Second-quarter revenue rose about 1 percent as circulation revenue climbs
New York Times Co. reported better than expected growth in revenue on Thursday as more readers paid for its news, indicating its plan to charge for its digital products helped offset declining ad sales.
The company, which publishes its namesake newspaper and the Boston Globe, said second-quarter revenue rose almost 1 percent to $515.2 million as circulation revenue climbed 8 percent. That beat analysts' average estimate of $510.9 million, according to Thomson Reuters I/B/E/S.
Total paid digital subscriptions climbed 13 percent – for both NYTimes.com and BostonGlobe.com – to 532,000 as of March 18.
Print advertising revenue at its news properties fell 8 percent while digital advertising revenue slid almost 2 percent.
Shares of the company surged 10 percent to $7.75 in morning trading Thursday after the results were released.
"Circulation revenue helped the company achieve modest revenue growth," said Jocelyn MacKay, an analyst with Morningstar.
Still, some troubling signs remain at the New York Times, which has been without a chief executive for seven months.
The company took a $194.7 million non-cash goodwill charge for the About Group, which swung the Times to a net loss of $88.1 million. The New York Times bought the About Group, which includes the websites About.com, ConsumerSearch.com and CalorieCount.com, in 2005 for about $410 million.
Excluding severance costs and the About Group writedown, the company reported earnings per share of 14 cents, beating analysts' estimates by a penny, according to I/B/E/S.
Including the About Group, digital ad revenue fell 4 percent.
"[About Group} is dragging everything down, which is concerning for how small About Group is," MacKay said.
About.com is a website that provides expert answers that are geared to appear high in search queries. In turn, the company sells advertising against those results. That division has run into trouble mainly because of changes made by Google Inc to its search algorithm to return high-quality results.
At the About Group, revenue fell almost 8 percent due to decreases in both cost-per-click and display advertising. The company cited competition and the weak economy for the display advertising revenue declines. The company said total ad revenue trends in the third quarter are expected to improve from the second quarter because of digital ad sales.