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New York Times Profit Drops as Print Advertising Shrinks

Feb. 2 (Bloomberg) -- New York Times Co., publisher of the namesake newspaper, reported a 12 percent drop in fourth-quarter profit, capping a year marked by shrinkage of print advertising.

Net income fell to $58.9 million, or 39 cents a share, from $67.1 million, or 44 cents, a year earlier, the New York-based company said in a statement today. Excluding some items, profit was 45 cents a share, compared with the 42-cent average of analysts’ estimates compiled by Bloomberg.

The company, also owner of the Boston Globe and About.com, has looked to expand its Internet business amid declining print ad sales. A so-called paywall, up since March on the New York Times website, bolstered digital advertising and lifted the publisher’s total paying online subscribers 25 percent to 406,000 at Dec. 31 from 324,000 a quarter earlier.

The performance was better than expected, Douglas Arthur, an analyst with Evercore Partners Inc., said in a telephone interview. “But the outlook for first quarter is disappointing,” he said of Times Co. guidance on a conference call that this month will be similar to last.

Sales dropped 2.8 percent to $643 million. Analysts on average had estimated $646.8 million, according to a survey by Bloomberg.

Leadership Vacuum

The December departure of Chief Executive Officer Janet Robinson, who was granted an exit package totaling more than $21 million, left a leadership vacuum. The company is faced with falling revenue, profit squeezed by pension costs, and pressure from members of the Ochs-Sulzberger family, which controls the board, to restore a dividend once worth more than $20 million a year to them. Times Co., headed by Chairman Arthur Ochs Sulzberger Jr., hasn’t paid any dividend since 2008.

“They need to find a CEO,” said Evercore’s Arthur, who rates Times Co. shares “overweight” and doesn’t own any.

The company is looking for a non-family member to be CEO, two people familiar with the matter told Bloomberg News for an article published on Jan. 27. The two declined to be identified because the information isn’t public.

Having an executive with digital expertise is important at a time that print advertising is seeing declines, said Ken Doctor, media analyst with Newsonomics and Outsell Inc.

Gannett Co., the publisher of 82 newspapers, including USA Today, on Jan. 30 reported a 5.3 percent drop in publishing revenue for the fourth quarter.

“You’re going to see lower newspaper advertising right across the sector,” said Edward Atorino, an analyst at Benchmark Co. in New York, in a telephone interview on Jan. 27.

Times Co. shares dropped 1 percent to $7.59 today at the close in New York. The shares have declined 29 percent in the last 12 months.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net

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