At NY Times, profit rises, CEO search drags on
(Reuters) - New York Times Co (NYT.N) investors brushed past the company's drop in print and digital ad revenue during the first quarter, focusing instead on a better-than-expected profit and the hope it would be returned to shareholders.
With $431 million of cash, Evercore Partners analyst Doug Arthur said The New York Times should initiate a dividend.
"They have to be the only company with this much cash not paying a dividend," he said.
The New York Times suspended its dividend in 2009.
The company has been searching for a chief executive since Janet Robinson stepped down at the end of last year and received a total payout of $24 million.
New York Times Chairman Arthur Sulzberger Jr. has been serving as CEO for the last four months and deflected suggestions he might take the position permanently.
"I have no doubt that we will find the right candidate and I'm looking forward to that," he said on a call with analysts on Thursday. "We will take the time necessary to find the right person for the role."
The New York Times' shares rose 5.5 percent in afternoon trading as the company reported adjusted first-quarter earnings per share of 8 cents, blowing past analysts estimates of 2 cents, according to Thomson Reuters I/B/E/S.
Still, The New York Times is facing a heap of challenges. Newspapers, once a choice mass-market vehicle to reach large swaths of people, have been under siege as advertisers and readers shift attention to digital products.
Sulzberger highlighted the company's digital strategy and increase in circulation revenue -- up 10 percent during the quarter -- as proof it is trying to move past the negative headlines.
Last year, New York Times launched a digital pay model at its flagship property, a closely watched experiment by other newspaper executives eager to find new revenue amid sinking ad sales and dwindling print subscriptions.
The company said it had 454,000 paid digital subscribers as of March 18, up 16 percent since the end of the fourth quarter and that it would decrease the number of free articles readers can view to 10 from 20.
Even so, pressure on advertising sales remains a challenge for the newspaper industry.
Advertising revenue decreased 8.1 percent, while digital ad revenue declined 10.3 percent mainly because of troubles at the About Group.
But even digital ad revenue at its news properties -- mainly its namesake and the Boston Globe -- dropped 2.3 percent on weakness in national display and classified ads.
Sulzberger pointed to an "uneven economic environment" for the drop in advertising sales, noting that digital advertising was also "under pressure."
The outlook for the second quarter suggests more of the same with advertising revenue expected to be similar to the first quarter, the company said.
The New York Times' results follow those of Gannett, the largest newspaper chain in the United States by circulation. Gannett said on Monday that newspaper ad revenue fell more than 8 percent, sending its shares down about 7 percent.
"The newspaper business is not getting better at all -- period," said Benchmark Co analyst Edward Atorino.
About.com -- the website that provides expert answers that tends to appear high in search queries and sells advertising against those results -- dragged down the company's digital revenue with a drop of 23.1 percent to $23.9 million.
Total first-quarter revenue was $499.4 million, down 0.3 percent. Analysts' forecast for the first quarter was $500 million.
The income gain for the quarter included the sale of a group of 16 newspapers across the U.S. Southeast and California for $143 million in January.
(Reporting By Jennifer Saba; Editing by Dave Zimmerman and Maureen Bavdek)
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