In an internal memo obtained by CNET News.com that was emailed to all New York Times employees, including its affiliate companies, the company stressed that the move reflects a need to give its online efforts a common strategic focus.
"By loosening the ties of these still fledgling operations to the business plans of the units from which they emerged, we feel they will be more flexible in adapting to changing market needs and in a position to make better use of the opportunities of cyberspace," said New York Times chairman Arthur Sulzberger Jr. and chief executive officer Russell Lewis. "This new structure also lets us devote the financial and staffing resources that our Internet efforts require without detracting from the financial results of our other business units."
The newspaper and broadcast media giant said that Martin Nisenholtz, currently president of the New York Times Electronic Media Company, will become chief executive officer of Times Company Digital, effective June 18, and will report to Sulzberger and Lewis.
The company also said it will consider selling shares in the online unit to the public. Such an offering would come as traditional media companies seek to highlight the value of their Internet assets to Wall Street, which has given increasingly high stock prices to many Internet-related properties.
"The [publishers] are flirting with the idea of trying to find ways to differentiate the value of some assets over others. They feel they owe it to their shareholders," said Lauren Rich Fine, an analyst at Merrill Lynch, who has a near-term "accumulate" rating on New York Times stock.
The company said that revenues from new media properties operated by the New York Times Company are expected to be between $24 million and $26 million in 1999.
"The decision to consolidate our Internet efforts should not be seen as any lessening in our fundamental commitment to our existing operations," wrote the two Times executives in the memo to company employees. "The view that the Internet will destroy the value of traditional media is, we both believe, an unsophisticated one."
The company said it has more than 7 million unique registered users of its flagship site, the New York Times on the Web, and that the site had about 2.4 million unique visitors in April.
Although Sulzberger and Lewis stressed that the company's newspaper, magazine, and broadcast operations are its core businesses, the new Internet division is to play a strong role in the future.
"[Success] in the digital world is equally critical to our Company's ability to prosper in the 21st Century," wrote the two executives.
Shares of the New York Times Company did not get a boost from today's news, dipping nearly 1 percent near the close of the trading day amidst a broader market sell-off. The company fell 0.89 percent to 34.75 and has traded as high as 40.69 and as low as 19.75 during the past 52 weeks.
According to the internal memo, the company has created a Digital Steering Committee to assist the senior management team in overseeing the company's Internet operations. Sulzberger and Lewis, along with the Times' editor in chief, Joe Lelyveld, and several high-ranking editors and executives, will be part of the committee.
The news follows Tribune Company's announcement last week that it will create Tribune Interactive, a new unit to house the online sites of four newspapers, 17 TV stations, and other Internet-related businesses.
Bloomberg contributed to this report.