Dec. 10, 2010 -- Standard and Poor's has replaced the New York Times with the growing Internet movie retailer Netflix on the S&P 500, the economic index made up of the economy's most powerful publicly traded companies.
The change will take effect after the close of trading on Dec. 17.
"We adjust the guidelines from time to time when the whole market goes up or down. Some companies grow very fast…and end up being in a better postion for 500. There's also companies that grow very slowly and they end up being in a much better position if they move out of the big cap," said David Blitzer, managing director and chairman of Standard and Poor's index committee.
Netflix, publicly traded since 2002, is worth $10.2 billion. The New York Times is worth $1.4 billion.
Netflix will move from the S&P 400, the index used for middle-sized stocks. Getting a place on the S&P 500 usually boosts a company's stock because investment funds that track the index will have to buy shares.
Today, the New York Times stock price went down 13 cents, to $9.61 per share. Netflix stock went up $3.58, to $194.63 per share, though it dropped slightly in after-hours trading.
"The newspaper business has not been most rapidly growing successful business for last several years," Blitzer said.
The New York Times, like other media companies, has gone through layoffs and a drop in advertising revenue. The paper has turned to digital revenue and will begin charging online customers starting next year.
Blitzer said that in the past 15 years, there's been a significant drop in the number of newspapers on the S&P 500 because many have become privately traded companies.
Netflix's business has continued to grow from primarily a mail delivery video service to online streaming. The news of the stock market shift comes soon after Netflix signed a licensing deal with Disney-ABC Television to stream shows and movies on its website. (Disney is the parent company of ABC News.)
"It is ironic that the grand old lady of newspapers, all the news that's fit to print, is being dropped to Netflix," said Edward Atorino, a media analyst from Benchmark Company. "It's not a nail in the coffin but it does indicate a further rise in interest and value in new media versus old media."
Along with the New York Times, Office Depot and Eastman Kodak Company were booted from the index. Cablevision, Newfield Exploration Co. and another high tech company, F5 Networks Inc. will also join the S&P 500.
Cablevision will replace King Pharmaceuticals Inc., which is being acquired by Pfizer.
All of the companies joining the S&P 500 index saw a boost in shares, while all of the companies being booted from the index saw a drop in shares today.
The Associated Press contributed to this report.