NYT Misses Profit Mark as Advertising Continues DropEdmund Lee
New York Times Co.’s efforts to transform itself into a digital newsroom with specialized stories and online subscription packages may not be enough to make up for the ongoing decline in its print business.
Both print advertising and print circulation fell in the second quarter, surpassing the gains in its digital business. Earnings, excluding some items, were 7 cents a share, compared with the 8 cents projected by analysts, according to the average of estimates compiled by Bloomberg. The shares fell the most in 21 months.
Jill Abramson, the first female executive editor of the Times, was fired in May as the publication -- along with most news organizations -- struggles to find footing in digital media, where ad rates are far cheaper than in print. In the first quarter, Times Co. reported its first rise in ad sales in more than three years -- an increase that Chief Executive Officer Mark Thompson said may not continue.
Times Co. expects third-quarter ad sales to decrease in the “mid-single digits” percentage, with circulation sales remaining unchanged, the New York-based company said in a statement today. That suggests the amount of new online subscribers its drawing is slowing down, according to Ken Doctor, media analyst with Outsell Inc.
“The fundamental reader revenue growth engine is slowing to a crawl and the new products aren’t pumping out new customers, that points to what will be a growing problem in the quarters ahead,” Doctor wrote in a note following the report.
Shares of Times Co. fell 8.1 percent to $12.89 at the close in New York, the biggest drop since October 2012.
The publisher’s ad sales fell for the 14th time in 15 quarters, dropping 4.1 percent to $156.3 million. Both print advertising and print circulation also declined, with ads sliding 6.6 percent to $114.8 million and circulation decreasing 1.2 percent to $168.1 million.
The gains in its digital business paled when compared with the falloff in print, which accounts for 73 percent of the company’s business. Online ads rose 3.4 percent to $41.5 million, and digital subscription sales increased 14 percent to $41.7 million.
Second-quarter revenue shrank less than 1 percent to $388.7 million, compared with the average estimate of $390.5 million.
Net income fell to $9.2 million, or 6 cents a share, in the quarter, down from $20.1 million, or 13 cents a share, a year ago. Operating costs rose 5.2 percent to $362.7 million as the publisher continues to invest in its transition to a digital newsroom.
When Chairman and Publisher Arthur Sulzberger dismissed Abramson more than two months ago, he said she had publicly mistreated colleagues and failed to properly communicate her management decisions. He denied that gender bias played any role in the dismissal following reports Abramson had confronted Sulzberger after she reportedly discovered that she was paid less than her male predecessor.
Dean Baquet, who took over for Abramson, is trying to find a way to better negotiate the paper’s business interests as digital initiatives continue to encroach deeper into editorial terrain. Abramson had chafed at the introduction of native ads, the marketing messages crafted to resemble news articles.
Those messages have nonetheless helped temper declines in the Times’ ad revenue, and the publisher’s online subscription plan, started in 2011, has helped spur circulation sales growth.
CEO Thompson has worked to extend the Times’ paying readership by creating packages of news coverage at different prices, including a new limited plan called NYT Now that costs $8 a month, as well as a higher-end plan called Times Premier. The cheaper plan made up the bulk of the 32,000 digital-only subscribers the publisher added in the period to reach 831,000, compared with the 799,000 subscribers it had at the end of March.
While the company didn’t report how many of those new customers paid for the main digital subscription package that sells for $15 a month, Thompson said on a conference call with analysts that the amount of readers it added to that package was “lower than we’d seen and lower than we should be satisfied with.”