Would you believe that one of the best-performing stocks since May 1 has been The New York Times
Looking back at the publisher's recent history, a series of divestments and strong reports helped boost shares.
On May 1, the company reported dramatic improvements in circulation at both The New York Times and The Boston Globe, and the following week, it continued its divestment of outside businesses by selling its remaining stake in the Fenway Sports Group, which owns the Boston Red Sox, for $63 million in cash. After it added two tech-savvy directors to the board, shares jumped another 8% on June 27, when the company announced it was starting a Chinese-language news site, and rallied 7% more over the following days. In its second-quarter report on July 26, the company confirmed its comeback, reporting a slight increase in revenue for the first time in two years. Adjusted EPS was $0.14 per share, beating estimates. On Aug. 8, reports that The New York Times would sell About.com, which had been declining in value, sent shares up another 6%. The upward trend continued through the next week as the company named BBC executive Mark Thompson as its new CEO, driving shares to $9.50, where they trade at today.
What appears to be behind much of this rise is the Times' ever-tightening pay wall, which has started showing results. In April, the newspaper's website cut the number of free articles available per month to nonsubscribers from 20 to 10, and subscriptions have gone up since then, rising 12% from just the first quarter of the year. Using a similar strategy, The Boston Globe scored a 28% jump in digital subscribers.
The New York Times isn't the only newspaper company that's been heating up recently. Shares of Gannett
Also underpinning the recent lift in newspaper stocks has been Warren Buffett's pursuit of newspapers. Berkshire Hathaway
Based on their pay wall strategies, the big chains seem to agree with Buffett. The main question for the newspapers should be: "What took so long?" Print advertising, once the main driver of industry revenue, peaked at $48.6 billion in 2000, but newspapers since then continued to offer their content for free in one channel (digital), while charging in another (print). That seems like a losing strategy if there ever was one.
While the Internet means steeper competition with the likes of AOL's
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Fool contributor Jeremy Bowman holds no positions in the companies in this article. The Motley Fool owns shares of Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.