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The Associated Press June 13, 2011, 12:09PM ET

Citigroup sees New York Times pay wall as working

A Citigroup analyst on Monday said The New York Times' strategy of charging for online subscriptions is probably working, judging by comments from the Times and other papers.

THE OPINION: The Times began charging for full access to the website in late March. In April, it said more than 100,000 people had become paying subscribers. Sales of online subscriptions now appear to be "robust," analyst Leo Kulp wrote in a morning research note.

THE ANALYSIS: The downside to charging for website access is that it drives away casual visitors, reducing the number of viewers for advertising. But Kulp believes the loss of online advertising revenue is likely minimal, because comments from other newspaper chains suggest that online ads aren't selling well in any case.

Together with new subscription income, this suggests the online "pay wall" will push earnings before interest, taxes, depreciation and amortization above expected levels, Kulp said.

The key risk, Kulp wrote, is that sales of ads for the printed paper remain softer than expected. However, he thinks this trend is mostly priced into newspaper stocks.

THE STOCK: Kulp maintained a "Buy" rating and an $11.50 price target on the New York-based company. New York Times shares fell 3 cents to $7.82 in midday trading.

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