New York Times Co revenue slips on advertising decline

Thu Aug 1, 2013 12:21pm EDT

People line up for taxi across the street from the New York Times head office in New York, February 7, 2013. REUTERS/Carlo Allegri

People line up for taxi across the street from the New York Times head office in New York, February 7, 2013.

Credit: Reuters/Carlo Allegri

(Reuters) - New York Times Co's second-quarter revenue fell almost 1 percent as gains in subscriptions to its flagship and other newspapers could not offset declines in advertising.

Advertising revenue - both print and digital - fell 6 percent from a year earlier to $207.4 million, the company reported on Thursday.

New York Times Co, as well as the entire newspaper industry, is battling against a relentless decline in advertising - once a primary source of revenue for most newspapers.

The reasons are many, including a challenging economic environment and the shift of advertisers away from print.

The drop in advertising revenue at New York Times Co in the second quarter was less than the first quarter's 11.2 percent. But it is unclear if the declines will continue to moderate. The company forecast that third-quarter advertising trends will be volatile.

The uncertainty in advertising is one factor that Chief Executive Mark Thompson cited for the company's decision to sit on its cash pile of almost $1 billion rather than reinstate a dividend. The company, controlled by the Ochs-Sulzberger family, has gone without a dividend since 2009.

"For the present, we believe it is in the best interest of the company to maintain a conservative balance sheet," Thompson said on a conference call with analysts.

Shares of New York Times Co fell 3.4 percent to $11.77 in midday trading.

To combat lower advertising, the company has rolled out a subscription model for its digital products to tap a new revenue stream. Circulation revenue rose 5 percent to $245.1 million in the second quarter, including paid digital subscriptions at its flagship and Boston Globe properties.

Circulation revenue now accounts for half of the company's total revenue.

At the New York Times newspaper and its international edition, digital-only subscriptions increased 35 percent from a year earlier to 699,000.

The company has narrowed its focus to its flagship and has in recent years shed TV and radio stations, dozens of newspapers and stakes in sports ventures.

Currently on the block are the Boston Globe and its sister Worcester Telegram & Gazette.

New York Times Chief Financial Officer James Follo said the auction is still underway and that the papers' pension obligations are unlikely to be included in the sale.

Reuters reported in June that the company had received multiple bids for the New England properties. Factors that could depress the price include the pension obligations and difficulty negotiating changes with more than a dozen labor unions that represent about three-quarters of employees.

Total revenue for the second quarter was $485.4 million, below analysts' average estimate of $487.43 million, according to Thomson Reuters I/B/E/S.

Operating profit rose 21 percent to $53.4 million.

Excluding one-time items, it earned 14 cents a share, beating analysts' average estimate by 2 cents.

(Reporting by Jennifer Saba in New York; Editing by Gerald E. McCormick, Chris Reese and John Wallace)