Analysts To NY Times Co.: We Like the TV Divestiture

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By: Jennifer Saba

Analysts are gung-ho about The New York Times Co. sell-off of its Broadcast Media Group to Robert Bass’ private equity firm Oak Hill Capital Partners for $575 million.

Given the glut of properties on the market, the price was considered good for the nine TV stations and affiliate Web sites.

Merrill Lynch and Prudential Equity Research calculated one of the higher multiples, estimating roughly 13 times 2006 estimated EBITDA. Wachovia Equity Research did one better, pegging the transaction at 15 times blended 2006/2007 estimated EBITDA. Goldman Sachs and Bear Stearns believe the transaction was closer to a multiple of 12.8 times 2006 estimated EBITDA.

No matter, all thought the Times fetched an attractive sum.

“Given the generally weak TV environment and abundance of media assets on the market, we view the deal as a positive for [the New York Times],” wrote Wachovia analyst John Janedis.

Both Goldman Sachs (the investment arm, independent of the research division, advised the Times on the sale) and Bear Stearns like the fact the company can now concentrate on its core newspaper and digital properties.

“We continue to believe this is a positive step and reflects an increasing level of corporate agility as traditional media companies fight to remain important players in the quickly changing media landscape,” wrote Alexia Quadrani an analyst at Bear Stearns.

As for the proceeds, analysts forecast the company will use the money for share buybacks, high-growth acquisitions, debt reductions, and dividend increases.

While the move was praised, it still doesn’t change the overall pall enveloping the industry caused by slumping ad revenue and circulation. Merrill Lynch’s Lauren Rich Fine put it this way in a note: “While the company has done a nice job of selling it non-essential assets and investing in its core operations, we are hard press to get excited.”

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