The publisher delivered a pleasant earnings surprise yesterday by cutting costs. Now it’s hoping for a revenue bump, if advertisers will play along.
The New York Times announced plans to cut eight percent of its newsroom payroll this week, citing “economic thunderstorms,” which suggested that this morning’s earnings results were going to be particularly unpleasant. Surprise! They’re not that awful, at least by the diminished standards of the newspaper industry.
The paper’s Internet operations used to be a bright spot. But last quarter Web advertising dropped more than 15 percent. What gives?
We saw a mini-rally in newspaper shares yesterday, based on the notion that the worst may be over for the industry. But the New York Times’s Q2 results are pretty inconclusive:
The publisher was able to take a big chunk out of costs, but revenue kept plunging, and Web ads dropped by more than 15 percent. The paper did say, though, that things got less bad as the quarter progressed, and that they’ll get slightly less bad next quarter, too.
Yesterday the New York Times won five Pulitzer Prizes and executive editor Bill Keller took a well-deserved victory lap with a speech that reportedly had his newsroom in tears. But for better or worse, none of that matters to investors, who are trying to figure out what the company’s long-term prospects look like. In the near term, they look terrible.
In the first three months of this year, the company saw ad sales drop 27 percent, and the Internet no longer helps: Web ad sales were down 6.1 percent. The company says to expect more of the same, for a while.
The New York Times had a bad December, and a lousy end to 2008. That isn’t a surprise. What is a bit shocking is that the paper’s digital ads are now vanishing almost as quickly as its print ads.
There’s been lots of dark muttering about Carlos Slim, the New York Times’s new benefactor/loan shark: Exactly how did he make his money, after all? And what does he want with the Times? In any case, it turns out Slim probably has some questions about the Times himself. Like who runs it and what they do?
The Times says its core Web ad business–selling display ads on its pages–fell off in November, has gotten worse this month and could really be in trouble next year. But About.com is holding up comparatively well.
New York Times CEO Janet Robinson and her CFO, James Follo, are speaking at the UBS media conference later this afternoon. But they want to get the news out in advance: They had a miserable November, but they’re confident they can deal with looming debt problems. Also, if anyone would like to invest in the Times, or lend it some money, they’re all ears.
Peter Kafka has been covering media and technology since 1997, when he joined the staff of Forbes magazine. Most recently, he has been the managing editor of the tech and media Web site, Silicon Alley Insider.
Here is a statement of my ethics and coverage policies. It is more than most of you want to know, but, in the age of suspicion of the media, I am laying it all out.
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