The New York Times Co. stands to lose 15% of its market cap in the short term thanks to The Wall Street Journal‘s “Greater New York” section, says nerdy finance-graph website Trefis.
Trefis, a social-networking/stock-valuation site created by MIT engineers and Wall Street analysts, breaks down components of a company’s business and lets users tweak variables to model a stock’s potential performance.
“Greater New York” aims to hurt the Times by usurping its New York readers and advertisers. Says Trefis:
We estimate that the print advertising business constitutes a third of the $11 Trefis price estimate for NYT’s stock, making it the most valuable business for the New York Times (NYT). There could be a downside of 15% to the Trefis price estimate if NYT’s US print ad market share were to stagnate around 11% as a result of greater competition from the WSJ rather than increasing to 16% share as we forecast.
Over the longer term, though, Trefis says the Times‘ high quality standards and loyal readership will help it continue to gain share of the print-ad market. It sounds like any damage the Journal would do to the Times would constitute a short-term jostling rather than total derailment:
We believe these tactics could give WSJ a short-term edge over NYT in attracting the diminishing print ad dollars; however, the long-term success of WSJ’s initiative is dependent on the quality of the newspaper’s content and its ability to attract readers.