The New York Times Company (NYT) recently posted better-than-expected second-quarter 2010 results that topped Zacks’ expectations. The quarterly earnings of 18 cents a share surpassed the Zacks Consensus Estimate of 14 cents, and rose more than twofold from 8 cents delivered in the prior-year quarter.

On a reported basis, including one-time items, quarterly earnings came in at 21 cents, down 22.2% from 27 cents posted in the year-ago quarter.

The New York Times witnessed positive momentum in the top-line during the quarter. After plunging 3.2% in first-quarter 2010, total revenue climbed 1.2% to $589.6 million compared with the prior-year quarter and clearly outpaced the Zacks Consensus Revenue Estimate of $581 million.

The publisher of the New York Times and the Boston Globe hinted that positive trends are being witnessed in both print and digital advertising with advertisers spend gaining pace. Another media conglomerate, Gannett Co. Inc. (GCI) also hinted at an improvement in the advertising environment helped by strengthening economies.

Total advertising revenue slid marginally by 0.2% to $314.9 million, as against the fall of 6.1% in first-quarter 2010. The murmurs about advertisers returning to the market are gaining strength.

By segment, News Media Group revenue grew marginally by 0.1% to $555.9 million. Advertising revenue dropped 2.3% to $282.9 million. Print advertising fell 6.1%, whereas digital advertising jumped 19.8%. Circulation revenue rose 3.2% to $234.8 million due to higher subscription and newsstand prices. Adjusted operating profit soared 36% to $83.3 million due to a fall in operating costs.

Management expects third-quarter 2010 print advertising revenue to improve sequentially, and digital advertising to rise in the mid-to-high teens. However, circulation revenue in third-quarter 2010 is expected to fall by 3% to 5% due to price increases taken in June 2009 at the New York Times and the Boston Globe.

About Group segment’s revenue soared 24.1% to $33.7 million due to an increase in display and cost-per-click advertising. Adjusted operating profit soared 39.2% to $18.2 million, reflecting an increase in advertising revenue.

Revenue for New York Times’ Internet business, which includes NYTimes.com, About.com, Boston.com, rose 20.5% to $94.3 million, and now accounts for 16% of total revenue, up from 13.4% in the prior-year quarter.

Online advertising has now become an integral part of the company’s revenue stream with advertisers migrating to the Internet driven by increasing online readership and lower ad prices online than print.

To grab the benefit of growing trends among readers who are surfing the Internet for free news, the publishing companies are now even considering charging readers for viewing online content.

News International, the subsidiary of News Corporation (NWSA) started charging readers for online content for The Times of London and Sunday Times of London from June 2010, whereas The New York Times Company plans to introduce a ‘pay and read’ model for NYTimes.com in 2011.

The company is also adapting to the changing facet of the multiplatform media universe, which currently includes mobile, social media networks and reader application products in its fold.

The New York Times Company also notified that its operating costs are expected to increase in the second half of 2010, primarily in the third quarter due to higher newsprint costs, rollback of salary cut, and costs related to development of the NYTimes.com pay model.

The company remains committed to lowering its debt load through cash generated from operations and divestiture activities. The New York Times Company lowered its debt burden, net of cash and cash equivalents, by about one-third to $670 million since the beginning of 2009. Moreover, the majority of the debt matures in 2015 or later.

Capital expenditures for the quarter were approximately $6 million. Management now anticipates capital expenditures between $45 million and $55 million for fiscal 2010. The New York Times Company remains committed to streamlining its cost structure, strengthening its balance sheet and rebalancing its portfolio.
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