Investors in The New York Times Company (NYT)
have had a good time lately, watching the stock rise to $10, which has
netted them a return of over 40% in the last three months. We think one
of the catalysts for the rapid rise was NYT’s renewed focus on digital
offerings, which was strengthened by the divestiture of non-core assets such as the About Group.
However, in contrast to the market, we aren’t so bullish on the
company’s prospects. We think that, in particular, the market is too
optimistic on digital subscription and revenue per page view growth.
Additionally, the market seems to be ignoring the impact of negative
secular trends on the company’s print division.