Created on: February 24, 2013 Last Updated: February 25, 2013
There was a time when folks who wanted to keep informed had only their morning paper to turn to. Those days seem long ago, as newspapers have been replaced by Internet news sites that disseminate information faster than a daily paper can. To survive, some papers have turned to pay-to-view setups on their own websites, effectively making them daily news services that are paid for on a monthly basis. As with all things, times change and businesses have to adapt. Such is the case with The New York Times.
In 1993, The New York Times purchased the Boston Globe in what was viewed as a shrewd move to buy other big name brands to help create a newspaper empire. Unfortunately, the strategy did not pay off, as it became apparent that the newsstand and home delivery newspaper business was going the way of the dinosaur. As that fact became clearer, The Times started attempting to divest itself of these assets, while changing their plan of attack for their own paper's survival.
The New York Times put the Boston Globe up for sale in 2009. Unfortunately, the Globe's pension plan liability became just that, a liability. Prospective buyers were scared off by a pension number that was said to be between $110 to $240 million. At that time, The New York Times required any buyer to assume that as part of the sales price. That effectively ran off any party that had real interest in acquiring the asset.
Fast forward to 2013, and the Times is putting the Boston Globe back on the block. This time around, though, they are not including the responsibility for the pension plan liability as part of the price. It would seem that The New York Times is very serious about selling off the Globe this time, but what has changed? For one, The New York Times has seen the writing on the wall, and now wants to focus solely on its own brand. That means dumping all of its other non-Times assets, the Boston Globe being the final one.
The New York Times also seems to be re-evaluating its advertising philosophy and concluding that the days of advertising being the biggest revenue earner for newspapers is over. In place of full-page nationwide ads, businesses now use the Internet and other targeted forms of advertising to get the word out to their consumers. The New York Times thus shifted focus and changed to an online subscription program, which now accounts for more money than what advertising brings in.
The Boston Globe still looks to advertising dollars to make their business profitable, but this business model is simply not working. A Bloomberg piece notes that the Boston Globe had, "reported a 7.8 percent drop in ad revenue last year minus the extra week to $183 million. That compares with a 1.7 percent decline in circulation sales to $155.1 million in the same period. The newspaper’s online subscription program has about 28,000 paying subscribers, 8 percent more than it did at the end of September".
Those are ugly numbers, no matter how they are looked at. They give a clear picture of why The New York Times is so interested in dispatching the once great Boston Globe newspaper. Those in charge at The New York Times have started to see a rebound in their profit margin, but know that it will not continue unless they can get this final albatross off their necks.
Learn more about this author, John Atchison.
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