Thursday, April 22, 2010

New York Times reports results in line with industry; improved net income through cost reductions

The roll call of earnings reports for the newspaper industry continued this morning with the New York Times Company reporting improved earnings.

The company reported net income of $14.1 million for Q1, compared to a loss of $74.3 a year ago.

But total revenues were down 3.2 percent, meaning that the improved bottom line was, like other newspapers companies that reported Q1 earnings, the result of continued cost cutting. The Times reported that total advertising revenue was down 6.1 percent, while circulation revenue increased 3.5 percent. Expenses were reduced by 18 percent overall.

“Once again strong cost control was a leading contributor to our improved operating performance in the quarter. The aggressive actions we have taken to permanently re-engineer our cost base in recent years are evidenced in the 18 percent decline in operating expenses. While we will remain vigilant in managing our costs, we expect these savings trends to moderate during the remainder of the year," said Janet L. Robinson, president and chief executive officer.

“Strong growth in digital advertising revenues, which rose 18 percent, significantly offset a 12 percent decrease in print advertising and held our total advertising revenue decline to approximately 6 percent compared with the first quarter of 2009," Robinson said. "“Our results clearly demonstrate the positive impact of transitioning into an increasingly multiplatform company, as we continue to extend our content to new devices and our reach to new audiences. Online advertising revenues have become a much more significant part of our mix and made up 26 percent of our advertising revenues in the first quarter, up from 20 percent in the prior year."

It is no doubt a good thing to see revenue falling less precipitously than last year -- but print revenue, in particular, is not growing dramatically at newspapers. As I wrote earlier this year, ad pages fell across all print media segments last year -- just at different rates. The question many had was would a recovery mean growth for everyone? I speculated that the recession was merely making both newspaper and B2B media problems worse, but that the economy was definitely not the source of the problem alone.

Now, in 2010, we are starting to see improved financial performance, but no real growth in newspaper print revenue. Some trade magazines, in the meantime, are seeing dramatically improved ad page counts, but these magazines are generally the leaders in their industries (and representing vibrant industries). As a result, many B2B pubs are seeing only minimal improvement in performance -- not enough to offset the huge losses they suffered in 2009.

The best run newspaper and B2B firms will most likely survive 2010 and, if they invest in new media products and initiatives, will see real growth down the line. For the others, 2010 will not see the kind of dramatic turnaround some had hoped for.