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Activist investor ValueAct Capital Management has built a new position in the New York Times Co (NYSE: NYT), saying that the iconic newspaper company could improve digital sales and margins through an aggressive rollout of its subscriber-only bundles.
San Francisco-based ValueAct, in a letter to investors, said it now owns a 7% stake in the Times, Bloomberg reported.
“Our research suggests that most current readers and subscribers are interested in the bundle and would pay a large premium for it but are not aware the offering even exists,” ValueAct said in the letter.
“This is an opportunity we believe management needs to drive with urgency, as it is the biggest lever to accelerate growth, deepen NYT’s competitive moat, and ensure the long-term strength and stability of the platform.”
The investment firm said that it believed the current valuation doesn’t reflect the company’s long-term growth prospects, and there is potential for the Times to see strong double-digit digital revenue growth and see margins expand by up to three times.
Shares of NYT had fallen about 32% this year but jumped more than 11% on Thursday in New York trading, giving the company a market value of about $5.8 billion.
“A generational shift is underway where US consumers prefer to consume high-quality news digitally –- across websites, social medial channels, mobile apps, podcasts, email newsletters, push alerts, and other surfaces –- which can only be satisfied by a scaled franchise with a trusted brand like NYT,” ValueAct said in the letter.
“This shift creates tremendous competitive pressure,” it said. “While most of its fragmented competition is challenged for growth, NYT is building a bigger, more profitable, and more defensible business.”
Picture Credit: TechCrunch
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