Times's $290 million gains in that sale, which is $58 million. So $642 million, aftertax, for About.com. Totaling up those figures gets you to just over $2.1 billion. Subtract that from the enterprise value, and you get $750 million for the company's remaining assets. Does anyone really believe that Times Co.'s other assets—The New York Times, the International Herald Tribune, and its New York City radio station—could be worth only $750 million? |
| Posted by:Nimble Spemble |
| #7 Let's see, a syndicate of ten million conservatives, $200 subscription.... The look on Krugman and Rich's faces when we lay them off, priceless! |
| Posted by: KBK 2008-07-26 22:39 |
| #6 Do I smell a bargain in the air? The outlook for any large newspaper is bleak. With the highest profile in the US, it's going to take more of a hit than some. But is it trash or treasure? What am I bid? |
| Posted by: Richard of Oregon 2008-07-26 21:38 |
| #5 ...despite all the respect the brand commands. ROTFL. Like sub-prime mortgage paper. Why should anyone pay to be the front for the Democratic Party? Let the Party pay for their own in house organ on their own dime and own time. There's nothing historically wrong with a Party putting out its own paper. Just be up front about it, instead of hiding behind the very poor Potemkin facade. |
| Posted by: Procopius2k 2008-07-26 19:41 |
| #4 How Can The New York Times Be Worth So Little? Have you read Maureen Dowd or Paul Krugman lately? |
| Posted by: Mike 2008-07-26 17:38 |
| #3 > Does anyone really believe that Times Co.'s other assets--The New York Times, the International Herald Tribune, and its New York City radio station--could be worth only $750 million? Yes. Next question. Are they worth anything at all? |
| Posted by: Bright Pebbles 2008-07-26 16:49 |
| #2 Does anyone really believe that Times Co.'s other assets—The New York Times, the International Herald Tribune, and its New York City radio station—could be worth only $750 million? When the owners and management has been riddled with incompetence for years and the newspaper has only been a cheer leading section for the liberal dhimocrat party instead of a news organization... Yes. |
| Posted by: DarthVader 2008-07-26 16:36 |
| #1 Good question. It's great for lining parrot cages and wrapping carp. That should give it some value. |
| Posted by: GK 2008-07-26 16:26 |