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New York Times Profit Increases Sevenfold After Asset Sales

New York Times Co., publisher of the namesake newspaper, advanced the most in almost four months after reporting a more than sevenfold rise in first-quarter profit that reflected gains on the sale of regional publications.

Times Co. climbed 4.4 percent to $6.38 at the close in New York, the biggest gain since Dec. 20. Net income rose to $42.1 million, or 28 cents a share, from $5.42 million, or 4 cents, a year earlier, the New York-based company said today in a statement. Excluding some items, profit was 8 cents a share, beating the 2-cent average of seven analysts’ estimates compiled by Bloomberg.

The newspaper publisher, which still owns the Boston Globe and the Worcester Telegram & Gazette after selling the Regional Newspaper Group for $143 million in December, has built up its digital business to capitalize on the ad industry’s shift toward online marketing and away from print.

“The results were better than we anticipated,” said Leo Kulp, a Citigroup Inc. analyst. “Costs were better than we thought and there appears to be a lot of upside in these results.”

Not all of the Times’s numbers rose. Sales declined 0.3 percent to $499.4 million. Five analysts had estimated $499.8 million on average. Advertising revenue declined 8.1 percent to $237.9 million, from $258.9 million a year earlier. Times Co. expects ad revenue in the second quarter to be “similar to the level experienced in the first quarter,” the company said.

Times Co.’s annual sales have fallen every year since 2006 as the publishing industry has lost ad dollars to Internet companies such as Google Inc. and Facebook Inc.

Paid Subscriptions

Paid subscriptions to the company’s digital publications, including the New York Times, the International Herald Tribune and the Boston Globe, totaled 472,000 as of March 18.

“The paid subscriptions aren’t quite enough to make a major difference to the declines in print advertising,” said Kulp, who rates the shares neutral.

Digital-advertising sales dropped 10 percent from a year earlier to $71.1 million because of lower revenue at, while circulation sales gained 9.7 percent to $227 million, the company said.

Times Co. has operated without a permanent chief executive officer since Janet Robinson was fired in December, a development that’s helped drive down its stock price despite gains in online subscriptions, according to Douglas Arthur, media analyst with Evercore Partners Inc.

‘Lots of Good’

“There’s lots of good going on with the company, from selling the regional newspapers to great pay-wall numbers and increased cash, but the stock is just death because there’s no CEO,” Arthur said in an interview before the earnings release. “This is the slowest CEO search ever,” said Arthur, who rates the shares overweight and doesn’t own any.

The company recently moved to boost its online subscriptions by further restricting the number of free articles people can read on the New York Times website to 10 articles a month from 20.

The company hasn’t broken out online subscriptions to the New York Times website alone since September, when there were 324,000 such paying readers.

Online Subscriptions

“We’re looking to see if that growth in online subscriptions can be sustained,” Kannan Venkateshwar of Barclays Capital Inc., said in an interview earlier this week.

Times Co. is generating an average of $250 annually for every digital subscriber, according to his estimates. If the publisher can continue to increase the number of paying readers, it could be enough to offset declines in print advertising, said Venkateshwar, who rates the shares neutral.

New York Times comes second to the Wall Street Journal in online subscribers. The Journal, owned by News Corp., averaged 521,417 paying readers to its site as of October, according to the Audit Bureau of Circulations. Gannett Co. started a digital-subscription program for 81 daily newspapers this year, while keeping its flagship USA Today freely available online.

U.S. newspapers lost $10 in print-advertising sales for every dollar gained online last year, Pew Research Center said last month. In 2010, newspapers lost $7 in print advertising for every dollar made from digital outlets.

Times Co. will bring in an estimated $90 million this year from digital subscriptions, Evercore’s Arthur said.

“If they keep that up, online could turn into a real business in the next year or two,” he said.

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