The New York Times Company (NYT) has posted better-than-expected first-quarter 2010 results that topped Zacks expectations on the heels of significant cost-cutting measures, newspaper price increase and improving trends in the advertising environment.
The quarterly earnings of 11 cents a share surpassed the Zacks Consensus Estimate of 4 cents, and rose substantially from a loss of 34 cents delivered in the prior-year quarter.
On a reported basis, including one-time items, quarterly earnings came in at 8 cents a share compared to a loss of 52 cents posted in the year-ago quarter.
The publisher of The New York Times and The Boston Globe indicated that both digital and print advertising revenue trends were improving as the economy eases. Another media conglomerate, Gannett Co. Inc. (GCI) also hinted at an improvement in the advertising environment helped by strengthening economies of the U.S. and U.K.
The rate of fall in the top-line decelerated during the quarter. After plunging 11.5% in fourth-quarter 2009, the rate of decline in total revenue shrunk to 3.2% year-over-year to $587.9 million.
Total advertising revenue dropped 6.1% to $312.7 million, as against a fall of 14.7% in fourth-quarter 2009. The murmurs about advertisers returning to the market are gaining ground. However, the positive effects have yet to be realized in the current financial results.
The New York Times Company registered an 18.3% growth in digital advertising, which was offset by a 12.3% decline in print advertising. Circulation revenue rose 3.5% to $236.9 million due to higher subscription and newsstand prices.
By segment, News Media Group revenue slipped 4.7% to $553.2 million. Advertising revenue plunged 9.1%, as print advertising fell 12.3%, partially offset by an 11.2% growth in online advertising. About Group segment’s revenue jumped 29.3% to $34.7 million due to an increase in cost-per-click advertising.
Like The New York Times Company, other newspaper companies such as News Corporation (NWSA) and Gannett have been grappling with the slump in print advertising demand, with advertisers migrating to the Internet driven by increasing readership and lower ad prices online than print.
To curb shrinking advertising revenue and improve market shares battered by the recent economic downturn, publishing companies are now even considering charging readers for viewing online content. News International, a subsidiary of News Corporation, will soon begin charging readers for online content for The Times of London and Sunday Times of London effective June 2010, whereas The New York Times Company plans to introduce a ‘pay and read’ model for NYTimes.com in 2011.
Revenue for New York Times’ Internet business, which includes NYTimes.com, About.com and Boston.com, soared 15.5% to $90.4 million, and now accounts for 15.4% of total revenue up from 12.9% in the prior-year quarter.
The New York Times Company recently sold 50 of its 750 units held in New England Sports Ventures (NESV) to Henry F. McCance, Chairman of Greylock Partners, a venture capital firm, which lowers its stake in NESV to 16.6% from 17.8%.
The company also hinted at its intention to sell the remaining stake in NESV. The sale of the entire stake will help The New York Times Company to alleviate near-term liquidity concerns to some extent. The company has also been paring its cost structure, and looking for potential avenues to raise cash and lower debt.
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