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(Reuters) - The New York Times Co said it will sell 16 regional newspapers spread across the U.S. Southeast and California to Halifax Media Holdings for $143 million in cash as it looks to cut costs and focus on its most important papers and their websites.
Regional newspapers have struggled recently because of weak local retail and national advertising, partly reflecting the economy's broader travails.
The company said it will record an after-tax gain of $150 million on the sale -- expected to close in a few weeks -- in the first quarter of 2012.
"I think that it's toward the low end of what we expected. I was expecting $150-$200 million," Evercore Partners analyst Douglas Arthur told Reuters.
"What it implies is that margins on regional newspapers were not as high as we thought, but the underlying profitability of the main New York Times is higher."
The analyst, however, said pension obligation will stay with the company and that could be one of the uses of the proceeds.
The group to be hived off has a weekday circulation of about 430,000, with newspapers such as Sarasota Herald-Tribune, The Ledger, in Florida; Herald-Journal in South Carolina; and The Press Democrat in California in its stable.
Last week, the Times Co said it will sell its regional newspapers days after Chief Executive Janet Robinson announced her sudden retirement.
The group's revenue -- more than a tenth of Times Co's overall sales -- fell about 7 percent to $190 million in the first nine months of this year.
"These newspapers have been a drag on overall results due to heavier reliance on local advertising which lags national advertising growth," Morningstar's Joscelyn Mackay said.
"Without these papers, the firm will be able to focus on its flagship The New York Times and monetize its digital content."
Halifax Media owns The Daytona-Beach News Journal, among other papers and media businesses across the south.
Times Co shares, which have lost a fifth of their value this year, closed at $7.76 on Tuesday on the New York Stock Exchange.
Reporting by Soham Chatterjee in Bangalore; Editing by Joyjeet Das