(WPO) Washington Post to Sell The Herald

The economy, which is still not completely out of the woods, has been impeding the growth of publishing companies, and The Washington Post Company (WPO) is no exception. The company recently entered into a deal to sell its daily and Sunday newspaper, The Herald, based in Everett, Wash., La Raza, to Black Press Ltd. and its subsidiary Sound Publishing.

Soft economic conditions, along with waning advertising demand, have been weighing upon this Zacks Rank #3 (Hold) stock’s performance, and compelled it to take the tough decision of offloading the newspaper, along with its print and online products, which it has owned since 1978. The amount of the transaction was not disclosed, which is expected to conclude early next month.

The Washington Post Company’s newspaper division has long been grappling, with revenue falling 7% to $419.6 million for the first nine months of 2012, and registering an operating loss of $56.3 million over the same time frame.

Earlier, the company had revealed its intention of shedding 2 shipping terminals in Alexandria and was seeking buyers to sell its headquarters housed in Northwest Washington. It seems that The Washington Post Company has been trying to shield itself from the impact of an unstable market.

The New York Times Company (NYT) is yet another example of publishing companies which are shedding assets. The company completed the sale of About Group, which it acquired in 2005, to InterActiveCorp (IACI) for a consideration of $300 million, divested its remaining stake (210 Class B units) in the Fenway Sports Group and sold Regional Media Group.

The publishing industry has been struggling with sinking advertising revenue for sometime now. This comes in the wake of a longer-term secular decline as more readers are gradually choosing free online news, thereby making the print-advertising model increasingly irrelevant. To curb shrinking advertising revenue and seek new revenue generating avenues, the publishing companies contemplated charging readers for online content.

News Corporation (NWSA) has taken a leap toward an online subscription-based model for general news content. The New York Times Company, on Mar 28, 2011, initiated a pricing system for NYTimes.com.

The newspaper companies are transforming their business models to better position themselves in a multi-platform media universe. Although the U.S. economy is witnessing a sluggish improvement in the advertising environment, we believe 2013 is unlikely to mark the resurrection of the publishing industry.
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