Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Boston Globe Doesn't Deliver For the Times [Wall Street Journal]
Summary: When the New York Times reports earnings today, look out for the Boston Globe's negative effect on its performance. NYT's rationale in purchasing the Globe for $1.1 billion in 1993 centered on the affluent Boston population. This affluence has resulted in Boston's having the third highest broadband penetration in the U.S., and a quick migration from traditional print media. The Globe's division ad revenues are in a tailspin, falling 7.2% in Q1 and 10.4% in Q2, and falling 11.7% and 15.7% in July and August respectively. Its Sunday circulation has fallen 25% since the acquisition, compared to industry Sunday circulation declines of 12%. Federated's May Co. acquisition has taken a major toll of an estimated 5.9% on advertising revenue. The paper has instituted cost savings measures including buyout offers to more than 200 employees and reduction of news content; alongside these measures, the company has introduced new niche products and increased advertising space. But as NYT CFO Len Forman noted in a June call with analysts: "they've had a marketplace that basically has just turned so far south. Cutting costs won't do it, and you'll just cut to the bone. "
Related links: Check here later today for NYT's earnings call transcript • Last quarter's earnings call transcript • NYT Buyout Rumors • Seeking Alpha coverage of newspaper stocks
Potentially impacted stocks and ETFs: New York Times (NYSE:NYT), Washington Post Company (WPO), Gannett (NYSE:GCI), Dow Jones & Co (DJ).
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