New York Times Beats Profit Estimates on Slower Ad Drop
New York Times Co., the newspaper publisher controlled by the Ochs-Sulzberger family, posted fourth-quarter profit that beat analysts’ estimates as its advertising decline slowed and online readership grew.
Net income tripled to $176.9 million, or $1.14 a share, from $58.9 million, or 39 cents, a year earlier, the company said today in a statement. The sale of About.com and a stake in Indeed.com added $164.3 million in the quarter after taxes. Excluding some items, profit was 32 cents a share, beating the 31-cent average of estimates compiled by Bloomberg.
Times Co., led by Chairman Arthur Sulzberger, is coping with a difficult ad market as national marketing spending continues to subside industrywide. Unlike regional newspapers, the New York Times relies on national advertising from major marketers such as movie studios, car companies and luxury goods for most of its money. National advertising dropped 10 percent across all newspapers in the first nine months of last year, according to the Newspaper Association of America. The company also owns the Boston Globe and the International Herald Tribune.
Times Co., based in New York, rose 3.3 percent to $8.51 at the close in New York. The shares have fallen less than 1 percent this year.
Advertising slid 8.3 percent to $265 million from a year earlier, excluding the effect of an extra week in the fourth quarter of 2012. That decrease compared with an 8.9 percent decline in the third quarter.
Circulation sales rose 8.6 percent to $241 million. Subscribers to online editions of the New York Times and International Herald Tribune increased 13.1 percent from September to 640,000. Total sales climbed 5.2 percent to $575.8 million. Analysts predicted $570.4 million.
The company said it expects total circulation sales to expand by about 4 percent to 6 percent this quarter, largely from gains in online subscriptions. Advertising through March will decline at a similar rate to the previous quarter, the company said.
For the full year, Times Co. recorded more circulation sales than ad revenue for the first time, drawing in $953 million in subscription fees and $898.1 million in ad dollars. It’s a milestone that upends the traditional 80-20 ratio between ads and circulation that publishers once considered a healthy mix and that is now no longer tenable given the industrywide decline in newsprint advertising.
“They clearly are leaning on their readers to support the business now,” Edward Atorino, a media analyst with Benchmark Capital Co. in New York, said in an interview after the report. He rates the company’s shares as hold.
Times Co. said it contributed about $107 million to pension plans in the fourth quarter. The plans were underfunded by about $396 million at the end of 2012, down from the $525 million Times Co. had reported a year earlier.
The company ended last year with $955 million in cash and short-term investments, according to the statement. Times Co. also reported $865 million combined in long-term debt and the pension underfunding, as well as a $250 million option to repurchase its headquarters by 2019.
Even with the Times Co.’s cash position, Chief Executive Officer Mark Thompson, who started in November, said on a conference call that now isn’t “the appropriate time to restore dividends.”
The New York Times eliminated 30 newsroom jobs last month, out of a total of 1,150, because of the slowdown in advertising.
More cost-cutting “is both inevitable and necessary as we reshape our business,” Thompson said on the call.
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