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Sunday, November 8, 
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Is a N.Y. Times-Yahoo! marriage pulp fiction?

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New_York_Times_Building_Flickr.jpgSuggestions that Google Inc. should buy the ailing New York Times Co. have been floating around the blagosphere since last year. Piper Jaffray & Co.'s analyst Gene Muster wrote in a research note last week that the Sunnyvale, Calif.-based company should set its sights to purchase a print newspaper such as the Gray Lady and a blog network. After the Times and Yahoo! Inc. announced expected sluggish earnings recently, would the two sides seriously consider the proposed hookup?

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Stranger things have happened. AOL buying Time Warner Inc. Bernie Madoff duping the Wall Street establishment. But this proposed deal should just be filed in the "good idea, never going to happen" folder.

Muster suggests the Times and Gawker Media would be a good fit. "These content acquisitions would allow Yahoo to own and distribute a collection of the best content on the Web in addition to generating short-form content to maximize page views and stickiness," Muster wrote in his report.

The proposed deals seem interesting to say the least, but the likelihood that Yahoo! would pursue them is slim. First off, Yahoo! seems to be in worsening financial trouble -- announcing that it sustained a $303 million fourth-quarter loss on Tuesday. Internet ad revenue came in at $1.59 billion, which was largely unchanged from a year ago. However, analysts predict a weak economy will likely dampen those numbers down the road. So, the addition of the Times won't likely help their numbers in the short term.

It's also obvious newspaper publishers have found it difficult to monetize online content. The Gray Lady's online operations is no exception as the media company announced Wednesday total Internet revenue fell 3% to $92.5 million, with online ad revenue slipping 3.5% to $81.9 million. Although the print operations provides a wealth of content, the reality is subscriptions and ad revenue to the print component have been weakening over the last couple of years. At the company's newspaper properties, total revenue fell 11% to $742 million for the fourth quarter, as advertising sales declined 18.4%. Circulation revenue did rise 4% on price increases and a likely one-time boost for strong demand for November election additions. Additionally,Yahoo! may be scared off by the Times' large debt load, which comes in at the end of the fourth quarter at about $1.1 billion.

So, how does the New York Yahoo!-Gawker Times sound? It doesn't roll smoothly off the tongue, but more importantly the numbers of that union don't seem to add up. - Gerald Magpily

See Barron's article





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