The New York Times Company (NYT) recently reported better-than-expected fourth-quarter 2009 results buoyed by significant cost-cutting measures, newspaper price increase, and improving trends in the advertising environment.
The New York Times quarterly earnings of 44 cents a share surpassed the Zacks Consensus Estimate of 41 cents, and soared 22.2% from 36 cents delivered in the prior-year quarter. In the last 30 days, the Zacks Consensus Estimate has shown an improvement of 2.5%, when 1 out of 3 analysts covering the stock raised his estimate.
The company outperformed the Zacks Consensus Estimate by 7.3%. The current Zacks Consensus Estimate for first-quarter 2010 is 7 cents a share.
On a reported basis, including one-time items, quarterly earnings came in at 61 cents a share, a substantial improvement from 19 cents posted in the year-ago quarter.
The publisher of The New York Times and The Boston Globe said that total revenue dipped 11.5% to $681.2 million, primarily due to lower print advertising. Total advertising revenue tumbled 14.7% to $398 million, whereas circulation revenue rose 2.4% to $239.3 million due to higher subscription and newsstand prices.
The quarter under review reflects a sequential improvement, as in the third quarter of 2009, when total revenue had dipped 16.9% and total advertising revenue had fallen 26.9%. Gannett Co. Inc. (GCI), the publisher of the nation’s largest-selling daily USA Today, also hinted at improvements in its advertising environment with the U.S. and U.K. economies showing some signs of recovery.
To combat the downtrend, many newspaper companies lowered headcount, resorted to pay cuts and furloughs and closed printing facilities. New York Times’ operating costs, excluding one-time items, declined 16.3%, whereas operating profit climbed 10.9% to $157.6 million.
In an effort to curb shrinking advertising revenues and market shares, publishing companies are now considering charging readers for online editions. This comes in the wake of a longer-term secular decline as more readers choose to read news free online, thereby making the print-advertising model irrelevant. The New York Times Company plans to introduce a paid model for NYTimes.com in 2011, which will bring the media conglomerate on par with The Wall Street Journal and Financial Times.
By segment, the News Media Group revenue slipped 12.8% to $644.8 million due to lower print advertising. Advertising revenue plunged 17.1%, as print advertising fell 20%, partially offset by a 4.1% growth registered in online advertising. The About Group segment’s revenue jumped 21.8% to $36.3 million due to an increase in cost-per-click advertising.
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