Activist investor ValueAct Capital Management has built a new position in the New York Times Co.
ValueAct stated in a letter to investors that it now has a stake in the Times. The current valuation doesn't reflect the company's long-term growth prospects in almost any potential economic environment and management has several opportunities to offset the macroeconomic challenges that face the industry
The key to this growth will be a more aggressive roll out of its products. The products include the Athletic and crosswords.
According to ValueAct's research, most current readers and subscribers are interested in the bundle and would pay a large premium for it but are not aware it exists. The biggest lever to accelerate growth, deepen NYT's competitive moat, and ensure the long-term strength and stability of the platform is this opportunity.
According to the investment firm, there is a chance for the Times to see double-digit digital revenue growth over the long run.
Before Thursday, the company's shares had fallen 32%. The company's market value was $5.8 billion when they rose as much as 12%.
The Times wasn't available for comment.
One of the rare success stories in publishing is the Times, as it has built a large and growing digital-subscription business. The company has a subscriber base of 9.2 million. Advertisers are pulling back on spending in a weak economy.
The Times said it expects advertising sales to be flat or down in the third quarter.
US consumers prefer to consume high quality news digitally across websites, social media channels, mobile apps, podcasts, email newsletters, push alert, and other surfaces, which can only be satisfied by a scaled franchise with a trusted brand like NYT.
The shift creates a lot of competitive pressure. The NYT is building a bigger, more profitable, and more defensible business while most of its competitors are challenged for growth.
With the assistance of a person.
(Updates with share gain in sixth paragraph.)
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